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Meta’s total investment in virtual and augmented reality is set to top $100bn this year, as its chief executive Mark Zuckerberg has declared 2025 will be a “defining year” for its smart glasses.
In its latest annual report, Meta revealed it invested $19.9bn in its Reality Labs division last year, a new high after more than a decade of heavy losses. The unit develops its Ray-Ban Meta smart glasses, which Zuckerberg last week called a “real hit”, as well as its Quest VR headsets, which have been slower to take off. The company sold 1mn sets of its Ray-Ban glasses in 2024, according to a person familiar with the matter.
The Silicon Valley-based company’s cumulative investment in VR and AR product development and acquisitions has now exceeded $80bn since the initiative began in 2014 when it bought VR headset maker Oculus, according to analyst estimates and Financial Times’ calculations based on company disclosures.
Meta’s annual report said it expected the division’s annual investments to increase further in 2025, suggesting that more than $20bn would be added to that total this year.
The figures show the extraordinary cost of Zuckerberg’s long-term effort to build a new computing platform that could one day replace smartphones and reduce Meta’s dependence on Apple’s and Google’s devices for distribution of its apps and services. As part of this, Meta is racing to develop more sophisticated AR glasses that overlay content on to the real world, unveiling its prototype Orion in September as rivals Apple and Google work on similar products.
“Meta’s investments in Reality Labs are eye watering, yet it’s not clear if they are unreasonable if you believe it can build the business that it’s looking to be, which is replacing [Apple’s] iOS,” said Matthew Ball, a tech investor and author of The Metaverse.
Meta declined to comment.
Three years after Facebook’s parent company rebranded itself as Meta to highlight its vision of building a “metaverse”, or online virtual world, Reality Labs brought in $2.1bn in revenue in 2024, up 13 per cent on the previous year. Its operating losses hit a new high of $17.7bn last year, up 10 per cent.
The unit has generated $10.1bn in revenue since 2019, the first year that Meta started to disclose financial results for it.
Over the past year, Zuckerberg has shifted focus from talking about creating an avatar-filled metaverse to touting progress in developing smart glasses powered by rapidly developing AI technology.
In Meta’s earnings call on Wednesday, he was enthusiastic about the outlook for its “AI glasses”, which are produced in partnership with Ray-Ban’s parent company EssilorLuxottica.
“This will be a defining year that determines if we’re on a path towards many hundreds of millions and eventually, billions of AI glasses, and glasses being the next computing platform like we’ve been talking about for some time — or if this is just going to be a longer grind,” he said.
The lightweight glasses have tiny cameras, microphones and speakers built in, allowing the wearer to take photos, listen to music and chat with an AI assistant. Meta is planning to release a new version later this year that feature a small display for the first time, the FT has previously reported.
Its Quest VR headsets, which cost $300 and upwards for the latest model, are still struggling to achieve mainstream appeal, with analysts and games developers estimating about 30mn units have been sold to date. Zuckerberg said the number of people using Quest devices and Horizon operating system “has been steadily growing”.
Ball said Meta’s tens of billions of dollars of losses from VR and AR was not dissimilar in scale to other efforts by Big Tech companies to enter new product categories, comparing it to Microsoft with its Bing search engine, Amazon’s Alexa assistant and Echo devices, and Google’s cloud computing unit.
He estimated Meta’s cumulative operating loss to date in Reality Labs to be $75bn, compared with more than $50bn for Amazon’s Alexa and over $30bn for Apple’s VR and AR development, including its Vision Pro headset, a more expensive rival to Meta’s Quest.
“A lot of attention is paid to Zuckerberg’s bet on Reality Labs but that is partly because they choose to discretely report it,” Ball said. “All of their competitors have investments that are comparable that they don’t surface.”
Meta’s Reality Labs investments are smaller than the “hundreds of billions of dollars” that Zuckerberg said he planned to spend on AI infrastructure “over the long term”.
Despite these capital-intensive efforts, Meta remains highly profitable, thanks to its lucrative online advertising business. Net income grew by 60 per cent last year to $62.4bn.