The US-based social media giant, Facebook is planning to invest billions this year in its ambitions on Facebook Reality Labs, its metaverse division tasked with creating virtual reality (VR) and augmented reality (AR) hardware, software, and content.
Mr. David Wehner, Facebook’s chief financial officer, said the company expected its investment in its hardware division, Facebook Reality Labs, to reduce overall operating profit in 2021 by approximately $10 billion.
“We are committed to bringing this long-term vision to life and we expect to increase our investments for the next several years,” the company wrote in its third-quarter earnings report. Facebook sees AR and VR as being core to the next generation of online social experiences.
The division, which already makes the Oculus Quest headset and Portal lineup of calling devices, is clearly being positioned as the next big thing inside of Facebook. This month, the social media giant revealed its plans to hire 10,000 employees in Europe over the next five years to work on this initiative.
Facebook said it’s going to begin reporting earnings specifically for its Reality Labs segment, while the company’s main ads business revenue, with a staggering $28 billion this last quarter alone, will be reported under another bucket.
“This is not an investment that is going to be profitable for us any time in the near future. But we basically believe that the metaverse is going to be the successor to the mobile internet,” Facebook CEO, Mr. Mark Zuckerberg stated.
Facebook missed revenue expectations by around $1 billion, for which the company blames a number of factors including, COVID-19, the economy, and Apple’s recent ad-tracking changes.
Apple updated iOS in April with a new privacy feature that requires users to actively opt in to allow apps to track them across other apps and websites. Initially, social media companies said they weren’t certain how much it would impact their ads businesses, which rely on that tracking in part to measure the efficacy of ads.