Meta’s discretionary budget is said to have decreased by 20% as Q2 revenues declined.
Between now and 2026, Meta will reportedly cut the budget of Realty Labs, the division responsible for developing the company's Metaverse hardware and software, by about 20%.
This comes in a report from Data and coincides with recent indications that Meta plans to shift its virtual reality labs into production mode ahead of several high-profile hardware launches over the next two years.
Bank of America analysts estimate the cost-cutting measures will result in savings of nearly $3 billion for Meta.
Q1 2024
The timing of the rate cut comes as no surprise to insiders. Meta's next earnings call comes on July 31, and analysts are predicting similar numbers to Q1, when the company posted $36.45 billion in revenue, up 27% from 2023.
Realty Labs, however, posted a loss of $3.8 billion for the quarter. Although some of the losses are not related to the company's efforts, in the measurement area.
As Cointelegraph reported in April, Meta CEO Mark Zuckerberg told investors at the company's Q1, 2024 earnings call that “our Realty Labs is growing in size to serve our AI efforts.”
2024 and beyond
The recently announced cost-cutting measures to streamline the department's efforts could have results that could be pleasing to inventors looking to stem the tide of money flowing into virtual reality labs. To date, the dividend has lost around $55 billion since 2019.
While this may be the first indication of Zuckerberg's willingness to reign in the reality lab, the ultimate fate of the segment may depend on whether or not the major consumer market opens up to future VR and AR products.
The company plans to launch a next-generation Quest VR headset and Ray-Ban smart glasses with a visual component as well as a wrist “neural interface” in the next few years. There's also a fully-holographic headset prototype in the works, but it's unclear if that will launch in the same timeframe.
Related: Meta Seeks AI Expert at $347K Salary for Metaverse Expansion
