Meta just posted another staggering Reality Labs loss - $4.4 billion in Q3 alone - bringing the total metaverse bet to over $70 billion in cumulative losses since 2020. But here's the twist: the division actually beat Wall Street expectations and generated more revenue than predicted, signaling the company's VR and AR investments might finally be gaining traction.
Meta's Reality Labs just delivered what might be the most expensive consolation prize in tech history. The company's metaverse division torched $4.4 billion in the third quarter while generating $470 million in sales - a massive loss that somehow managed to beat Wall Street's even gloomier expectations.
Analysts had braced for a $5.1 billion operating loss on just $316 million in revenue, making Wednesday's earnings a rare bright spot in Meta's otherwise costly VR and AR adventure. The division has now recorded over $70 billion in cumulative losses since late 2020, when Mark Zuckerberg first went all-in on his metaverse vision.
But something interesting is happening beneath those eye-watering numbers. The Ray-Ban Meta smart glasses are actually working. EssilorLuxottica, Meta's eyewear partner, reported that the AI glasses helped lift its third-quarter sales during its recent earnings call.
"Clearly there is a lift coming from Ray-Ban Meta wearables as a product category," EssilorLuxottica CFO Stefano Grassi told investors. The $799 Meta Ray-Ban Display glasses, unveiled by Zuckerberg in September, represent the company's first consumer-ready AI glasses with a built-in display and neural wristband technology.
The surprise success of the smart glasses appears to be reshaping Meta's entire approach to the metaverse. In a quiet but significant move this week, the company transferred Vishal Shah - who had been leading metaverse initiatives - to vice president of AI products in Meta's Superintelligence Labs division.
That organizational shift signals Meta might be evolving beyond its original metaverse thesis. Instead of betting everything on immersive VR worlds accessed through bulky Quest headsets, the company seems increasingly focused on AI-powered wearables that blend digital experiences with the real world.
The Reality Labs unit remains responsible for the Quest VR headset family and the Ray-Ban partnership, but the emphasis is clearly shifting. While the division continues burning billions developing VR and AR hardware, the actual consumer traction is coming from sleek glasses that look normal but pack AI capabilities.
