Meta Platforms will stay the course in 2023 with investment in its metaverse division Reality Labs expected to account for 20 per cent of its overall expenses amid growing scepticism of CEO Mark Zuckerberg’s decision to focus on the nascent sector.
Reality Labs CTO Andrew Bosworth noted in a blog post yesterday the company planned to spend about as much on the metaverse division next year as it did this year, despite a reported a loss from operations of $9.4 billion through the first nine months of 2022.
In a research note, Radio Free Mobile’s Dr Richard Windsor said he recently estimated Meta’s expenses in 2023 will be around $97.3 billion, meaning that spending on the Metaverse is expected to be $19.2 billion.
“This is a vast amount of money to spend on a technology that might take off at the end of the decade leading me to think that this is also an insurance policy,” wrote Windsor. He added the move is “almost certain to hit earnings hard in 2023.”
The Reality Labs unit posted losses of $3.7 billion in Q3, up $1.1 billion year-on-year, as the company invested 18 per cent in the metaverse division in that quarter.
“Economic challenges across the world, combined with pressures on Meta’s core business, created a perfect storm of scepticism about the investments we’re making,” Bosworth stated.
About 80 per cent of the company’s investments will go towards Meta’s “family apps” that include Facebook, Instagram, WhatsApp and Messenger. Those apps accounted for roughly $32 billion in profit during that same period.
Zuckerberg (pictured) announced in 2021 that Facebook had changed its corporate name to Meta Platforms, but a large number of shareholders stated this year they’ve lost faith in that decision to focus resources on metaverse products and services.
He announced in November that the company would cut around 13 per cent of its global workforce, which amounted to more than 11,000 jobs.