Quick take:
- The metaverse will account for 20% of Meta’s expenses in 2023.
- That equates to about $19 billion based on a recent research note by Radio Free Mobile.
- The company came under criticism in 2022 for investing too much in the metaverse.
Meta Platforms will continue to invest in the metaverse as it remains committed to reaping the long-term benefits. In a blog post published on Monday by Reality Labs CTO Andrew Bosworth, the company could spend up to 20% of its 2023 expense budget on its metaverse business.
The figure is also backed by Zuckerberg’s statement earlier this month that despite the widespread criticism of Meta’s “massive” investment in the metaverse, the company only commits 20% of its resources to develop hardware and software for the 3D virtual space.
If indeed Meta dedicates 20% of its 2023 expense budget to the metaverse, that would equate to about $19 billion according to a research note published by Radio Free Mobile’s Dr Richard Windsor.
In November, the company provided guidance on expected total expenses for 2022 in the range of $85 billion to $87 billion, representing about a $15 billion increase from 2021. An increase of $10-$15 billion in 2023 will take the $2023 expenses to about $97.3 billion, which is the figure Windsor predicts.
Reality Labs’ costs and expenses totalled about $10.8 billion in the first three quarters of 2022, for a net loss of about $9.4 billion. However, Bosworth thinks that the scepticism attached to the metaverse business is overblown, citing challenges to Meta’s core business and the current business climate as contributing factors.
“Economic challenges across the world, combined with pressures on Meta’s core business, created a perfect storm of scepticism about the investments we’re making,” Bosworth stated, adding that “these are the moments that truly test people’s belief in the future.”
Meta’s plan for the metaverse is long-term, which is why Bosworth emphasised the danger of short-terminism. “We’ve all seen the disastrous consequences of this kind of short-term thinking: hollowed-out companies that gave up on innovating long ago, content to just turn the crank on an existing business until it stops working.”
The company’s first few quarters in the metaverse business have been less successful, with Reality Labs netting a loss of $3.7 billion in Q3, 2022.
In October, Wall Street Journal also released findings from internal Meta documents indicating that the company’s leading metaverse platform Horizon Worlds was struggling to keep hold of users, with most of them quitting the platform just after a month.
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