Meta’s metaverse division, Reality Labs, reported its most successful quarter to date in terms of revenue, surpassing $1 billion in the last quarter of 2023. This achievement was primarily driven by strong sales of Meta’s Quest virtual reality (VR) headsets and the Ray-Ban Meta smart glasses, particularly during the holiday season.
While reaching the $1 billion revenue mark is a significant milestone for Reality Labs, the division is still grappling with substantial financial losses. In the fourth quarter of 2023, Reality Labs reported a loss of $4.65 billion, contributing to a total annual loss exceeding $16 billion for the entire year of 2023.
This quarter marked the division’s largest operating loss since the fourth quarter of 2020 when Meta first included Reality Labs’ financials in its reporting.
For the full year of 2023, Reality Labs generated total revenues of just under $1.9 billion, with more than half of that revenue generated in the fourth quarter following the release of the Meta Quest 3. However, the division’s operating losses for the same year reached $16.1 billion, representing a 17.5% year-on-year increase compared to 2022.
Meta’s Chief Financial Officer, Susan Li, reiterated the company’s stance that these losses are expected to increase significantly in the coming year. This projection is attributed to ongoing product development efforts in augmented reality/virtual reality (AR/VR) and investments aimed at expanding Meta’s metaverse ecosystem.
During an earnings call, Meta’s CEO, Mark Zuckerberg, credited Reality Labs’ revenue success to a strong holiday season for its VR headsets, especially highlighting the performance of the latest Quest 3. He emphasized that Meta’s long-term strategy revolves around AI and the metaverse, and the company intends to maintain substantial investments in both areas.
Despite some industry players shifting their focus away from the metaverse, Meta remains committed to its metaverse strategy with Reality Labs. Zuckerberg described the metaverse as the “next frontier” and the “successor to the mobile internet,” expressing strong confidence in its potential. Despite criticism from certain quarters, Meta’s CEO remains steadfast in his vision.
Currently, Reality Labs’ primary focus is on the Quest family of VR headsets, with the Quest app becoming the most downloaded app in Apple’s App Store on Christmas Day.