Meta’s Reality Labs has lost more than $21 billion since start of 2022

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Meta reported second-quarter earnings on Wednesday and said that its Reality Labs unit, which develops virtual reality and augmented reality technologies needed to power the metaverse, logged a $3.7 billion operating loss.

The unit recorded $276 million in second-quarter sales, down from the $339 million in revenue it brought during the first quarter. Analysts polled by StreetAccount were projecting Reality Labs to record $421 million in sales and $3.5 billion in operating losses.

Shares of Meta were up about 5% after it reported an 11% pop in revenue as advertising rebounded and the company issued an uplifting sales forecast for the third quarter. It shows that Meta is still very much an ad company with a big cost center.

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Last year, Meta’s Reality Labs unit lost a total of $13.7 billion while bringing in $2.16 billion in revenue, which is driven in part by the company’s sales of Quest-branded VR headsets. Reality Labs lost $3.99 billion during the first quarter. That puts its total losses at about $21.3 billion since the beginning of last year.

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Meta said in its earnings report that it expects operating losses in its Reality Labs unit “to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and investments to further scale our ecosystem.”

In June, Meta announced a VR subscription service dubbed Meta Quest+, which costs $7.99 a month and is compatible with the company’s Quest 2, Quest Pro and upcoming Quest 3 headsets. The subscription service lets people access two new VR games each month, and they will be able to play those games as long as they have active subscriptions.

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Also in June, Zuckerberg revealed details about the Quest 3 headset just days before Apple announced its Vision Pro VR and AR headset that will cost a whopping $3,499 when it is released in 2024. The Quest 3 will be sold at a price starting at $499 and is 40% thinner than the Quest 2 and will contain a next-generation Qualcomm chipset, the company said.

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