In the company’s Q3 2021 earnings call Facebook today said it expects its XR investments this year to top $10 billion, and advised investors that it plans to spend even more than that in subsequent years.

Facebook’s top brass believe so deeply that XR and the metaverse will be a transformative computing platform that they are dropping tens of billions of dollars in investments aimed to give them a head start in the space.

Today during the company’s Q3 earnings call, Facebook said that it planned to change its future financial reporting to more granularly detail the aggressive investments its pouring into Facebook Reality Labs (FRL), the company’s XR and metaverse division which includes Oculus, FRL Research, and more. The company says it hopes this change will “provide investors with additional visibility into the investments that we’re making in augmented and virtual reality.”

While the first financial reports to include the more detailed look into FRL spending won’t come until the company’s Q4 2021 earnings report, Facebook CEO Mark Zuckerberg said on today’s call that the company expects its FRL spending to total some $10 billion in 2021 alone. What’s more, Zuckerberg said, investors should expect that number to “grow even further for each of the next several years.”

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Facebook is spending exponentially more in this category than anyone else in the industry, at least as far as we know; Apple & Microsoft are perhaps the only two companies in the world that might match or exceed Facebook’s investment, though neither company has explicitly stated the kind of spending it’s doing in the field. Facebook, on the other hand, seems to want everyone within earshot to know.

The news comes just a week after Facebook announced plans for a 10,000 person hiring spree to bolster its workforce as it races to dominate the metaverse.

Also during the earnings call the company noted that it’s ‘Other’ revenue (a category which covers its non-advertising activities) is up 195% over the prior quarter, for a total of $734 million in Q3 2021. While the category includes non-Oculus hardware (like Facebook’s Portal products), the company specifically said that the revenue was “driven by strong Quest 2 sales.”

There’s plenty more news to come with the Facebook Connect conference set for Thursday where the company may reveal a new Quest headset that was apparently leaked.

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Ben Lang
Ben is the world's most senior professional analyst solely dedicated to the XR industry, having founded Road to VR in 2011—a year before the Oculus Kickstarter sparked a resurgence that led to the modern XR landscape. He has authored more than 3,000 articles chronicling the evolution of the XR industry over more than a decade. With that unique perspective, Ben has been consistently recognized as one of the most influential voices in XR, giving keynotes and joining panel and podcast discussions at key industry events. He is a self-described "journalist and analyst, not evangelist."
  • Cl

    What could they possibly have spent 10 billion dollars on this year relating to XR? Research? 10 billion on research? Acquisitions? I dont see how that adds up. Someone inform me.

    • Anonymous

      You already added them all up. A bit of everything you said.
      Research doesn’t come cheap and if there is some patent they don’t have, they need to acquire it (likely the entire company).

      My guess is that they may have their eyes on less bulky full body tracking solutions like Slime VR and rudimentary brain devices, and possibly more game software companies.

      Also let’s not forget their 10k job creation on Metaverse is likely a part of this $10B.
      If you ask me, I say even $10B it is still decades away to fully realize FB’s ambitions, although you can’t rush what doesn’t exist yet.

      • mappo

        The 10K metaverse jobs is a future intention; the $10B is what they’ve already spent this past year.

    • VRFriend

      10 000 people already work on VR for Facebook. They want to hire another 10 000 people. You see where the money was spent.

      • Blaexe

        They don’t all work on VR. They work at FRL which has a pretty broad scope at this point.

    • Till Eulenspiegel

      The money was spent on more VRporn studios, that’s what secretly driving this industry.

  • JesuSaveSouls

    Don’t get me wrong…Pimax Reality looks like something from a future Sci fi movie. Yet Oculus continues too, to innovate, but drop their price points. Now the Quest has 128 gb storage at only $300. The Quest 1 was $400 at lower resolution. Guess you can call the Pimax Reality futuristic, but it’s not coming out until the future. Q4 2022.

