Meta promises further metaverse investment - Main 1

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Professional and casual Meta Quest users can expect to see more improvements to their headsets, new content and better executed business-focused apps, and next-generation hardware

Quick read

➨ Meta’s Reality Labs earned around $2.27 billion last year
➨ Mark Zuckerberg committed to further investment in the metaverse in 2022
➨ Another company working on a metaverse project is Engage XR—its results are coming in March

The story

Ever since Facebook announced its plans for the ‘metaverse’ and changed its name to Meta last year, we have been waiting for today’s reporting of its 2021 financial results.

The reasons are twofold: the results promised to break down just how much money Meta is making from virtual reality (VR) and other immersive technologies, and reveal whether the company continues to see them as viable investments.

Today is the first time Meta has split the results of its family of apps, namely Facebook, Whatsapp and Instagram, and Reality Labs, the division that oversees augmented reality (AR) and VR hardware, software and content, providing a clear view of revenue.

We already know that Meta has invested a huge $10 billion in Reality Labs, severely hitting the company’s overall operating profit in 2021. With that much skin in the metaverse game—and right now, that means consumer gaming and business use cases such as training and collaboration—what impact would a poor performance for Reality Labs have on Meta’s desire to go another round?

Well, Reality Labs earned around $2.27 billion last year.

Compared to the revenue earned from its apps, this figure is relative pocket change for Meta. However, it is the clearest indication yet of the potential of VR and AR and its current popularity, particularly when pitted against earnings from previous years.

Meta’s Reality Labs recorded revenues of $1.14 billion and $501 million in 2020 and 2019, indicating a huge increase as the pandemic took hold and lockdowns came into effect around the world.

That doubling of growth continued into 2021, earning Meta $2.27 billion last year and as the company continues to enhance Quest with useful business tools and prepares to release its next-generation headset—not to mention updated avatars.

Meta promises further metaverse investment - Avatars
Meta recently issued an update to the avatars to be used across its apps and services

Mark Zuckerberg, founder and chief executive officer of Meta, had this to say on release of the results today and the positive growth seen in VR: “We had a solid [fourth] quarter as people turned to our products to stay connected and businesses continued to use our services to grow.”

“I’m encouraged by the progress we made this past year in a number of important growth areas like Reels, commerce, and virtual reality, and we’ll continue investing in these and other key priorities in 2022 as we work towards building the metaverse.”

So Meta is fully committed to continuing to invest in the metaverse and, although Zuckerberg was at pains to admit at Connect last year that the company’s aim for a Ready Player One-like virtual world intermingling with the real one is a long way from being realised, professional and casual Quest users alike can expect to see more improvements to their headsets, new content and better executed business-focused apps, and next-generation hardware.

Having said that, at the time of writing Meta has seen more than a fifth of its market value erased in after-hours trading after the Q4 financial results disappointed on several key measures, including user numbers. The $10 billion invested in Reality Labs also dragged down quarterly profits by 8%.

With Zuckerberg’s commitment to investing in the metaverse this year, the company could face more headwinds as use of its technology and platforms returns to pre-pandemic levels, potentially complicating his long-term plan for VR and AR.

Elsewhere in professional VR and AR, another company working on a metaverse project is Engage XR (formerly Immersive VR Education).

Like Meta, Engage is building its own metaverse, this one specifically for business, and has changed its name to better align its corporate identity with its plans.

Engage recently provided a trading update for the year ended 31 December 2021, ahead of publishing its full results for the year in March. The figures make impressive reading.

The company, which operates the Engage communications, education and events platform for VR and 2D devices, expects to report 2021 revenue of €2.4 million, an increase of 68% on the prior year.

Engage’s enterprise and education clients now number 139, with total licences reaching 6,634.

Meta promises further metaverse investment - Engage Oasis
An early view of Engage Oasis, its VR business metaverse

All of these figures represent significant growth over the previous year and, while, like Meta, they could be expected to come down once the effects of the pandemic are no longer being felt, Engage’s plan for a business metaverse codenamed Oasis, aimed at professionals, brands and corporations looking to conduct business in VR, promises to provide users with their next reason for donning a headset rather than, say, catching a plane to have their next meeting.

All in all, we are seeing significant investment and interest in VR and AR as the current players share their own visions for the metaverse and what a 3D internet that overlays and interacts with the real world could achieve.

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Images: Meta and Engage XR