Meta’s Metaverse lost the company $3.8 billion in 3 months, CEO still optimistic

When Mark Zuckerberg announced the rebranding of Facebook to Meta, he had an ambitious vision in which virtual reality was the new way of social interaction. In his vision people would be able to teleport instantly as a hologram to be at the office without a commute, at a concert with friends, or in your parents’ living room to catch up.

It’s safe to say the plan has not gone exactly as planned. Metaverse uptake has been lacklustre with Meta's Reality Labs division, responsible for virtual reality development, posting a loss of $3.8 billion in the first quarter of 2023.

The losses have decreased compared to the previous quarter (17% reduction) and the same period last year (3.7% reduction), but the Metaverse remains a significant challenge for Zuckerberg and Meta.

However, this has not deterred Zuckerberg from chasing his ambitious project.

"It's been a good start to the year," Zuckerberg said in the company's quarterly earnings release on Wednesday. "We continue making steady progress building the metaverse as well."

Zuckerberg went on to reassure investors that it is a normal challenge that he has had to face with every of his other products.

“I think it’s worth calling that out, that we’ve historically seen a lot of volatility in our stock during this phase of our product playbook where we’re investing in scaling a new product but aren’t yet monetizing it,” Zuckerberg said. He cited past efforts like short-video service Reels, Stories and the transition to mobile.

The so-called death of the Metaverse isn't the end, but rather the end of its hype phase. Most new technologies from the internet to electric vehicles go through a hype cycle where their proponents make bold promises about what the tech can and will do, but those promises take a lot longer to be fulfilled than expected.

While Meta has shifted its focus from "Metaverse-first" to "AI-first," its efforts in the Metaverse are still progressing quietly.

In the last quarter of 2023, Meta's Reality Labs division achieved a record $1 billion in revenue. In the first quarter of 2023, Reality Labs reported sales of $440 million, a decrease from the previous quarter but a 30% increase compared to the same period last year.