Mark Zuckerberg, Meta’s CEO, has today declared openly to shareholders that the company’s steep investments in XR and metaverse technologies aren’t expected to thrive until the next decade. Zuckerberg disclosed this while responding to a shareholder question at Meta’s Q1 2022 earnings call.
During the earnings call, Meta provided a quarterly update to its shareholders, outlining the company’s most recent earnings and expenses. According to the social media platforms, the revenue increased 30% year over year for Reality Labs, the company’s XR and metaverse segment, from $534 million in Q1 2021 to $695 million in Q1 2022.
However, operating costs for the Reality Labs segment increased, even more, rising 62% year over year from $1.83 billion in Q1 2021 to $2.96 billion in Q2 2022.
Last year, Meta informed investors that the company’s XR investments will amount to $10 billion in 2021 and that they would continue to expand from then, although this increase in costs was foreseen.
For years, Zuckerberg has pleaded with investors to be patient with his vision for XR and metaverse technology. He was already preparing investors for a long road when he said in 2017 that XR would need a 10-year trajectory from the time it purchased Oculus to attain mass adoption—a timescale that has now been stretched out to 2024. However, in Zuckerberg’s opinion, that deadline has slipped significantly.
According to him, the company’s initial 10-year trajectory featured just a hazy concept of the metaverse, which, while still amorphous, has become clearer in the eight years since Meta acquired Oculus and set out to construct the next computing platform.
Meta didn’t begin seriously testing with social VR in what would eventually become Facebook Spaces, the company’s first social VR platform, until 2016, when it began truly experimenting with it in what would eventually become the company’s first social VR app, which launched in 2017.
In 2019, Facebook Spaces was decommissioned, and Horizon took its place. Horizon, on the other hand, was announced in 2019 but didn’t launch until the end of 2021, and it’s still only available to a select group of people. When shareholders see Meta spend $2–$3 billion per quarter on Reality Labs, it’s easy to see why the business is frequently questioned about its extravagant spending. The fact that Zuckerberg believes the investments won’t fully take off until the 2030s isn’t going to help matters.
As a result, Zuckerberg stated that the company intends to pay for its ambitious and forward-looking spending with revenue from its non-XR companies like Facebook, or Instagram. Thus, Zuckerberg will need to continue to sell his idea that XR is the next computing platform and explain why shareholders should stick around for the journey if he wants investors to stick around for the long haul.