Meta, the firm that used to be Facebook just released its full-year financial statistics for 2021. Reality Labs, the company’s augmented/virtual reality branch, claimed a 100% increase in revenue over 2020, but a nosedive in operational losses.
In 2021, Reality Labs produced $2.2 billion in revenue, with almost $1 billion coming from the Oculus Quest Store’s software sales. Reality Labs, on the other hand, faced a $10.2 billion operational loss, according to GamesIndustry.biz. This is a significant increase from $6.6 billion in 2020 as well as $4.5 billion in 2019.
The findings of Meta’s hardware section were presented for the first time. Previously, the firm did not break out such figures since virtual reality headsets were a minor portion of its total business, which is heavily reliant on social media and digital advertising. ‘
Putting $10 billion in the metaverse is significantly more than 5 times the price Facebook spent for Oculus VR in 2014 and ten times the price Facebook paid for Instagram in 2012.
The expense yanked Meta’s quarterly earnings, which dipped 8% to $10.3 billion ended in December, despite sales rising 20% to $33.7 billion. Wall Street experts projected a return of $10.9 billion on $33.4 billion in sales.
Simultaneously time, the company stated its social networking operations, like Instagram and Facebook, were being impacted by various shifts implemented by competitors. Apple’s modifications to its mobile os, which made it harder for applications to follow iPhone users’ digital habits last year, are projected to affect Meta’s financial performance, the company claimed.
The change has had an impact on social media businesses since it has limited the amount of data they can use to provide users targeted ads. According to Meta, the adjustments will cost the company around $10 billion in ad sales this year.
The increased spending on the metaverse, as well as the impact of Apple’s modifications, have come together to make the shift to Meta for Facebook a challenging one. The numbers were out of the ordinary for a firm that has consistently delivered great financial results despite privacy, disinformation, as well as other toxic content issues for years.
In after-hours trading on Wednesday, Meta’s stock plummeted 22% in reaction to the release of the results.
“It is time for a reality check on Meta’s position for the metaverse,” said Raj Shah, a technology analyst for Publicis Sapient, a digital consultancy firm. “The metaverse is a long way from being profitable or filling the gap in ad revenue after Apple’s policy change.”
In a conference call with investors following the release of Meta’s findings, Meta’s CEO, Mark Zuckerberg, seemed to admit the issues. “Although our direction is clear, it seems that our path ahead is not quite perfectly defined,” Mark said.
For years, Meta has worked to distance itself from social networking scandals including disinformation and hateful speech, and to become less reliant on Apple, which controls the majority of iPhone users. So, in October, Zuckerberg declared that his firm will be taking a new direction into the metaverse.
He changed the name of Facebook to Meta. Since then, the firm has undergone a major internal transition, restructuring itself and encouraging staff to join groups working on virtual and augmented reality.
