Metaverse hype fizzled, AI took over, and VR flopped, leaving crypto and legless avatars in history.

Metaverse hype fizzled, AI took over, and VR flopped, leaving crypto and legless avatars in history.

Meta's Reality Labs division has once again reported substantial losses, with Q2 2025 figures showing an operating loss of $4.53 billion and sales revenue of $370 million [1]. This extends a multi-year streak of red ink for the company’s ambitious, future-facing unit focused on virtual reality (VR), augmented reality (AR), and metaverse hardware. Despite the significant losses, Reality Labs remains core to CEO Mark Zuckerberg’s vision, with investments reflecting Meta’s commitment to developing the next evolution in personal computing [1].

The division’s loss, although staggering, came in better than Wall Street’s expectations of a $4.99 billion deficit [1]. Revenue missed slightly compared to the projected $381 million but marked a 5% year-over-year increase, largely attributed to the success of Meta’s partnership with Ray-Ban and its smart glasses [1]. The Ray-Ban partnership has led to triple year-over-year sales for the AR glasses, while VR adoption continues to lag behind, hampering commercial progress [1].

Meta’s core advertising business, however, posted $47.52 billion in revenue for Q2, enabling the company to absorb the losses from Reality Labs [1]. Zuckerberg’s long-game strategy hinges on AI-powered hardware growth and the possibility of building widespread consumer demand for his vision of superintelligence [1]. He believes that AI systems capable of 'personal empowerment' will drive future growth [1].

The article provides a balanced view of Meta’s Reality Labs, acknowledging both the significant losses and the potential of AI-driven hardware. It highlights the company’s commitment to its long-term vision and the continued investment in its ambitious projects.

References:
[1] https://www.digitalmusicnews.com/2025/07/31/meta-reality-labs-q2-2025/