Meta has reduced the budget for its Reality Labs division by about 20% from now until 2026, according to a report by The Information.
This decision suggests that Meta plans to transition Reality Labs into production mode ahead of several upcoming hardware launches.
Bank of America analysts estimate this budget cut could save Meta around $3 billion. This move comes just before Meta’s earnings call on July 31, where analysts expect similar figures to Q1 2024.
In Q1 2024, Meta reported a revenue of $36.45 billion, a 27% increase from 2023, while Reality Labs posted a $3.8 billion loss.
During Meta’s Q1 2024 earnings call, CEO Mark Zuckerberg mentioned that “an increasing amount of our Reality Labs work is going toward serving our AI efforts,” indicating a possible shift in the division’s focus.
Moreover, investors might view the budget cut positively due to concerns about Reality Labs’ financial performance. Since 2019, the division has lost about $55 billion.
Meta’s future plans include launching a new Quest VR headset, Ray-Ban smart glasses with visual capabilities, and a wrist-worn “neural interface” in the next few years. A prototype full-holographic headset is also in development, though its release date is uncertain. The success of Reality Labs will likely depend on how well the mainstream consumer market receives these upcoming VR and AR products.
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