Mark Zuckerberg’s Metaverse meltdown: Meta’s Reality Labs has lost $21 billion in roughly 18 months

In the social media company’s second-quarter earnings, it reported its Reality Labs unit, which oversees the VR and AR (Augmented reality) technologies that go hand in hand with the metaverse, lost $3.7 billion.

That brings its losses since the beginning of 2022 to $21.5 billion—and its overall losses (since the fourth quarter of 2020) to just shy of $34 billion.

Despite the losses, CEO Mark Zuckerberg remains “fully committed” to the Metaverse and AI, calling them both “major priorities” that overlap and are complementary. And he indicated he’s not worried about the low engagement numbers for Horizon Worlds, the metaverse manifestation that has, so far, fallen flat.

“For Horizon, the team is focused on retention right now and we’re making good progress on that,” he said in an earnings call Wednesday. “We made big improvements on avatars as well and that’s going to be a bridge between our mobile apps and our VR and mixed reality experiences.”

Zuckerberg also touted the forthcoming Quest 3 VR headset, saying it “seamlessly blends your physical world and the virtual one by intelligently understanding the physical space around you.”

The losses aren’t expected to end anytime soon and, in fact, will likely get much worse, the company warned.

“For Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and investments to further scale our ecosystem,” it wrote in its earnings release.

As Meta continues to sink money into the its metaverse initiative, people who have spend time in Horizon Worlds haven’t stuck around, even Meta employees. And the founder of Oculus, who sold his VR startup to Meta in 2014 has lambasted Horizon, saying, “I don’t think it’s a good product”.

Horizon Worlds saw a peak of about 200,000 active users in late December. Meta was hoping to hit 500,000 by the end of June, but did not give an update on the user count in its earnings report.

As part of that effort, the company has reportedly considered lowering the age requirement from 18 to 13. Government officials have warned the company against doing that, citing the company’s “documented track record of failure to protect children and teens”.