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Meta lost $10 billion on AR and VR in 2021

This was the first time the company broke out AR and VR revenue and losses as part of a new “Reality Labs” business unit.

Meta Quest

Q4 numbers suggest that Meta did sell a lot of Quest headsets during the holiday quarter.

Image: Facebook / Protocol

Meta’s AR and VR ambitions come with a significant price tag: Meta’s Reality Labs unit lost $10.2 billion last year, the company revealed as part of its Q4 2021 earnings report Wednesday. In 2020, the unit lost around $6.6 billion.

Revenue for Meta’s AR and VR businesses amounted to $2.3 billion for 2021, compared to $1.1 billion in 2020. This was the first time the company broke out AR and VR revenue and losses as part of a new “Reality Labs” business unit.

Meta Reality Labs numbers include revenue generated with both augmented and virtual reality hardware and software sales, and the company didn’t reveal any sales numbers for its Quest VR headset Wednesday. However, Q4 numbers suggest that Meta did sell a lot of Quests during the holiday quarter: Revenue for the quarter was $877 million, compared to $717 for the 2020 holiday quarter.

“I'm encouraged by the progress we made this past year in a number of important growth areas like Reels, commerce, and virtual reality, and we'll continue investing in these and other key priorities in 2022 as we work towards building the metaverse," Mark Zuckerberg was quoted saying in the company’s earnings release.

Altogether, Meta generated $33.7 billion revenue in Q4 of 2021, compared to $28 billion during the same quarter a year before. Net income for the quarter was $10 billion, but the company warned that its ad business would be negatively affected by lower prices and a shift toward less-profitable video formats this quarter.

Investors reacted to this forecast and the $10 billion AR/VR price tag with a sell-off, sending Meta’s share price down more than 22% in after-hours trading.

Updated: This story was updated Feb. 2, 2022, to include more information about Meta's forecast and revenue numbers.

Janko Roettgers

Janko Roettgers (Twitter, Mastodon) used to be a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

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