A decade, a hundred billion dollars and a change in the entire corporate identity - that's the balance sheet of Meta Platforms in its grandiose but so far unsuccessful attempt to create the next great computing platform: the metaverse. Mark Zuckerberg's story is like that of an engineering team that spent astronomical sums developing a hyperbole engine but still can't get it out of the garage.
Over the past ten years, the company has invested more than $100 billion in virtual (VR) and augmented reality (AR) to build virtual worlds where users will be able to do absolutely anything, making them the successor to the modern internet. Despite this colossal financial resource, progress has been modest, to say the least.
The main driver of this expensive experiment is the fear of dependency. Back in 2015, Zuckerberg outlined his strategic vision in an internal memo: "Within ten years, VR and AR will be the next big computing platform after smartphones. We are vulnerable on smartphones because Google and Apple control the mobile platforms. The only way to change that is to develop a centralized platform and applications."
The irony is that today, 10 years later, this strategic goal remains unachieved. Meta was late in realizing the importance of smartphones, which made it hostage to the rules dictated by the iOS and Android platforms. Now the company is chasing a platform that has yet to win over the masses.
The Reality Labs division, which is responsible for developing VR and AR, is a real "black hole" for Meta's financial statements. Analysts estimate that investments here will exceed $100 billion by the end of the third quarter of 2025. This multi-billion dollar adventure began in 2014 with the acquisition of Oculus VR for $3 billion.
The expenses are monstrous: since the end of 2020, expenses have reached $83 billion, while revenue for the same period was only about $10 billion. For comparison, Meta's advertising business generated approximately $50 billion in just one quarter!
The company's main product, the Meta Quest headset, dominates the VR market and generates the majority of these modest revenues. But while games remain the most profitable VR application, they are a niche segment, accounting for less than 1% of global gaming industry revenue. Even the latest Quest 3 and Quest 3S headsets have failed to replicate the success of their predecessors.
The bright side of the whole picture is that the Quest headsets are mostly appealing to children and teenagers. This is the same audience that made Roblox the largest platform in the metaverse, with nearly 380 million users. For them, VR is not an abstract concept, but a natural environment for socializing. Meta is pinning all its hopes on this younger generation, who grew up with glasses and took virtual worlds for granted, hoping to succeed where Horizon Worlds failed.
Not all the billions are going to VR. More than half of Reality Labs’ investments are aimed at developing augmented reality (AR). Zuckerberg justifies this division by saying that AR is the biggest challenge, but also the area with the greatest long-term potential.
The Meta Orion prototype is a pure demonstration of cutting-edge technology that requires custom AR chips and new supply chains. But the real bridge to the mass market may be the smart glasses from its partnership with Ray-Ban. Their demand surprised even Meta and opened up a new product category that is considered the ideal hardware platform for the era of artificial intelligence. These glasses, equipped with AI assistants, will be the intermediate stage to full-fledged AR devices.
Despite all the obstacles, one thing cannot be denied: without Meta’s relentless efforts, there would be no consumer VR market today, and competing products like the Apple Vision Pro and Samsung Galaxy XR would hardly exist.
Although two of its three business goals – breaking free from Google and Apple, and achieving profitability – remain far away, Meta has truly positioned itself as a leader and innovator in this segment. Time will tell if this decade-long, hundred-billion dollar investment will finally bear fruit.