The metaverse might be marketers’ latest shiny new toy – with many brands intending to place a large investment into channel – but they are likely to need deep pockets to see any returns as it will be years before the VR-driven market reaches enough consumers to make it viable.
That is according to a new study by TradingPlatforms.com, which reveals Meta’s Reality Labs division, home to the company’s VR technologies and projects, has lost $35bn (£29bn) over the past four years, with the annual operating loss tripling.
Although Meta’s investors have called on the company to reduce spending on metaverse projects, it continues to lose billions of dollars to bring Mark Zuckerberg’s vision to life. Even more worrying is that Zuckerberg expects losses to grow significantly in 2023.
In 2019, the operating loss stood at a $4.5bn (£3.7bn), according to Statista data and Meta’s earnings reports. A year later, this figure grew by 46% to $6.6bn (£5.5bn). However, 2021 saw an even bigger increase, with the amount of invested money surging by 54% year-over-year to $10.2bn (£8.5bn).
In the last quarter of 2022 only, the Reality Labs division recorded an operating loss of $4.3bn, bringing the total for the year to an eye-watering $13.7bn, or 34% more than a year before that.
Although Zuckerberg expects the metaverse project to grow his company’s operating income in the long run, at this point it is just the opposite, with metaverse investments weighing heavily on Meta’s results.
Last year, the company’s operating margin dropped from 40% to 25%, as total operating profit went down from $46.8bn in 2021 to $28.9bn in 2022. Moreover, Meta saw the biggest market cap drop of all big five tech giants last year, with more than $750bn wiped off its stock value.
Although Meta is losing billions of dollars on metaverse projects at this point, the Statista Advertising & Media Markets Insights survey shows a huge potential in the metaverse to justify such massive investments – for those who can afford to keep investing.
The conservative addressable market scenario, where 15% of the digital economy shifts to the metaverse, shows Zuckerberg is seemingly shooting for a slice of a large and lucrative business.
According to Statista’s forecast, the metaverse’s reach is projected to hit 700 million people – 11% of the world’s population – by 2030. The total addressable market in the conservative scenario, or the revenue opportunity for metaverse products and services, is expected to hit $1.91 trillion (£1.6 trillion) in this period.
In the optimistic scenario, where 35% of the digital economy shifts to the metaverse, this value jumps to $4.44 trillion (£3.69 trillion).
Whether brand owners will remain part of this journey – or jump in once the market reaches maturity – remains to be seen.
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