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New Facebook Reality Labs operating segment to lose $10 billion in 2021

Facebook's continuing AR and VR endeavors, including Oculus, is leading to a substantial monetary loss, according to its latest earnings report.

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The dive into virtual reality sure sounded like a good idea at the time for social media giant Facebook. After all, they had plenty of money to throw around, so why not buy an Oculus and try to force a Facebook login to a whole new audience? Well, as it turns out, operating a virtual reality is pretty expensive and it's going to wind up costing Facebook a pretty penny. How much of a penny? Try $10 billion USD worth of pennies.

Here's the pertinent information from the Facebook Third Quarter 2021 Results:

Starting with our results for the fourth quarter of 2021, 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. The new segment disclosures will provide additional information on the performance of FRL and the investments we are making. Under this reporting structure, we will provide revenue and operating profit for two segments: The first segment, Family of Apps, will include Facebook, Instagram, Messenger, WhatsApp and other services. The second segment, Facebook Reality Labs, will include augmented and virtual reality related hardware, software and content. 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.

Ahead of the fourth quarter earnings call, we will share additional details about the reporting format of our segmented financials.

It's been more than seven years since Facebook initially acquired Oculus VR for $2 billion. While the company had grand plans for their acquisition, operations of augmented and virtual reality have proven to be substantially more expensive than expected. However, the company appears to be committed to seeing this idea through. Whether Facebook plans to recoup any of its losses through concepts like advertising or other avenues remains to be seen.

We're reporting on Facebook's earnings throughout the day. Plus, we're also following whatever happens with Oculus. Keep it here on Shacknews for the latest updates.

Senior Editor

Ozzie has been playing video games since picking up his first NES controller at age 5. He has been into games ever since, only briefly stepping away during his college years. But he was pulled back in after spending years in QA circles for both THQ and Activision, mostly spending time helping to push forward the Guitar Hero series at its peak. Ozzie has become a big fan of platformers, puzzle games, shooters, and RPGs, just to name a few genres, but he’s also a huge sucker for anything with a good, compelling narrative behind it. Because what are video games if you can't enjoy a good story with a fresh Cherry Coke?

From The Chatty
  • reply
    October 25, 2021 1:45 PM

    Ozzie Mejia posted a new article, New Facebook Reality Labs operating segment to lose $10 billion in 2021

    • reply
      October 25, 2021 3:11 PM

      Does that mean they're losing money on each quest sale? Surely they're not spending 10 billion just on R&D.

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        October 25, 2021 3:47 PM

        Marks words sounds like it’s r&d, they’re going full steam ahead on the meta verse

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      October 25, 2021 4:18 PM

      They’re going to burn the cash, shut it down and VR will take a dive like before. “If Facebook can’t make it work no one can” will be the headlines.

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        October 25, 2021 10:46 PM

        I think VR for gaming will always be a niche, and Facebook's failure won't change a thing. The ergonomics will always be a lot worse than using a controller and a TV, the cost will always be higher than regular hardware, and the actual gameplay benefits only exist in a few genres like racing/flight sims.

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          October 26, 2021 3:11 AM

          The cost is already cheaper than regular gaming hardware for standalone VR, and the other two points you bring up are 100% subjective. That's not to say that VR gaming will eventually supplant traditional pancake games (I'd frankly be amazed if that happened any time even remotely soon, if ever), but you seem to be making some really large assumptions about a "new" consumer tech that's only just now taking its first steps.

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          October 26, 2021 4:03 AM

          You completely ignore the immersion benefits that VR brings to a whole multitude of genres when claiming that it's good only for sims. Good VR games feel like the future of gaming.

          The cost part is also arguable. TVs ain't cheap, but quests are, comparatively speaking.

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        October 26, 2021 12:23 AM

        With more and more industries making use of VR these days I highly doubt we'll see a widespread collapse of the industry again. What I think you could see, though, is a decrease in the prominence of dedicated VR headsets for non- business/industry/education/healthcare use cases as we start getting more full-featured and low-profile AR headsets. I think that being able to get a lot of the functionality of VR, without requiring shutting yourself off from the world with a full HMD, would probably be more appealing to most consumers.

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      October 26, 2021 1:01 AM

      good

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