Meta, the social media company, reported that its metaverse division, the Reality Labs unit, was losing a lot of money. In its recent earnings call, the company informed that although the Reality Labs unit managed to generate more than $400 million in sales, its losses reached $2.8 billion, mainly due to the costs of research and development associated with metaverse and VR products.
Meta’s metaverse push causes it to lose funds
Meta, one of the first companies to announce a social media pivot to the metaverse, is struggling to make a profit from its new direction. In its most recent earnings callwhich reports on the company’s economic performance during the second quarter, the company announced that its metaverse division, the Reality Labs unit, lost more than $2.8 billion during the mentioned period, even when it manages to register more than 400 million dollars in sales. .
Reality Labs is in charge of the company’s metaverse strategy, including the development of virtual reality and augmented reality products and the research necessary to build them. The monetization of Meta’s metaverse initiatives is still ongoing, with its flagship VR app, Horizon Worlds, opening its monetization options to users, with the company keeping up to 50% of each sale.
Negative predictions
Meta’s outlook for the third quarter of 2022 is also negative. The company attributed this prediction to:
a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is due to broader macroeconomic uncertainty.
Mark Zuckerberg, CEO of Meta, also hinted at the possibility of layoffs over the next year, saying “this is a time that demands more intensity and I expect us to do more with fewer resources. The company said it had increased its workforce by 32% since last year, with its workforce reaching 83,553.
In July, Zuckerberg made Remarks on slowing down the company’s hiring strategy and improving performance standards for current Meta employees.
On the metaverse side, the company also forecast that Reality Labs will continue to lose money in the next quarter. However, Zuckerberg called this metaverse pivot a group of long-term investments because it believes that the metaverse will scale over time to house billions of users who will all make transactions in the metaverse, with each of those transactions being monetized by the business.
What do you think of Meta’s latest gain and loss call via metaverse activity? Tell us in the comments section below.
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