Meta Announces Second Quarter Operating Loss of $2.8 Billion for its Metavers Division

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Meta’s second quarter results showed us that Mark Zuckerberg’s view of the metaverse is still very expensive. And losses in the VR division reached $2.8 billion in the second quarter, even as sales of virtual reality hardware and software continue to grow.

Meta has started releasing the results of its Reality Labs division (formerly known as Facebook’s Oculus division) to give investors an idea of ​​how much it is investing in the next version of the Internet, or metaverse, the universe of virtual reality. worlds that are all interconnected, like in novels like Snowfall and Borrow player one.

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Yesterday, the company reported some bad news (for virtual reality software companies, at least) when it announced it would increase the prices of its Meta Quest 2 VR headsets by $100 each on August 1. It also increases the prices of peripheral products.

meta Reality Labs generated $452 million in revenue for the second quarter ended June 30, compared to $305 million a year ago and $695 million in the first quarter. The loss for the quarter was $2.8 billion in the second quarter, compared to a loss of $2.4 billion a year earlier and $2.96 billion in the first quarter.

Total net income was $6.69 billion on revenue of $28.8 billion in the second quarter, compared to net income of $10.4 billion on revenue of $29.1 billion a year earlier. Analysts had expected a net profit of $7.03 billion on $28.9 billion. Meta’s daily active users were 1.97 billion, up 3% from a year ago. Every month, Meta’s platforms reach more than three billion people.

“The Metaverse is a huge opportunity for a number of reasons,” Zuckerberg said during the analyst call. “It creates a deeper social experience where you feel a realistic sense of presence with other people, whatever you’re doing,” whether it’s gaming or meeting.

Il a déclaré que la société dépensait de l’argent pour la construire de manière à ce qu’elle soit la meilleure plate-forme possible, sans les contraintes que “nos competitors nous imposent”, c’est-à-dire Apple et ses cost. Zuckerberg said the metaverse could unlock hundreds of billions of dollars or trillions of dollars over time.

He said it was obviously very expensive, but the Metaverse will be important to the way we live, and he’s happy to play a part in creating it.

He said the company plans to launch a web-based version of its Horizon social metaverse platform later this year, and the company is hearing good things about Project Cambria hardware coming later this year.

In terms of guidance, Meta said it expects Reality Labs revenue in the third quarter to be lower than in the second quarter. The price increase probably won’t help with that.

Meta CEO Mark Zuckerberg shows off the Holocake 2 VR prototype.

Zuckerberg has publicly said there are “probably a lot of people in the business who shouldn’t be here,” indicating that VR losses and a slowdown in wider business are starting to hurt. The company imposed a staff freeze amid declining ad revenues as a result of Apple’s privacy policy. And TikTok has become very competitive with Meta in the short video market. On this front, Meta is fighting back with his short Reels videos.

“It was good to see a positive trajectory in our engagement trends this quarter, coming from products like Reels and our investments in AI,” Zuckerberg said in a statement. “We are devoting more energy and focus to our top business priorities that unlock short- and long-term opportunities for Meta and the people and businesses that use our services.”

As of August, Meta Quest 2 will cost $400 and $500 for the 128GB and 256GB versions, respectively. And for a limited time, every purchase of a new headset will include an offer to download the popular VR rhythm game Beat Saber for free. In addition to these changes, Meta will also increase the prices of Meta Quest 2 accessories and refurbished units.

The workforce was 83,553, down from 77,805 on March 31. The number of 83,553 is 32% higher than a year ago. During an earnings call, Zuckerberg said the economic downturn and its potential impact on advertising looked worse than it did a quarter ago. And he said the goal was to steadily reduce the workforce over the next year.

“It’s a time that requires more intensity and I expect to do more with fewer resources,” he said.

But the company said it is not giving up on its optimism around virtual reality. Zuckerberg said the company is moving the technology waves of AI and the metaverse.

In other news, the Federal Trade Commission has filed a lawsuit to block Meta’s proposed acquisition of virtual reality company Within, maker of subscription-based VR workout app Supernatural.

Colin Sebastian, an analyst at RW Baird, said in an email to GamesBeat that Zuckerberg is convinced that the next era of computing will be virtual reality and the metaverse, which is a potential thread for Meta, but also a huge opportunity.

“I don’t know how much it cost Apple to specify, design, build and launch the first iPhone and the first mobile operating system (iOS), but Steve Jobs had the vision and resources to lead us in the wave of mobile computing. “Mark certainly has the resources, but it’s not clear yet if he has the right vision or if his gamble will pay off in terms of commercial success. That said, we like companies that take risks, rely on top tech talent, and are conditioned to innovate.

He noted that this is how Google can continue to grow, even though it is already the largest media and advertising company in the world.

“Right now, during a macroeconomic downturn, it’s a tough trade-off because investors prefer companies that maintain margins and cash flow, rather than investing in speculative projects,” Sebastian said. “It’s worth it, given the size of the stakes, but we’d also like to see Reality Labs held accountable for expenses, such as hitting certain milestones.”

Meta’s VR headset prototype wall.

Wedbush analyst Michael Pachter said in an email to GamesBeat: “They clearly think the metaverse will be huge and they clearly think they will dominate. I agree with the first, but the second is hard to predict because they can look like AOL trying to dominate the internet. However, if they don’t invest, they have no chance of winning.

The Oculus mobile app has so far had just over 20 million installs worldwide from the App Store and Google Play, according to measurement firm Sensor Tower.

The app saw its highest ever installs in a single month when it reached about 2.8 million in December 2021. This contributed to the record increase in quarterly installations in the fourth quarter of 2021, as shown in the table below. Since that record quarter, adoption of the Oculus mobile app has declined quarter-over-quarter; however, it still surpasses its facilities from a year ago, Sensor Tower said.

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