Ten years and 100B dollars later: where is Meta's metaverse?

“Our vision is that in ten years, VR and AR will be the next major computing platform after the smartphone,” writes Mark Zuckerberg in an internal memo, outlining his strategy for achieving this and explaining why this shift is important for the company.

“We are vulnerable in the smartphone space because Google and Apple control the mobile platforms,” Zuckerberg says. In the next computing era, the company therefore wants to take a stronger strategic position. “We can only achieve this by developing a significant platform and central apps.”

The memo describes the current status quo but is significantly older: Zuckerberg wrote it in 2015.

A project of astronomical proportions

Zuckerberg has since renamed his company to Meta and invested exorbitant sums in Reality Labs, the division that develops VR and AR products. In the hope that the technologies will catch on broadly, but also out of fear of missing the next big wave of computing. Facebook only recognized the importance of the smartphone late, almost failed in the mobile revolution, and became dependent on Apple and Google, who dictate the platforms with iOS and Android on which Facebook, Instagram, and WhatsApp build their business model.

Meta has been reporting expenses for Reality Labs in its quarterly financial statements since the end of 2020. In the past quarter, they totaled 83 billion US dollars. How much the company invested in previous years is not known, but according to estimates by metaverse analyst Matthew Ball (X link), the sum exceeded 100 billion US dollars in the third quarter of 2025. Meta's multibillion dollar investments began with the acquisition of the startup Oculus VR in 2014, for which Facebook paid three billion US dollars.

There is a deep chasm between effort and return.

(Image: Tomislav Bezmalinović / heise medien)

The high expenses are contrasted by comparatively low revenues: with expenses of around 83 billion US dollars since the end of 2020, revenues from VR and AR in the same period are about ten billion US dollars. For comparison: In the past quarter alone, Meta generated around 50 billion US dollars from its advertising business.

Virtual Reality: Still in the self-discovery phase

Zuckerberg's memo is ten years old. What has Meta achieved since then?

Meta Quest, the company's central VR product, dominates the VR headset market, is the largest VR platform, and generates the majority of Reality Labs' revenue. Meta's quasi-monopoly is also the result of aggressive cross-subsidization that has pushed other companies out of the market or deterred them from entering.

Games remain the highest-grossing application for virtual reality but are still a niche: they account for less than one percent of revenue in the gaming industry. Furthermore, the crisis in the gaming industry has also affected the VR market, which has lost momentum in recent years. This was recently demonstrated by the MR headsets Quest 3 and Quest 3S, which could not match the success of their predecessors.

Teenagers currently form the most active VR user group.

(Image: Meta)

A positive for Meta is that Meta Quest today primarily excites children and teenagers, the target group that has made “Roblox” the largest metaverse platform with around 380 million users. A reach and relevance that Meta has been striving for in vain with its own proto-metaverse “Horizon Worlds.” The hope now rests on representatives of Generation Alpha, who grow up with headsets, understand VR as a natural part of their lives, and socialize in virtual worlds. For them, the metaverse is no longer an abstract concept but has long been a reality.

The rest of humanity is still struggling. Ten years after its commercial relaunch, virtual reality is still looking for a use case that makes it indispensable for the masses. Games are not, nor is media consumption or productivity. Perhaps a new form factor can revive interest in VR: With its next headset, Meta is reportedly aiming to significantly reduce the size and weight of the devices.

Apple Vision is marketed as an AR device, but is a conventional VR headset with no fundamental difference to Meta's products.

(Image: Apple)

One thing is clear: without Meta's persistent efforts, there would be no significant VR consumer market today, and VR would be primarily limited to professional applications. A field in which it is now firmly established and will not disappear. Apple Vision Pro and Samsung Galaxy XR would also be hardly conceivable without Meta's years of groundwork and have lent additional legitimacy to the product category.

Augmented Reality: Billion-dollar bet with an open outcome

Even though Reality Labs gained visibility primarily through VR headsets, more than half of the investments flow into augmented reality and thus into a product that has not yet been released: Meta's upcoming AR glasses. At a company meeting, Zuckerberg justified the cost distribution by stating that augmented reality is the most demanding work of Reality Labs but also the one with the greatest long-term potential.

Looking closely at the first publicly shown AR glasses prototype, it becomes clear why the development cost billions: Meta Orion is a crazy piece of technology, which required numerous innovations, custom AR chips, and the establishment of entirely new supply chains.

Meta Orion combines a field of view of about 70 degrees with a form factor that approximates that of conventional glasses.

(Image: Meta)

This effort would be justified if the AR glasses fulfill Zuckerberg's grand vision from 2015 and usher in a new computing era under Meta's leadership. But that's a big if. Even though the first AR glasses are said to be released “in the near future,” according to Meta, it will likely take another decade until a mass-market product is available.

Meta is paving the way with smart glasses like the Ray-Ban Meta glasses. The demand surprised Meta and prompted Google and Apple to develop their own products of this kind. What's new about the product category is the form factor, which not only opens up real mass-market potential but is also considered ideal hardware for the AI era, with assistance systems that accompany and support users in everyday life, both visually and audibly, while remaining almost invisible. The next development step is smart glasses with a heads-up display like the Meta Ray-Ban Display, which represent an intermediate step towards full AR glasses.

The Meta Ray-Ban Display overlays information directly into the wearer's field of vision. The display is barely visible to others.

(Image: Meta)

Despite initial successes, it remains to be seen how great the interest in smart glasses and AR glasses actually is. And how socially compatible a technology is that constantly captures the surroundings and projects screens directly into the users' eyes.

Evolution instead of revolution

Mark Zuckerberg outlined three business goals for VR and AR in his 2015 memo. Meta missed the strategic goal: Ten years later, neither VR nor AR has helped to break free from dependence on Google and Apple. The financial goal has also not been achieved: VR and AR remain highly investment-intensive, with no prospect of near-term profitability. The third, brand-related goal, however, seems within reach: to position Meta as an innovation leader through VR and AR.

With the Ray-Ban Meta glasses, Meta has achieved an Apple-like feat: merging technology and fashion.

(Image: Meta)

In both VR and smart glasses, Meta holds a market-dominating pioneering role, which Google, Samsung, and Apple are following with a delay. With the Ray-Ban Meta glasses, the company has created a new lifestyle category. And in augmented reality, Meta is also likely to become a trendsetter, with a technological lead that will be significantly harder to catch up than in other product categories.

Even after ten years of development, VR and AR are still in an early phase. Given the agonizingly slow progress, Meta's research director Michael Abrash is ironic, quoting Hofstadter's Law: “It always takes longer than you expect, even when you consider Hofstadter's Law.” Whether Meta's billion-dollar bet will pay off is therefore likely to be seen only in the distant future.

Mark Zuckerberg's memo can be viewed at Scribd.

(mki)