Meta Reportedly Cuts Metaverse Budget by 20% as Q2 Earnings Call Looms

Meta Reportedly Cuts Metaverse Budget by 20% as Q2 Earnings Call Looms

Meta will reportedly cut the budget of its Reality Labs, the division responsible for developing the company’s metaverse hardware and software, by about 20% between now and 2026. This comes via a report from The Information and aligns with recent indications that Meta plans to shift Reality Labs into production mode ahead of several high-profile hardware launches slated over the next couple of years. Analysts for Bank of America opined that the cost-cutting measures would net Meta a savings of about $3 billion.

Q1 2024: A Closer Look

The timing of the cost-cutting measure should come as no surprise to insiders. Meta’s next earnings call comes on July 31 and analysts predict similar numbers to Q1 when the company posted $36.45 billion in revenue, up 27% over 2023. Reality Labs, however, posted a $3.8 billion loss for the quarter. Though some of those losses may not have been related to the company’s endeavors in the metaverse space.

CEO Mark Zuckerberg told investors during the company’s Q1, 2024, earnings call that “an increasing amount of our Reality Labs work is going toward serving our AI efforts.

2024 and Beyond: Future Plans and Expectations

It’s possible the recently announced cost-cutting measures could simply account for a realignment of the division’s efforts with the potential knock-on effect of pleasing investors looking to stem the tide of cash pouring into Reality Labs. To date, the division has lost somewhere around $55 billion since 2019.

While this may be Zuckerberg’s first indication that he’s willing to rein in Reality Labs, the ultimate fate of the division likely lies in whether or not the mainstream consumer market opens up for the next generations of VR and AR products.

The company intends to launch the next generation Quest VR headset and Ray-Ban smart glasses with a visual component as well as a wrist-worn “neural interface” over the next few years. There’s also a prototype full-holographic headset in the works, but it’s unclear whether that’ll launch within the same time frame.