Meta XR Operating Losses: Reality Labs Unit Reports $3.7 Billion in Q2

Meta’s Reality Labs unit, responsible for developing virtual reality (VR) and augmented reality (AR) technologies, has reported a staggering $3.7 billion operating loss in the second quarter of 2023. Despite this, the unit still managed to generate $276 million in sales, significantly lower than the first quarter’s $339 million. Analysts had projected sales to reach $421 million, resulting in $3.5 billion in operating losses.

The news of the losses sent Meta’s shares up by 5%, likely due to the 11% increase in revenue from advertising, as well as the company’s optimistic sales forecast for the third quarter. It’s clear that Meta remains primarily an advertising company, despite the hefty expenses incurred.

Meta’s Reality Labs Unit Experiences Total Loss of $13.7 Billion

In the previous year, Meta’s Reality Labs unit experienced a total loss of $13.7 billion, while generating $2.16 billion in revenue. These figures were influenced by the sales of the company’s VR headsets under the Quest brand. During the first quarter, the unit’s losses amounted to $3.99 billion, bringing the total losses to a whopping $21.3 billion since the beginning of last year.

Meta Quest+ Subscription Service and Quest 3 Headset

Meta anticipates a significant increase in operating losses for its Reality Labs unit due to ongoing product development in the VR/AR space and investments in scaling their ecosystem. The company recently launched the Meta Quest+ VR subscription service, priced at $7.99 per month, in June. This service is compatible with Meta’s Quest 2, Quest Pro, and upcoming Quest 3 headsets. Subscribers gain access to two new VR games every month for the duration of their active subscription.

In June, Meta CEO Mark Zuckerberg revealed details about the Quest 3 headset, just days before Apple’s announcement of its Vision Pro VR and AR headset. The Quest 3, which is expected to be 40% thinner than the Quest 2 and equipped with a next-generation Qualcomm chipset, will launch with a starting price of $499. In contrast, Apple’s Vision Pro headset is projected to cost $3,499 upon its release in 2024.

Conclusion

Meta’s Reality Labs unit has experienced a substantial operating loss in the second quarter of 2023, amounting to $3.7 billion. Despite this, the unit still managed to generate $276 million in sales, and Meta’s shares rose by 5% following the announcement. The company is investing heavily in product development and scaling their ecosystem, with the launch of the Meta Quest+ subscription service and the upcoming Quest 3 headset. The Quest 3 is expected to launch with a starting price of $499, while Apple’s Vision Pro headset is projected to cost $3,499 upon its release in 2024.