Big XR News from Meta, Microsoft, and Magic Leap

Revenue drops and acquisitions blockers slow major Metaverse ambitions

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Published: April 28, 2023

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Rory Greener

This week saw many firms release first-quarter (Q1) earnings reports. In the XR world, these Q1 reports give great insight into the success, failure, and goals of many immersive firms looking to leverage the emerging and unpredictable marketplace.

Moreover, with significant firms struggling through Q1, official government bodies are also decelerating Metaverse growth out of competition fears.

Despite that, some significant firms are working hard to provide cross-platform, interoperable XR solutions that go against the grain to offer accessible tools.

Meta’s Reality Labs Division Sees Massive Revenue Loss

Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, released its Q1 earnings report on Wednesday, indicating a massive loss of revenues for its Reality Labs division. This comes despite stronger-than-expected profits at the start of 2023.

The report noted that its Reality Labs division saw a 51 percent drop in revenues “due to lower Quest 2 sales” at $339 million. This is a significant decline from the $695 million in revenues the division generated in the same quarter of 2022.

The Reality Labs division develops and manufactures Meta’s VR headsets, such as the Oculus Quest 2. The division also develops AR and VR technologies like the Quest Pro headset.

Meta CEO Mark Zuckerberg has said he believes the metaverse is the next central computing platform and has invested heavily in developing the technology. However, the company has yet to see a significant return on its investment.

The Q1 earnings report further indicates that Meta’s metaverse ambitions face challenges. The company faces increased competition from other VR and AR companies, such as Sony and Apple.

Microsoft’s Metaverse Push Blocked by UK Officials

The UK Competition and Markets Authority (CMA) blocked Microsoft’s $69 billion acquisition of Activision Blizzard, which provides the “building blocks” for its Metaverse. Microsoft first announced its acquisition in 2022. At the time, Satya Nadella, Chairman and Chief Executive of Microsoft, said that the gaming industry plays a “key role in the development of Metaverse platforms.”

Moreover, the purchase marks Microsoft’s attempt to expand Activision Blizzard’s gaming business operations across PCs, mobiles, consoles, and the cloud.

The CMA, on the other hand, is refusing to approve the deal because it believes it poses a threat to competition in the cloud gaming industry.

CMA reps say that if Microsoft buys Activision Blizzard, it could shut out competition by only putting popular games like Call of Duty on its Games Pass digital application storefront.

The CMA stated that the acquisition enables Microsoft to establish a “strong position” in the rapidly expanding cloud gaming market. Additionally, the CMA asserts that the move risks “undermining the innovation” essential to the growth of cloud gaming market opportunities.

Magic Leap Natively Backs OpenXR

This week, Magic Leap announced increased compatibility with OpenXR for its Magic Leap 2 AR headset.

In an explanation on Tuesday, the organization reaffirmed its obligation to build an “open and open [AR] biological system.” This aims to support businesses and developers in all industry sectors.

Since its inception, the company in Plantation, Florida, has worked with OpenXR to improve interoperability between XR devices.

The company elaborated, “as the most immersive AR device on the leading XR industry standard API, we are committed to empowering developers, enterprises, and users with greater choice and faster innovation in an industry that is becoming increasingly dynamic.”

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