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Meta’s second quarter results showed us that Mark Zuckerberg’s metaverse view is still very expensive. And his losses in his VR division reached $ 2.8 billion in the second quarter, even as his sales of virtual reality hardware and software continue to grow.
Meta began publishing its findings from its Reality Labs division (formerly known as Facebook’s Oculus division) to give investors an idea of how much it is investing in the next version of the internet, or metaverse, the universe of virtual worlds that are. all interconnected, like in novels like Snowfall And Player on loan one.
Yesterday, the company reported bad news (at least for virtual reality software companies) when it announced it would raise the prices of its Meta Quest 2 VR headsets by $ 100 each on August 1. It also increases the prices of peripheral products.
Half Reality Labs generated revenue of $ 452 million in the second quarter ended June 30, compared to $ 305 million a year ago and $ 695 million in the first quarter. The loss for the quarter was $ 2.8 billion in the second quarter, compared with a loss of $ 2.4 billion the year before and $ 2.96 billion in the first quarter.
Total net income was $ 6.69 billion on revenue of $ 28.8 billion in the second quarter, compared to net profit of $ 10.4 billion on revenue of $ 29.1 billion a year earlier. . Analysts had forecast net income of $ 7.03 billion on $ 28.9 billion. Meta’s daily active users were 1.97 billion, up 3% from a year ago. Each month, Meta’s platforms reach more than three billion people.
“The Metaverse is a huge opportunity for a variety of reasons,” Zuckerberg said during the analyst’s phone call. “It allows for a deeper social experience where you get a realistic sense of presence with other people, no matter what you’re doing,” whether it’s a game or a meeting.
He said the company was spending money to build it to be the best possible platform, without the constraints that “our competitors place on us,” namely Apple and its costs. Zuckerberg said the metaverse could unlock hundreds of billions of dollars or trillions of dollars over time.
He said it was obviously very expensive, but the Metaverse will be important to the way we live, and he is happy to have a role in its creation.
He said the company plans to launch a web-based version of its Horizon social metaverse platform later this year and that the company is hearing good news about Project Cambria hardware coming later this year.
In terms of indications, Meta said it expects Reality Labs’ revenue to be lower in the third quarter than in the second. The price increase probably doesn’t help.
Zuckerberg has publicly stated that “there is probably a group of people in the industry who shouldn’t be here,” signaling that VR leaks and a slowdown in business in general are starting to hurt. The company has instituted a hiring freeze due to declining advertising revenue due to Apple’s privacy crackdown. And TikTok has become very competitive with Meta in the short video market. On this front, Meta is fighting with its short Reels videos.
“It was good to see a positive trajectory on our engagement trends this quarter from products like Reels and our AI investments,” Zuckerberg said in a statement. “We are dedicating more energy and focus to our key business priorities that unlock short and long term opportunities for Meta and for the people and companies that use our services.”
Starting in August, Meta Quest 2 will cost $ 400 and $ 500 for the 128GB and 256GB versions respectively, and for a limited time each new headset purchase will include an offer to download the popular VR rhythm game for free. Beat Saber. Along with these changes, Meta will also increase the prices of Meta Quest 2 accessories and refurbished units.
The workforce was 83,553, down from 77,805 as of March 31. The number of 83,553 is up 32% from a year ago. In an earnings call, Zuckerberg said on the call that the economic downturn and its potential impact on advertising looked worse than it was a quarter ago. And he said the goal was to steadily reduce the workforce over the next year.
“This is a time that requires more intensity and I expect to do more with fewer resources,” he said.
But the company said it doesn’t give up its optimism about virtual reality. Zuckerberg said the company is riding the tech waves of AI and the metaverse.
In other news, the Federal Trade Commission has filed a lawsuit to block Meta’s proposed acquisition of virtual reality company Within, the maker of the subscription-based VR training app Supernatural.
Colin Sebastian, analyst at RW Baird, said in an email to GamesBeat that Zuckerberg is convinced that the next era of computing will be virtual reality and the metaverse, which for Meta represents a potential thread but also a huge opportunity.
“I don’t know how much it cost Apple to specify, design, build and launch the first iPhone and the first mobile operating system (iOS), but Steve Jobs had the vision and resources to lead us into the wave of mobile computing,” said Sebastian. . Mark certainly has the means, but it is still unclear whether he has the right vision or whether his bet will pay off in terms of commercial success. That said, we like companies that take risks, rely on the best engineering talent and are conditioned to innovate.
He noted that this is how Google can continue to grow even though it is already the largest media and advertising company in the world.
“Right now, during a macro recession, it’s a difficult trade-off as investors prefer companies that preserve margins and cash flow, rather than investing in speculative projects,” said Sebastian. “It’s worth it, given the scale of the stakes, but we would also like to see Reality Labs held accountable for expenses, such as meeting certain milestones.”
Wedbush analyst Michael Pachter said in an email to GamesBeat: “They clearly think the metaverse is going to be huge and they clearly think they will dominate. I agree with the former, but the latter is difficult to predict as it might seem. AOL trying to dominate the Internet, however, if they don’t invest, they have no chance of winning.
The Oculus mobile app has had just over 20 million installs worldwide to date from the App Store and Google Play, according to measurement company Sensor Tower.
The app experienced the highest number of installs ever in a single month when it reached approximately 2.8 million in December 2021. This contributed to the record increase in quarterly installs in the fourth quarter of 2021, as shown in the table below. Since that record quarter, the Oculus mobile app has experienced a decline in adoption on a quarterly basis; however, it still outperforms its facilities from a year ago, Sensor Tower said.
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