Facebook parent Meta said Wednesday that the augmented and virtual reality business at the heart of its metaverse ambitions generated $877 million in revenue in the fourth quarter, while its social media businesses fuels its profits.
The details mark the first time the company has broken out the performance of its AR and VR unit, which is known as Reality Labs. Meta’s VR and AR business lost $3.3 billion in the fourth quarter. Though it is still unprofitable, the unit contains the Oculus headset that will help anchor the company’s push into the metaverse. In October, Facebook rebranded itself as Meta, a change that fueled hype around the online spaces where people will be able to work and socialize as digital avatars.
As it barrels into the metaverse, Meta remains reliant on digital advertising on Facebook and its photo-service Instagram for revenue.
In the fourth quarter, Facebook posted revenue of $33.7 billion, above analyst expectations of $33.4 billion. The company earned $3.67 per share, falling short of the $3.84 per share projected by analysts surveyed by Thomson Reuters. Facebook’s stock plunged more than 19% in after-hours trading.
Meta, like other tech companies, have warned that Apple’s privacy changes could make it harder for businesses to measure the effectiveness of their ads on Facebook and Instagram.
Though the metaverse concept has been around for years, Meta has been hiring engineers and purchasing VR apps to bolster the creation of its virtual worlds. On Christmas, the Oculus app required to set up the Quest headset topped Apple’s App Store, suggesting that people had purchased the headsets over the holidays as a gift. The social network is also working on augmented reality glasses and released its first pair of smart glasses to shoot photos and videos with Ray-Ban.
Meta’s efforts to build more digital realms has been bumpy. The company still faces criticism that it doesn’t do enough to combat misinformation, hate speech and other types of offensive content, problems that will only grow more complex in the metaverse. The US Federal Trade Commission and multiple states, led by New York, are reportedly investigating potential anticompetitive practices by Oculus. This week, Meta shuttered its Diem cryptocurrency project after regulatory pushback.
The challenges haven’t stopped Meta from pushing forward with its futuristic vision of what it thinks will be the successor to the mobile internet.
“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,” Meta CO and founder Mark Zuckerberg said in a statement.