Meta Raked In $2 Billion From Reality Labs in 2021
Meta Platforms detailed the revenues from Reality Labs for the first time, last week. While revenues surpassed $2.3 billion, costs and expenses surpass $10 billion.
The report shows the Quest content store had raked in more than $1 billion in purchased virtual reality content since its 2019 launch.
In the earnings call, the company did not reveal the unit sales figures for the Quest 2 headset but the company confirmed that its Quest store had surpassed $1 billion in VR software sales since its 2019 launch.
This represents a major growth in spending via the Quest store. The last milestone shared by the company was a monthly store revenue of $12.4 million. That has now grown to $51.3 million.
Meta did not provide a breakdown of the $1 billion revenue figure for its Quest store but this likely includes apps, games and DLCs sold through the Quest Store and App Lab. Cross-buy titles purchased for use in the Oculus PC platform could also be part of this.
The last milestone shared by Meta was $150 million in store revenue. This figure was announced before the launch of Quest 2 in 2020. The latest milestone, therefore, vividly illustrates the impact of the Quest 2 headset since its launch.
Meta hasn’t officially released data on the number of headsets sold but in a recent briefing, Qualcomm, which manufactures the chips used in the headset, gave a figure of 10 million which many consider fairly credible.
The Meta Quest 2 is so aggressively priced that the company might actually be losing money on the headset. However, Meta is more intent on developing a self-sustaining ecosystem for developers. Zuckerberg has, in the past, stated that 10 million units is the threshold required for a sustainable and profitable ecosystem for developers. Zuckerberg stated that once that threshold was reached, the ecosystem and the content would “just explode.” If Qualcomm’s numbers are right, then we are very close to hitting that threshold. Meta’s increased investment in the Quest store is also a good sign.
Below are the key financials that Meta reported in its first earnings call since the rebranding: –
- Q1 2021 Reality Labs Revenue: $534 million
- Q2 2021 Reality Labs Revenue: $305 million
- Q3 2021 Reality Labs Revenue: $558 million
- Q4 2021 Reality Labs Revenue: $877 million
All of these amount to revenues of $2.3 billion in 2021. This is almost the same as the $2 to $3 billion that Facebook paid in 2014 to acquire the Oculus startup.
Meta Platforms boss Mark Zuckerberg had also warned that the company’s investment in Quest and other future AR/VR technologies would cost a minimum of $10 billion annually in its bid to develop the metaverse. Reported financial results last year seemingly correspond with the Reality Labs loss from operations: –
- Q1 2021 Reality Labs Loss From Operations: $1.8 billion
- Q2 2021 Reality Labs Loss From Operations: $2.4 billion
- Q3 2021 Reality Labs Loss From Operations: $2.6 billion
- Q4 2021 Reality Labs Loss From Operations: $3.3 billion
Total losses from operations in Reality Labs for 2021 amount to $10.3 billion. As a result, the company generated $2.3 billion in revenues from $12.5 billion in costs and expenses, including in research and development work in VR and AR technologies.
Reality Labs doubled its revenues two years in a row. In 2019, revenues were $501 million. This grew to $1.1 billion in 2020 and $2.3 billion in 2021.
Meta Platforms CFO David Wehner said Reality Labs’ fourth-quarter revenues were “driven by strong Quest 2 sales” in the holiday season.