Meta's Metaverse Division Lost Close to $50B in Five Years

November 3, 4:43 pm

Although Meta bounced back from its 2022 slump after posting earnings of $25.1bn and revenues of $94.8bn in nine months, which surpassed the full-year results of 2022, the company's metaverse division continues losing billions of dollars.

According to data presented by AltIndex.com, the five-year operating loss of Meta's Reality Labs unit, which develops metaverse-related technologies, has climbed to nearly $50bn.

Reality Labs Nine-Month Operating Loss Jumped by 21% Year-over-Year

Two years ago, Facebook founder and CEO Mark Zuckerberg changed the company's name to Meta, declaring the metaverse the next frontier. However, the project, which was supposed to be the company's future, has cost Meta and its shareholders tens of billions of dollars. Even more worrying is that the annual operating loss of Meta's Reality Labs unit, home to metaverse-related technologies, has tripled in five years.

According to Statista and the company's official data, back in 2019, the operating loss of Meta's metaverse division amounted to $4.5bn. Just twelve months later, this figure jumped by 46% to $6.6bn. Statistics show 2021 saw an even bigger increase, with the operating loss growing by a massive 54% year-over-year and reaching a shocking $10.2bn. The negative trend continued in 2022, with the Reality Labs division losing another $13.7bn, or 34% more than a year before.

And while Meta bounced back from its 2022 slump, its metaverse division might be on course to break its own negative record. During nine months of 2023, the Reality Labs unit reported an operating loss of $11.47bn, 21% more than in the year-ago period, pushing the five-year total to a shocking $46.5bn.

Although Zuckerberg expects the metaverse project to grow its company's operating income in the long run, at this point, it's just the opposite, with metaverse investments weighing heavily on Meta's results. Last year, the company's operating margin dropped from 40% to 25%, while its total operating profit plunged by 38% year-over-year to $28.9bn. Despite aggressive cost-cutting measures, Meta still expects Reality Labs' operating losses to continue growing in 2024.

Metaverse to Reach Over 1.1 Billion People by 2025

Although the tech giant has lost tens of billions of dollars on developing the metaverse technology, the Statista survey shows Zuckerberg is shooting for a slice of a large and lucrative business.

According to Statista's forecast, the global metaverse market is projected to reach more than 1.1 billion people in the next two years. By the end of the decade, the number of users will grow to over 2.6 billion. The total addressable market in the conservative scenario, or the revenue opportunity for metaverse products and services, is expected to hit $1.91trn by 2030. In the optimistic scenario, where 35% of the digital economy shifts to the metaverse, this value jumps to $4.44trn.

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