Just How Deep Is Mark Zuckerberg’s Metaverse Money Pit?

When it comes to measuring the progress of Mark Zuckerberg’s metaverse, big numbers have been in short supply. Only 20 million of his Quest virtual reality headsets have sold since 2019. Only 200,000 users are reportedly active in Meta Platform Inc.’s flagship virtual reality experience, Horizon Worlds. Oh, actually, there is one big number: $21 billion lost on creating the Metaverse since the start of 2022.

All this prompts an obvious question: Just how much money is Zuckerberg prepared to spend to make his Metaverse successful?

Luckily for him, he doesn’t have to answer that just yet. Meta’s legacy business — selling online advertising — is roaring, with double-digit revenue growth for the first time since the end of 2021. That’s providing a sufficient distraction to keep investors from coming down on him too hard. Sure they’re concerned that Meta has spent so much money on the metaverse with so little to show for it — but they’re not angry.

Revenue from the Metaverse — selling headsets, plus apps and services — fell between 2021 and 2022, and analysts expect it to sink even further this year. Reality Lab's expenses were $4 billion in the most recent quarter alone — a 23% increase from the same period a year earlier and not a good omen during what is supposedly Meta’s “year of efficiency.” Reality Lab's expenses will increase in 2024. “A lot of investors might want to see us spending less here in the near term,” Zuckerberg said last week. “My view is that we are leading in these areas. I believe that they're going to be big over time.”

When bad times come around again, and advertising sees a slump, Zuckerberg’s metaverse vision needs to be in much stronger shape than it is today. Otherwise, he’ll find investors might be far less forgiving.

Harsh Realities