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Meta (the company formerly known as Facebook) reported that its virtual reality game, app, and hardware business generated $877 million in revenue in the fourth quarter, up from $717 million a year earlier.
But it’s clear what the company means when it says VR is an investment, as the division lost $3.3 billion in the quarter, compared to a loss of $2.09 billion in the fourth quarter a year earlier.
Meta broke out its virtual reality division — Meta Reality Labs — for the first time and showed how the business is growing over time. Mark Zuckerberg, CEO of Facebook, announced in October that the company was changing its name to Meta and it was investing (i.e., losing) more than $10 billion a year in the metaverse, or the next generation of computing. Meta also changed the company’s Oculus Quest 2 VR headset name to Meta Quest 2, and its division is called Meta Reality Labs.
Zuckerberg disclosed those numbers and made those changes to show just how serious the company is about the metaverse, the universe of virtual worlds that are all interconnected, like in novels such as Snow Crash and Ready Player One.
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A screenshot from Mark Zuckerberg’s press briefing in the metaverse from Reuters on YouTube (https://www.youtube.com/watch?v=ugTxyXB6yOo)
And clearly, the fourth quarter was a highwater point for sales of Meta Quest 2 headsets and the accompanying games and apps.
Overall, Meta’s other businesses such as Facebook, Instagram, and Messenger are generating a lot of revenues and profits to finance the investment in the metaverse. Overall, Meta reported net income of $15.9 billion on revenue of $32.8 billion for the fourth quarter ended December 31.
David Wehner, chief financial officer at Meta, said in a statement that the company expects 2022 capital expenditures, including principal payments on finance leases, to be in the range of $29 billion to $34 billion, unchanged from the company’s prior estimate.
“Our planned capital expenditures are primarily driven by investments in data centers, servers, network infrastructure, and office facilities,” Wehner said. “As we discussed previously, this range reflects a significant increase in our artificial intelligence and machine learning investments, which will support a number of areas across our Family of Apps. While our Reality Labs products and services may require more infrastructure capacity in the future, they do not require substantial capacity today and, as a result, are not a significant driver of 2022 capital expenditures.”
Back in 2020, Reality Labs generated a net loss of $6.62 billion on revenue of $1.14 billion for the full year.
In 2019, the company generated a loss of $4.5 billion on revenue of $501 million. That means that the revenues per quarter have been growing.
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