Meta May Slash Metaverse Budget by a Third in 2024
▼ Summary
– Meta is reportedly considering budget cuts of up to 30% next year for its metaverse division, which develops Quest VR headsets and Horizon Worlds.
– The company has invested billions into the metaverse but is now shifting its focus toward developing artificial intelligence superintelligence.
– CEO Mark Zuckerberg requested broad 10% budget cuts but asked the metaverse unit for deeper reductions due to lower-than-expected industry competition.
– As part of these potential cuts, Meta could begin laying off staff from its metaverse projects as early as January.
– The metaverse unit, Reality Labs, has reported massive financial losses exceeding $70 billion since the start of 2021.
The parent company of Facebook and Instagram is reportedly considering a significant reduction in its investment toward building the metaverse. Sources indicate that Meta may cut its budget for metaverse-related projects by as much as 30 percent in 2024. While these potential cuts are not yet finalized, they would primarily affect the division responsible for the Quest virtual reality headsets and the Horizon Worlds social platform. This strategic pivot reflects a broader shift in the company’s priorities away from its once-core vision.
Meta, which famously rebranded from Facebook to signal its commitment to the metaverse, has invested tens of billions into developing its virtual reality ecosystem. However, CEO Mark Zuckerberg has recently redirected the company’s focus toward artificial intelligence and the pursuit of AI superintelligence. This new direction has been underscored by a series of prominent hires, including former Apple design executive Alan Dye, who will now lead the design of hardware, software, and AI integration for Meta’s interfaces.
According to internal reports, Zuckerberg instructed company executives to identify areas for a ten percent reduction in costs as part of standard annual budget planning. The directive for the metaverse division, housed within the Reality Labs unit, was reportedly more severe. Insiders suggest the deeper cuts are due to a slower-than-expected adoption of metaverse technology and a lack of the intense industry competition Meta initially anticipated. Should these budget reductions proceed, employee layoffs within the metaverse teams could begin as soon as January.
The financial context for this potential retrenchment is stark. Since the start of 2021, the Reality Labs division has accumulated staggering losses exceeding seventy billion dollars. The company’s most recent quarterly earnings report confirmed that this unit continues to operate at a substantial deficit, burning through cash as it develops its virtual and augmented reality technologies. This ongoing financial drain, coupled with the strategic embrace of AI, appears to be driving a major recalibration of resources.
(Source: The Verge)
