Mark Zuckerberg, CEO of Meta Platforms, demonstrates the Meta Quest Pro during the virtual Meta Connect event in New York on Oct. 11, 2022.
Michael Nagle | Bloomberg | Getty Images
Meta continues to sink billions of dollars a quarter into developing the metaverse, and is just now facing its first real competitive threat from Apple.
In its fourth-quarter earnings report Thursday, Meta said its Reality Labs unit recorded an operating loss in the period of $4.65 billion. Analysts were expecting a loss of $4.26 billion, according to StreetAccount.
The metaverse division has now lost more than $42 billion since the end of 2020, the first quarter for which numbers are available publicly. The fourth-quarter loss was its biggest yet.
“We expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem,” the company said in its earnings statement.
Revenue within Reality Labs was more than $1 billion in the fourth quarter, up from $727 million in the same period a year earlier. Analysts polled by StreetAccount were expecting revenue of $768.2 million. Meta debuted its Quest 3 VR headset last fall.
Reality Labs develops the virtual reality and augmented reality technologies underpinning the metaverse, which Facebook founder Mark Zuckerberg has called the “next frontier” and the “successor to the mobile internet.” The current centerpiece for the business is the Quest family of VR headsets.
As Meta pours money into the metaverse, Apple is hitting the market with its first headset. Apple’s Vision Pro goes on sale Friday and will cost $3,500, significantly more than Meta’s Quest 3 VR headset, which has a starting price of $500.
Sales of VR and AR headsets and glasses dropped almost 40% in 2023 to $664 million in 2023, as of Nov. 25, according to research firm Circana. An analyst at Circana told CNBC that the steep drop was likely due to a lack of new stand-alone VR headsets.
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