Even after a turbulent 2022 for Facebook parent company Meta, its Chief Executive Officer (CEO) Mark Zuckerberg has clarified that the firm is not changing course on its metaverse strategy which is known as Facebook Reality Labs (FRL). According to Meta Platform’s released earnings report, the FRL division recorded a loss of $13.7 billion with a revenue of only $2.2 billion.
“None of the signals that I’ve seen so far suggests that we should shift the Reality Labs strategy long term,” Zuckerberg said during an earnings call questioning the firm’s efficiency in relation to FRL.
Facebook Reality Labs (FRL) is the metaverse division of Meta Platforms which oversees the company’s virtual and augmented reality operations. In Q4 2022, the division ended up with a $4.3 billion loss, which is more than a 16% increase from the $3.7 billion reported in Q3. The Q4 loss was below the consensus estimate of $4.4 billion previously made by analysts.
Meta’s Q2 earnings report showed a total loss of $2.8 billion from its metaverse division while in Q1, there was a $2.9 billion loss in the FRL division. Just like many other organizations, Meta was significantly affected by the crypto winter and ended up reducing its headcount in the second week of November to stabilise its operations. At that time, the company’s CEO Zuckerberg said,
“In 2023, we’re going to focus our investments on a small number of high-priority growth areas. So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year. In aggregate, we expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today.”
Meta Invests $19B into Facebook Reality Labs
True to Zuckerberg’s statement, in December the company suggested plans to allocate $19 billion which was 20% of its 2023 budget to its metaverse division indicating that it was one of its high-priority growth areas.
Andrew Bosworth, the Chief Technology Officer (CTO) of FRL noted that the sector had recorded huge losses and the metaverse was raising skepticism amongst industry players. At the same time, he assured that they were merely exaggerated.
“We’ve all seen the disastrous consequences of this kind of short-term thinking: hollowed-out companies that gave up on innovating long ago, content to just turn the crank on an existing business until it stops working,” Bosworth explained.