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In the technology industry, the concept of metaverse — a range of virtual experiences — is becoming a buzzword. It generally refers to shared virtual environments that people can access via the internet. Most technology companies, including Facebook, have invested heavily in it. The social media giant says it is planning to invest up to $10 billion (roughly Rs. 74,963 crore) this year on its metaverse division — named Facebook Reality Labs — tasked with creating augmented reality (AR) and virtual reality (VR) hardware, software, and content. This focus on emerging technology has come at a time when Facebook’s earnings are strained.
Facebook said this week that it will start reporting earnings for its Reality Labs segment separately from its main advertisement business. The move is a sign to investors that they should value the metaverse division differently from how they have judged Facebook.
“We plan to break out Facebook Reality Labs, or FRL, as a separate reporting segment. As we have discussed, we are dedicating significant resources toward our augmented and virtual reality products and services, which are an important part of our work to develop the next generation of online social experiences,” stated the company in its third-quarter earnings release.
It’s also a move to, perhaps, distract from the fact that Facebook missed its revenue expectations by around $1 billion (roughly Rs. 7,496 crore), “which speaks to some of the company’s struggles right now”, reported The Verge.
Facebook said its earnings dipped because of the pandemic, the economy, and the recent privacy changes brought in by Apple. But the company is facing a lot of heat after a whistleblower testified before the US Congress recently and told lawmakers that Facebook knew its apps were harming the mental health of young users.
Now, Facebook has decided to focus on its Metaverse division. It sees AR and VR being core to “the next generation of online social experiences”.
“We expect our investment in Facebook Reality Labs to reduce our 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 added in its third-quarter earnings release.