Meta is cutting back or postponing some projects in its Reality Labs division and halting hiring for some positions.
Reuters first reported earlier this week that Meta’s Chief Technology Officer Andrew Bosworth broke the news to Reality Labs staff in a weekly Q&A session, according to a summary of his comments viewed by Reuters, with more specific changes to be announced within the week. We independently reached out to Meta about the report, and a spokesperson reiterated to UploadVR they’re “evaluating key priorities,” not planning layoffs “at this time,” and “so far, Meta has hired more engineers in Q1 than all of 2021.”
While Meta’s Reality Labs revenue grew 35% year-on-year in Q2 2022 ($695 million, compared to $534 million Q1 2021), costs grew 55% as well, up to $3.7 billion from $2.4 billion in Q1 2021. During a recent earnings call, CFO David Wehner said the growing costs were “driven by employee-related costs, R&D operating expenses and cost of goods sold.” While those numbers may appear big at first glance, Meta CEO Mark Zuckerberg gave warning ahead of time by signaling a $10 billion loss in overall 2021 profit related to the company’s VR/AR investment, while also warning he expects that investment to “grow further” for the next several years.
Despite the increase in costs, revenue from Quest 2 continues to grow and Meta plans to expand its consumer headset offerings building out from the standalone platform. A high-end consumer headset, codenamed Project Cambria, is slated for release later this year. Two new Quest headsets and a subsequent iteration of Cambria may be in the works for 2023 and 2024 as well, according to a recent report from The Information. The company also opened its first brick-and-mortar consumer store this week, selling Quest, Portal and Ray-Ban Stories sunglasses.
While Meta isn’t alone among platform-building tech companies that seem to be preparing to weather a “market downturn“, Zuckerberg’s investment in realizing VR and AR technology remains significant and we’ll be curious to see how the company focuses its efforts going forward. In June, for example, the poorly rated Venues app will disappear as events move inside Meta’s broader Horizon Worlds effort.