Expensive Metaverse: Zuckerberg reportedly wants to cut investments

Mark Zuckerberg is considering a substantial cut in Metaverse spending for next year. According to the Bloomberg news agency, a reduction of up to 30 percent in the annual budget is being considered. This is significantly more than the approximately ten percent that Zuckerberg normally sets as a guideline.

The majority of the cost-cutting measures are likely to affect the VR division, which develops the Metaverse platform Horizon Worlds and Quest devices, among others, according to Bloomberg's sources.

The cost-cutting target has reportedly been increased because the competition that the company originally expected has not materialized. Cuts of this magnitude would most likely involve layoffs, possibly starting as early as January. However, a final decision regarding the cuts has not yet been made.

AR projects and AI glasses probably not affected

The company has been investing in Virtual and Augmented Reality for more than ten years and even renamed itself from Facebook to Meta in 2021 to emphasize its strategic focus on the Metaverse.

Analyst Matthew Ball estimates that Meta exceeded the $100 billion mark in Metaverse spending last quarter. These astronomically high expenses are contrasted by comparatively low revenues: since the end of 2020, revenues have been around ten billion US dollars, primarily from the sale of VR hardware.

Even though Meta's Metaverse division Reality Labs has so far gained visibility mainly through Meta Quest and the Ray-Ban Meta glasses, a large part of these investments has flowed into a product that has not yet been released: Meta's upcoming AR glasses. As this is a flagship project for the group, its development is unlikely to be affected by the cost-cutting measures. AI glasses are also likely to be among the priority projects within Reality Labs, as they are celebrating initial sales successes and have triggered an industry-wide race for smart glasses.

The current generation of the Meta Quest VR headset, on the other hand, fell short of the group's expectations due to declining sales. However, this does not mean that Meta will no longer develop new hardware. According to Bloomberg's sources, the company is sticking to the development of end-user devices.

According to several reports, Meta is pursuing a new approach next year and will present a particularly light VR headset for media consumption instead of a Meta Quest 4. The former head of interface design at Apple, who recently joined Meta, is likely to help improve the interface of the devices. This is considered one of the biggest weaknesses of VR systems.

(mho)