Reality Labs, a division of Meta Platforms Inc., is pioneering the development of innovative augmented reality (AR) and virtual reality (VR) technologies. The division is in charge of many cutting-edge products, such as the well-known Quest headsets, Meta Avatars, Horizon, smart glasses, and the creation of AR glasses and their neural wristband input device.
While industry analysts predicted sales of around $299.3 million, Reality Labs reported $210 million in revenue for the third quarter of 2023. With costs totaling $3.95 billion, the division faced a $3.7 billion loss. This pattern of high costs relative to revenue has been constant, resulting in more than $11 billion in losses since the start of the year.
The Reality Labs division’s performance was significantly lower than anticipated. The revelation also emphasizes how expensive Meta Platforms Inc.’s ventures into augmented reality (AR) and virtual reality (VR) have been.
Meta’s Quest 3 VR Headset: A Technological Leap Forward in the Pursuit of the Metaverse
Despite these significant financial losses, Meta Platforms Inc. is unwavering in its commitment to bringing the metaverse to life. The Quest 3 VR headgear, which debuted in September, is one of the most recent instances of Meta’s dedication. The Quest 3 VR Headset, positioned as the technologically advanced replacement for the Quest 2, has an improved “passthrough” capability that creates a more immersive mixed-reality experience.
However, the cost of the Quest 3 VR Headset has generated considerable buzz. The headset costs $499, which is more than the Quest 2, which costs around $299. Nonetheless, it is still less expensive than the expensive Quest Pro VR headset, which retails for $3,499.
Comparing its Quest range of headsets to Apple’s impending Vision Pro mixed reality headset, Meta is trying to present itself as a more affordable choice for people exploring VR. It is anticipated to launch at an astounding $3,499 next year.
Reality Labs’ Financial Projections: What to Expect in 2024?
Even though Reality Labs’ losses seem significant, they see it as long-term investments. The XR headsets and the impending AR glasses are examples of emerging technologies that are still in the early stages of development. The research and development of AR glasses account for more than half of Reality Labs’ expenditures, demonstrating the company’s commitment to these cutting-edge technologies.
Meta has maintained a strong overall financial performance despite the losses reported by Reality Labs. Although Meta’s stock price initially fell as a result of the division’s losses, the company’s other results helped offset this impact, and after-hours trading has since seen a slight recovery.
In addition, earlier in the year, the company made major reductions to its staff and streamlined its operations in response to increasing financial pressures. Through these efforts, they hope to improve their algorithms and fortify their advertising capacities by using artificial intelligence.
Ultimately, Reality Labs is playing the long game with hopes that their efforts will pay off in the long run. Reality Labs’ considerable “losses” are likely to continue in 2024, owing primarily to continuous product development and efforts to scale the ecosystem. These developments are most likely related to the planned AR glasses and perhaps future Quest headset models.