Meta’s VR Albatross

Mark Zuckerberg is burning billions of dollars on Meta’s virtual reality platform with no sign of payoff in sight.

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(Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

Facebook parent company Meta notched $23 billion in profit in 2022 despite one glaring problem in its 2022 financials: a loss of $13.7 billion on its virtual reality division.

CEO Mark Zuckerberg has long wanted virtual reality to be the new crown jewel of his tech empire, but big-ticket investments in the division coupled with low usership and user retention raise the question of whether Zuckerberg’s hope is a miscalculation of the marker. 

The multibillion-dollar loss isn’t anything new nor is it expected to stop anytime soon—Meta’s virtual reality division, Reality Labs, lost $10.2 billion in 2021, and Meta’s 2022 third quarter report said the company expects “Reality Labs operating losses in 2023 will grow significantly year-over-year.” 

Zuckerberg signaled his interest in the virtual reality world back in 2014, when Meta—then Facebook—purchased Oculus, a virtual reality headset and software company. His growing interest in the metaverse—an expansive interactive virtual world in which users can essentially carry out their lives online—became apparent with the launch of Reality Labs in August 2020 and with the October 2021 announcement that the company was changing its name from Facebook to Meta. “Over time, I hope we’re seen as a metaverse company,” Zuckerberg said at the time.

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  1. Avatar photo
    Show Jay Janney the 🚪!

    The technology isn't there yet. I own a few pair of audio eyeglasses (mine are prescription). I love them. the sound is not as good as high end headphones, but I prefer them to ear buds. I pair mine with my pc, so I get lots of notifications.

    I bought a pair for my MIL, who is basically deaf. We put a bluetooth receiver in her church's pa system, and she can hear it so much more clearly now. She loves it. Around home, they work great for the TV, other than they run out of juice after a few hours.

    When VR helps people adapt in a non intrusive way, they'll be very popular. It just needs its killer app.

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    Mattjabour

    Well, it was mighty nice of Facebook to cut its own legs off so we wouldn't have to worry about them effectively taking over the world. On the other hand, a while lot of dystopian novels are now hopelessly outdated.

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    Robert Knudson

    VR will have to be exciting and gamelike to succeed; I know enough people who have constructed their own alternate reality around various aspects of their day to day lives without a VR headset to know that other uses don't make sense.

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  4. Pishposh

    Give it time. I have a sneaking suspicion it will eventually pay off. Amazon used to be a roundly repeated joke for never being able to turn a profit... Now I can't imagine living without it.

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    Shawngallagher

    Sadly it won't be a money making effort until they adapt it to pornography. That's usually how it works.

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    1. Avatar photo
      Probably Wrong

      “Until” implies a belief that this hasn’t already occurred

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    Trevor Reid

    The whole VR thing is just somewhere between boring and icky…fine for an amusement park ride once in a while, but not as a daily replacement for work, food, nature, personal interaction…life. The whole thing seems incredibly tedious. Not interested. Seems like no one else is either.

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  7. MathewA

    I believe VR will eventually have a big future. But as noted, it's going to be in games. Things like World of Warcraft but with better VR graphics could be a HUGE hit. That's something people would pay for. They want to really feel like they are fighting a dragon, or throwing a fireball.

    You could get similar buy-in for a VR version of Modern Warfare/Call of Duty etc

    And of course VR porn is going to be huge.


    You don't need to reinvent the wheel here. Take the kind of activities people are already doing, just make them better and more immersive with VR. That's the golden ticket.

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    1. Avatar photo
      Jeremiah

      As someone who plays games in VR yes they are going to be where it's at. I don't want a Zoom call in VR. I do want a racing game in VR.

      That said there are developers who do just VR now and they have very quickly found that you can't just make a game VR and have it work. It only has any value for very specific types of games, and while I suspect that their are entirely new types of experiences we have yet to see it still will not replace anything we have now.

      We will add VR to our collection but it will not replace any of our current gadgets. Gameboy did not replace playing games on your TV. Now we have handheld, TV, phone and VR games.

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  8. Avatar photo
    Pat Riot

    Can somebody with technical knowledge explain to me why the thing's games look like they are from the 1980s? People are used to even greater levels of hyper-realism, right? Why the giant step backwards?

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    1. Avatar photo
      Probably Wrong

      If your consumers all need fancy hardware, a big open space to wave their hands around in, a good level of fitness, and a certain tolerance for motion sickness, then your user base is necessarily limited. It’s not always gonna be worth the effort to make the fanciest or prettiest game ever if doing so will even further restrict the number of people who can buy or play the thing by adding a huge PC power requirement - and Beat Saber is still fun even with a simple concept.

      But there are some high end games out there. Just because the economics don’t always work out right now doesn’t mean the tech can’t do it.

      https://youtu.be/TGb2vU1Pffk

      https://youtu.be/77AWKWjRePI

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    2. Avatar photo
      Jeremiah

      Part of it is technical. You are rendering not for one screen but two (one for each eye) and they have to refresh 120 frames a second (most console games run at around 60). So right out the gate you need more than four times the processing power to get remotely comparable graphics.

