Meta will reduce funding for its Reality Labs division, responsible for developing the corporation’s metaverse hardware and software, by 20%. This was reported by The Information.
According to the publication’s sources, the division’s budget will be cut between 2024 and 2026, with most reductions occurring in the coming months.
This does not signal an end to developments in virtual and augmented reality. Meta plans to release new Quest VR headsets and Ray-Ban AR glasses over the next three years, journalists reported.
Analysts at Bank of America believe that the cost-cutting measures will save the company about $3 billion.
In April, Meta reported revenue of $36.5 billion for the first quarter of 2024, a 27% increase from $28.6 billion a year earlier. However, Reality Labs lost approximately $3.8 billion in the same period, generating $440 million in revenue.
During a presentation on the first quarter’s results, CEO Mark Zuckerberg stated that “an increasing portion of Reality Labs’ efforts are directed towards AI services.”
Despite the challenging situation, the division managed to reduce losses by 17% over the last three months of 2023 and the first quarter of 2024. Since its inception in 2019, Reality Labs has lost about $55 billion.
Meta’s plans regarding AI and the metaverse are likely to become clearer following the company’s second-quarter earnings report, scheduled for release on July 31.
Previously, the corporation posted a job opening for integrating AI into VR and AR games. Meta aims to bring more generative AI technology into entertainment projects.
Back in June, Meta announced the integration of AI characters into Instagram.