The losses generated by Reality Labs, the entity in charge of developing the metaverse for the Facebook environment, surpassed more than 50% of those registered during the first quarter of last year, which were already over USD 1.8 billion.
Facebook’s parent company, led by Mark Zuckerberg, Meta Platform Inc, recently revealed its balance report for the first quarter of 2022, which presented that its direction for the development of the metaverse ended up in losses registered at USD 2.9 billion for this period.
A Concerning Balance for Meta Reality Labs
The entity in charge of developing the protocols linked to the metaverse is Reality Labs, an address generated by Facebook / Meta to start progressing in this area, which will be the focus of its line of business. The report details that losses caused by the entity surpassed more than 50% of those registered for the first quarter of 2021.
However, the company also increased its revenue margin during this quarter approaching approximately USD 695 million, surpassing by 7% the USD 534 million generated for that same quarter in 2021. Despite everything, this spread does not seem to be successful enough, as the balance report reveals significant losses in this sector.
A crucial aspect to highlight is that much higher expenses would get projected for 2022 at a general level and that Reality Labs is one of the directions that will need more capital.
The report highlighted expectations of 2022 spending to be in the range of $87-92 billion, down from the previous outlook of $90-95 billion. Spending growth in 2022 should get primarily managed by Family of Apps, followed by Reality Labs.
The focus of Reality Labs is the development of virtual and increased reality items and services, with which users can execute various activities at work, entertainment, and communications levels.
Therefore, it is one of the directions in which the greatest expectations of the active company of Facebook get spotted since their great bet for the future connects directly with the metaverse. They will invest vast amounts of capital to make it possible.
Wrong Expectations in the Short Term
These negative results run in parallel with the USD 4,000 million disclosed in losses by the financial director of Meta, David Wehner. He revealed these figures in an earnings report issued in February for shareholders. He highlighted that a good part of that capital got invested in recruiting employees, R & R&D services, and the cost of certain items.
Although the vision is more positive in the long term, there are many concerns about the costs and adjustments that the company must apply to assume the expenses that will come before having an item already active.
The Meta team would take almost half of the profits of any item traded in the metaverse. This action points directly at transaction fees since the collectibles get produced by the community members, generating discontent among these for the high commissions that it would mean for them to carry out commercial operations.
By: Jenson Nuñez