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      1. Avatar photo
        Pat Riot

        I get that we've had to wait for stuff to ramp up in the past, the I suspect the problem they are up against is that the technology on plain old computer screens is so much better. I don't recall a new technology where we've had to initially go backwards like this.

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        1. Avatar photo
          Jeremiah

          Look at 3D games. If you've seen any of the original PlayStation or Nintendo 64 games they are pretty terrible looking. Compare to the height of the Super Nintendo and Sega Genesis visually and realize that the move to 3D while cool was not better looking. We have the same issue with VR. Games that embrace an actually interesting art style that demands less of the processer are actually very good right now. While any VR game going for "photorealism" looks awful.

          That said you are right, the technology for regular games on regular TVs has the benefit of a few decades of polish not all of which carry over to VR.

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          1. Libertyforallusa2

            This is a really good point. Stylized graphics tend to hold up better over time than realistic graphics.

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    3. Ken B

      It's a consequence of the big step forward to not have to be wired to a PC. There's only so much compute power they were able to put into the headset itself.

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        Pat Riot

        Seems like a problem that would hinder adoption...

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  9. Avatar photo
    Michael McGuire

    A pretty good summary but missing a sort of elephant in the room when it comes to VR: Apple.

    Apple’s long awaited VR/AR entry is currently rumored to be launching this summer at their development conference. If any one has a history of making niche products mainstream, it’s Apple.

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    1. Avatar photo
      George.Skinner

      I'm curious to see what Apple comes out with. They usually don't release a new product unless it's actually useful and actually works well. I'm guessing that it's going to lean more on the AR aspect though - you can already see elements in the past few generations of iPhones, and would likely yield some real productivity benefits vs. the entertainment focus of VR.

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        Michael McGuire

        Yeah, I think the “real” product they want to release can’t exist now (futuristic AR glasses) but they have to start somewhere.

        It will be an interesting few years for those interested in the space (like me!)

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  10. Avatar photo
    George.Skinner

    One of the headwinds for this type of project is we’ve recently been through a pandemic that forced everybody into a heavy reliance on virtual interactions with other people. People discovered they didn’t really like it that much, and craved the reality of being with others in person. Zuckerberg is basically trying to do the equivalent of operate an expensive food truck outside selling to bloated customers leaving an all-you-can eat buffet.

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    1. Clark.Monson

      I think this is a very underdiscussed point. We've lived our lives online--it sucked, and most people don't want to pay for the punishment.

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      1. Avatar photo
        Joe.Elwell

        But what most people DO seem to want is to be able to work from home, and therefore, via a virtual experience of some kind. This is one area that VR might be able to penetrate in the future, once the googles become less burdensome. The loss of water cooler encounters, as well as the ability to have a quick ad hoc convos ('hey john, what did we decide on x?') that just aren't as easy now virtually, even with Slack, etc.

        But it does seem amazing that Meta hasn't focused more on the DICE angle - that's what I'd be willing to strap on a headset for, even now.

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    2. MathewA

      Games like World of Warcraft have 10 million plus fees paying users. The interest is there, you just need to make the right games, and make them REALLY good.

      When I used to play it was usually 3-4 hours a night pretty much every night.

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        George.Skinner

        That basically falls into the DICE ( dangerous, impossible, counterproductive, or expensive) category described in the article as the market for VR. The problem is Meta keeps focusing on getting you to browse social media or have chats and meetings with VR.

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        1. Avatar photo
          DougCLE

          One thing that I would pay money for in a meeting is the ability to have virtual space, so I could get up and move around and "whisper" to the guy next to me while the main presenter discussed other things.

          I do a lot of online meeting these days, and I find the biggest problem is that only one person in the room can talk at a time. This is fine for a presentation, but I think in most meetings you'll find little groups of people whispering questions and clarifications to each other throughout. Likewise for when the meeting breaks into little task groups that may still need to confer with each other. This needs to be able to be accomplished intuitively, not through those clunky "breakout rooms", and it seems like VR - paired with an algorithm that reduces volume the further (virtually) that you are away from the speaker - would be the perfect approach for this.

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            George.Skinner

            I’ve been using the chat function in Teams and Zoom for that - you can message one or a few people directly without engaging the whole group. But yeah, I find there are a lot of things lacking in a virtual meeting space vs a physical meeting, and even the digital analogs are sometimes lacking. The virtual whiteboard just isn’t the same as sketching out diagrams or ideas on a real whiteboard, for example. You also miss a lot of body language and facial cues.

            One other thing I’ve noticed is this may be a generational thing. Younger member of the organization are more digitally native than me and my generation, and seem to adapt better to a virtual environment. One example would be how I still get a lot of value out of being in the same physical office for brief, informal meetings and interactions. They do the same thing via chat almost instinctively.

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        2. MathewA

          Yeah. Why bother with that

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