Meta dominates VR market, but Reality Labs division posts $5 billion loss for the quarter
The big picture: Meta recently posted excellent sales in its VR division while still recording a loss due to R&D. The company currently holds a dominant position in the VR market, but the landscape is rapidly evolving. New offerings from tech giants like Apple, Google, and Samsung are expected to increase market competition, making R&D investments more critical for staying ahead.
Meta’s Reality Labs division achieved a significant milestone in Q4 2024, generating $1.1 billion in sales, primarily driven by the success of the Meta Quest 3 headset. This impressive figure underscores Meta’s dominance in the consumer VR gaming market, where the Quest 3 holds most of the market share. Unfortunately, the division also posted a substantial $4.97 billion loss for the quarter.
The losses mainly stem from Meta’s continued investment in research and development, with plans to make between $60 billion and $65 billion in capital expenditures this year. Meta will allocate a decent portion of this investment to its ambitious Metaverse project, envisioned as a comprehensive virtual social space.
Despite the financial setback, Meta’s commitment to VR hardware development remains strong. This persistence will likely benefit game developers as the company continues refining and updating its VR offerings to meet market demands. The Meta Quest 3, for example, offers significant hardware upgrades, including twice the GPU power and increased CPU and memory compared to its predecessor, allowing developers to create more sophisticated applications.
The Meta Quest’s popularity among VR game developers is also evident, with a recent State of the Game Industry survey indicating that most studios with VR projects are targeting the platform. According to the 2025 report, 59 percent of VR/AR developers are making games for Meta Quest. This figure significantly outpaces other VR platforms, with Steam VR at 31 percent, PlayStation VR 2 at 16 percent, and Apple Vision Pro at 8 percent.
However, Meta’s position in the VR market may face future challenges. Rumors suggest Apple is developing a more consumer-friendly version of its Vision Pro headset, known internally as N107. Apple has reportedly prioritized this device over the next-generation Vision Pro, potentially launching it before the high-end model.
Meanwhile, Google and Samsung have partnered to develop a new XR. This initiative, dubbed “Project Moohan,” aims to create innovative smart glasses and virtual reality headsets powered by a tailored version of Google’s Android operating system. These developments could lead to increased competition in the consumer VR space, potentially threatening Meta’s current market dominance.
