Meta spent $10 billion on the metaverse in 2021, dragging down profit.
Mark Zuckerberg said his company was going all in on the metaverse last year. On Wednesday, he showed how much he had to spend on it. Meta, the …
Mark Zuckerberg said his company was going all in on the metaverse last year. On Wednesday, he showed how much he had to spend on it.
Meta, the company that Mr. Zuckerberg founded as Facebook, said that its Reality Labs division, which makes virtual reality goggles, smart glasses and other yet-to-be-released products, lost more than $10 billion in 2021 as it built the business. Those products are key to Mr. Zuckerberg’s vision of the metaverse, a next generation of the internet where people would share virtual worlds and experiences across different software and hardware platforms.
It was the first time that Meta revealed the results of its hardware division. In the past, the company has not broken out those numbers because products like virtual reality headsets were a small part of its overall business, which is dependent on social networking and digital advertising. Investing $10 billion in the metaverse is more than five times the amount of money Facebook paid to purchase the Oculus VR business in 2014 and 10 times what it paid to buy Instagram in 2012.
The spending dragged down the company’s quarterly profits, which decreased 8 percent, to $10.3 billion, from a year earlier. Shares of Meta’s stock plunged about 22 percent in after-hours trading.
“We had a solid quarter as people turned to our products to stay connected and businesses continued to use our services to grow,” Mr. Zuckerberg said in a statement. “I’m encouraged by the progress we made this past year in a number of important growth areas like Reels, commerce and virtual reality, and we’ll continue investing in these and other key priorities in 2022 as we work towards building the metaverse.”
The disclosures illustrate how much Meta is pushing in a new direction. In October, Mr. Zuckerberg announced that he planned to spend heavily on the metaverse in the years ahead, a big shift for a company that has been mired in endless social networking controversies involving misinformation and hate speech. Meta has since embarked on a sweeping internal transformation, restructuring itself and pushing employees to join the augmented reality and virtual reality teams.
Meta is in a full-throttled race against other technology giants to claim ground in the theoretical metaverse. Last month, when Microsoft said it was buying the video game maker Activision Blizzard for nearly $70 billion, the software maker cited the deal as a building block for the metaverse, even though Activision does not produce virtual reality games. Google has also been working on metaverse-related technology for years, and Apple has its own devices in the works.
Funding Meta’s expansion into the metaverse was its core advertising business, which continued to grow. The company said revenue rose 20 percent in the three months ending in December, to $33.7 billion, compared with the same period a year earlier. Wall Street analysts had predicted a profit of $10.9 billion on revenues of $33.4 billion.
The company also announced plans to change its stock ticker so that its shares would trade under the symbol META on the Nasdaq Stock Exchange instead of FB.