  • Ad

    This is insane. We’re just watching the future slip out of our hands and into theirs, liken when Amazon mopped up countless small businesses during the pandemic, but this is going to be a massive monster everyone will have to deal with for decades.

    Also cover the facebook papers, it’s idiotic for anyone to argue those aren’t relevant to either XR or their metaverse narrative.

    • Jonathan Winters III

      But this “monster” is selling us a $299 headset that would be $999 from any other company. And funding lots of great titles and making quality VR mainstream. Let them at it!

      • Blaexe

        $299 headset that would be $999 from any other company

        The Pico Neo 3 is sold in China to consumers for $390. Quest 2 is a cheap headset made with cheap components at a very high volume.

        • Daniel Fitzgerald

          FB are subsidising the sale of every quest sold to capture the market. Simple.

          • Blaexe

            Maybe – or maybe not. To this day we simply don’t know. We do know however that Quest 2 is not a premium headset sold cheap. It’s a cheap headset sold cheap.

          • ViRGiN

            And Valve makes $700 bucks of pure profit off each Index sold.

      • Ad

        Good thing VR is just for a games console and will never be part of anything more significant like AR or work or the metaverse. Because then you’d sound like a selfish gamer and a douche.

    • Hivemind9000

      A rising tide lifts all boats. This level of investment is necessary to move XR forward as fast as possible. The R&D will trickle out and down from FB as engineers move to other businesses or start their own. It also creates more interest in XR from VCs, who will try to ride the tail of this by investing in alternate XR hardware and complementary businesses (software, peripherals). This is how industries grow and develop. No one likes Facebook, but this is good for the entire XR industry.

      • Guest

        It is dirty-money gained from politics even worse than VC’s laundering their I’ll gotten gains!

        • Hivemind9000

          Yes, yes, evil rich people blah blah. So if not VCs or big industry players (or kickstarter as you probably hate that too), where will all the R&D money come from genius?

        • Alexander Sears

          While unfortunate, Facebook’s investment here is the big step in the dark that the industry needs to materialize itself.

      • Ad

        I really don’t think so. At all. They will build a lot of the pillars of AR, or the metaverse. It will be permanently worse because of decisions made today like the IBM engineers who made x86 and stuck us with a lot of its baggage. Or that little start up called Microsoft that’s still here forty years later with 80% market share.

    • ViRGiN

      Oh noes! Did you make a new reddit post on r/valveindex hoping for your god to finish his break and sprinkle some steam portable power?

  • kontis

    Chet Faliszek (ex-Valve) claims that Facebook “tried to lock up materials locking companies out of vendors they themselves never even used”

    https://twitter.com/chetfaliszek/status/1451044023779561472

    If that’s true then this $10B may not be universally good for the industry as we assumed…
    I wonder if that’s related to the legal debacle Valve recently had with new VR displays manufacturer.

    • Jonathan Winters III

      Nevermind Chet’s sour grapes. Chances are you own one of their VR headsets, along with the majority of other VR enthusiasts.

    • Hivemind9000

      Not much better than a conspiracy theories. Securing guarantees for supply chains is just business 101, especially in a world of supply shortages (esp. electronics). I don’t particularly like Facebook, but their actions are just those of any large business. And the one from Brielle is particularly laughable. In the tech industry you are always competing with other companies for the best engineers. It doesn’t matter if there are 100 companies, or 10, you still have to attract them to you vision and business. I think the net effect of their hiring spree will lead to more good XR engineers floating around the industry, which will benefit everyone.

  • Till Eulenspiegel

    If Zuckerberg wants people to take him seriously, he should sell Facebook and focus exclusively on XR. Without the baggage of Facebook’s bad name, Oculus just might succeed.

    • ViRGiN

      Oculus doesn’t need anti-FB fanboys like you to succeed. They already succeeded and are on path to even greatest success, get real. You are clearly spending too much time on the internet, probably browsing Steam forums in free time.

      • Till Eulenspiegel

        Zuck just got rid of Facebook and Oculus, LOL. Are you ready to lose your virginity yet?