Image: Meta/Instagram Mark Zuckerberg
Meta reports growing losses in its VR division, despite overall success. Zuckerberg bets on Roblox and better customer retention.
Despite weak quarterly results from Meta’s VR division, Mark Zuckerberg is confident in his long-term vision for the Metaverse. “I think the world is moving in this direction,” the Meta CEO said at an investor meeting, though he could not guarantee that his “bet” on the technology’s success would pay off.
Meta continues to invest heavily in its long-term VR strategy. VR division Reality Labs lost $3.7 billion in the second quarter of 2023, up 33 percent from $2.8 billion in the same quarter last year. Revenue fell 39 percent to $276 million in the second quarter of 2023, down from $452 million in the second quarter of 2022.
Metaverse strategy shaped by incoming Quest 3
The latter is not surprising, as Meta is about to release Quest 3. The launch of the new VR headset will bring a lot of expenses, Zuckerberg said, citing lower sales of Quest 2 as the main reason for the revenue drop. Meta plans to unveil Quest 3 at its Meta Connect conference, which begins on September 27. An exact launch or shipping date has not yet been set.
CFO Susan Li already prepared investors in the call for increasing losses at Reality Labs. These are expected to rise significantly year-over-year due to “ongoing product development efforts in AR/VR and our investments to further scale our ecosystem.”
User retention is the current focus of the division. In this regard, Zuckerberg mentions that the social building world of Roblox will be coming to the App Lab in an open beta for Quest 2. The team is also focused on improving engagement with the company’s own social VR app, Horizon Worlds, which hasn’t seen much success.
Another way to make VR worlds more appealing to users is to make 3D avatars ubiquitous. In the future, the same avatars will be available in virtual reality as in other Meta applications such as Facebook or Instagram.
Positive quarterly results for Meta
Overall, Meta continued to deliver strong results. Second quarter revenue grew 11 percent year over year to $32 billion. During the same period, profits jumped 16 percent to $7.8 billion. Wall Street responded positively: Meta’s stock was up six percent after trading hours.
“The investments we’ve made in AI over the years, including the billions of dollars we’ve invested in AI infrastructure, are clearly paying off in our ranking and recommendation systems, improving engagement and monetization,” Zuckerberg said.
As of July, Meta also owns the fastest growing online platform in history. In just five days, more than 100 million users have joined the Twitter alternative “Threads,” according to Forbes. On July 18, Meta also released the free open-source language model Llama 2 as a competitor to ChatGPT.
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