Mark Zuckerberg said his company bet everything on the Metaverse last year. On Wednesday he showed how much he had to spend for it.
Meta, the company Mr. Zuckerberg founded as Facebook, said its Reality Labs division, which makes virtual reality glasses, smart glasses and other yet-to-be-released products, will spend more than $10 billion in building the business in 2021 lost dollars. These products are key to Mr. Zuckerberg’s vision of the Metaverse, a next-generation Internet where people would share virtual worlds and experiences across diverse software and hardware platforms.
It was the first time that Meta disclosed the results of its hardware division. In the past, the company hasn’t broken out those numbers because products like virtual reality headsets accounted for only a small portion of its overall business, which depends on social media and digital advertising. The $10 billion investment in the Metaverse is more than five times the amount of money Facebook paid to buy the Oculus VR business in 2014 and ten times what it paid to buy Instagram in 2012.
The expenses hurt the company’s quarterly profit, which fell 8 percent year-over-year to $10.3 billion. Meta’s shares plummeted about 22 percent in after-hours trading.
“We had a solid quarter, with people turning to our products to stay connected and businesses continuing to use our services to grow,” Mr. Zuckerberg said in a statement. “I’m encouraged by the progress we’ve made over the past year in a number of key growth areas including reels, commerce and virtual reality, and we will continue to invest in these and other key priorities in 2022 as we work towards building the Metaverse. ”
The revelations illustrate just how much Meta is pushing in a new direction. In October, Mr. Zuckerberg announced that he plans to spend big on the Metaverse in the coming years, a big shift for a company mired in endless controversy on social media with misinformation and hate speech. Since then, Meta has embarked on a profound internal transformation, restructuring itself and pushing employees to join the augmented reality and virtual reality teams.
Meta is in a full-throttle race against other tech giants to gain ground in the theoretical metaverse. When Microsoft announced last month that it would buy 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 doesn’t produce virtual reality games. Google has also been working on Metaverse-related technologies for years, and Apple has its own devices in the works.
Funding Meta’s expansion into the Metaverse was the core business of advertising, which continued to grow. The company said revenue for the three months ended December rose 20 percent from the same period last year to $33.7 billion. Wall Street analysts had forecast earnings of $10.9 billion on sales of $33.4 billion.
The company also announced plans to change its stock ticker so that its shares trade under the symbol META on the Nasdaq Stock Exchange instead of FB.