Facebook to report separate AR, VR earnings, ahead of metaverse moves

Social media giant Facebook is making a significant change to how it reports earnings from its various businesses. In its third quarter earnings release posted last night, the company said that it will “break out” Facebook Reality Labs (FRL) as a separate reporting segment from the next quarter. The company had announced that it will focus on building a “metaverse” during its second quarter earnings call this year, which is likely why it’s splitting FRL into a separate segment.

“As we have discussed, we are dedicating significant resources toward our augmented and virtual reality products and services, which are an important part of our work to develop the next generation of online social experiences. The new segment disclosures will provide additional information on the performance of FRL and the investments we are making,” the company said in the release.

Under the new reporting structure, the company will provide revenues under two segments — Family of Apps and FRL. The first includes apps like Messenger, Instagram, Facebook, WhatsApp and more, while FRL is the unit inside Facebook that deals with Augmented Reality (AR) and Virtual Reality (VR) research. The company is expected to announced its plans for building the metaverse at the Facebook Connect Conference scheduled for October 28.

Also read: What is the Metaverse and why is everyone talking about it?

On October 14, chief executive Mark Zuckerberg and VR head Andrew Bosworth posted photos of the company’s new VR headsets. “We expect our investment in Facebook Reality Labs to reduce our overall operating profit in 2021 by approximately $10 billion. We are committed to bringing this long-term vision to life and we expect to increase our investments for the next several years,” the third quarter earnings release said.

Also read: Facebook touts ‘retina resolution’ VR headsets for the future metaverse

“Proud of the research Michael Abrash's team is working on at FRL-R Redmond—excited to get an early look at some of the technologies that will underpin the metaverse (we work on several prototype headsets to prove out concepts, this is one of them. Kind of. It's a long story),” Bosworth said in a tweet at the time. 

FRL includes the virtual reality headsets from Oculus, a virtual reality company Facebook bought in 2014. Michael Abrash is the chief scientist at Oculus. The unit also includes products like the Portal smart speakers and other future-facing research. 

Also read: Facebook might change its name on October 28: report

In March, the company revealed that it had developed prototypes of wrist-based AR controllers, which read the signals our brains send to our hands through the neurons. This system was meant for future ambient computing, AR and VR interfaces, where interactions will mostly happen through gestures.