Meta’s third-quarter monetary outcomes for fiscal yr 2022 are exhibiting that the corporate’s Reality Labs division (which homes the corporate often called Oculus, quite a lot of recreation studios and different VR/AR {hardware} tasks) is shedding extra money than ever. In the three-month interval ending September 30, 2022, the division posted a lack of $3.67 billion, and solely earned $285 million in income throughout the identical interval.

In the identical interval in 2021, Reality Labs misplaced $2.6 billion on $558 million in income. That means Meta’s metaverse losses have elevated by 39.5 p.c, and its income has shrunk 48 p.c year-over-year.

Does this imply Meta is operating out of cash? Not for the second. Its promoting income remains to be earth-shatteringly excessive, clocking in at $27 billion this quarter (a 3 p.c dip over final yr’s $28 billion in income). Its “Family of Apps” firm division managed to shrink its losses by 28 p.c, solely shedding $9 billion in income over the $13 billion it misplaced within the third quarter of 2021.

However, the corporate’s earnings have shrunk 46 p.c year-over-year from $10 billion in revenue to $5 billion in revenue, and that bleeding is not being stemmed anytime quickly. Chief monetary officer David Wehner wrote that the corporate expects Reality Labs’ working losses will “develop considerably year-over-year in 2023.”

“Beyond 2023, we anticipate to tempo Reality Labs investments such that we will obtain our purpose of rising general firm working revenue in the long term,” he added. That implies that Meta remains to be playing on its Metaverse investments as being dependable income drivers within the decade forward.

What is Meta spending all that cash on?

Legs. Okay, not simply legs. Also VR studios, and an intense quantity of R&D on know-how that can energy Mark Zuckerberg’s dream of the metaverse.

We acquired our first take a look at a few of that know-how in Meta’s Connect 2022 presentation again in early October. Some of it was spectacular, a few of it was middling, and a few of it concerned staged pre-rendered animations.

The most spectacular of these investments embrace large swings on computing interface units that may seize and make use of correct hand motion, and facial seize know-how that can far surpass the present uncanny animation of Horizon Worlds, Meta’s user-generated content material platform that’s clearly impressed by Ready Player One however would not dwell as much as the fantasy.

Right now Meta’s greatest hope of off-setting its Reality Lab losses (with in-division belongings) embrace gross sales of Quest 2 and Quest Pro units. The former of those headsets may see an uptick of gross sales within the vacation season (with a wholesome quantity of income to match), however the latter gadget has rolled out to blended outcomes available on the market. Demos at stores are not going properly.