How Meta's Oculus Splurge Will Affect Its Bottom Line

Meta Platforms (META 2.98%) is updating and rebranding its virtual reality headset, and is even opening a showroom on its campus to sell the product. In this Motley Fool Live segment from "The Gaming Show," recorded on April 25, Fool.com contributor Jose Najarro takes a look at Meta's new developments in this area of its business.  

Jose Najarro: First, there was some recent news today that Meta is actually opening up their first showroom to sell VR headsets. So some of the people, it kind of reminds me of kind of that Apple strategy where you kind of go to an Apple store and kind of test out the device. This is in very, very early stages though, the first showroom that they're opening up is actually on their campus, so it's not like it's at a mall or it's not somewhere we're usually with with kind of high foot traffic, but it's set to open in May 9th, and the overall kind of concept is to kind of just show where what you can do with the VRs right now. So I don't know, maybe even businesses can kind of go and and kind of see some of the products there where maybe they can kind of make some form of solutions for businesses. So that's pretty interesting. I want to see where that's going to go in the future, maybe in the next year or two, we might start to see more of like Meta stores opening up in malls or other places.

The second thing is which we all know, owns the Oculus, which is now called the Meta Quest, I believe, they kind of rebranded. There were some updates there, they did a gaming show for 20th and they called it the, I believe, the Meta Quest Game Show, and they kind of showed some popular games. One of the games that they mentioned was Among Us VR. I think it's interesting that the games that are coming out here, most of them are from well known franchises. I mean, Among Us was the most downloaded mobile game in 2020, now, they're kind of creating a VR version on the Oculus on the Quest platform. So that's another way that I'm guessing they're trying to grab people to come and play their product. Hey, this is a game I played before. Maybe I should go buy an Oculus Quest because I know how fun the game was in mobile, maybe it might be even funner in VR.

I know in a bit, Jon is going to mention a little bit about NFL entering the VR. They kind of announced it, but we'll talk about that in a bit. Ghostbusters was another big player that they kind of brought up and many more. Resident Evil was another one. Then just kind of some new games that just kind of showcase what you can do with the VRs, The games look pretty cool. I want to say, nothing that I want to say is a big game changer to the VR market as of yet. I think right now, what we're just seeing is more popular names entering the market like Among Us, like the NFL that we're going to talk about, and Ghostbusters. They also kind of made an update to their hand tracking, and this seems simple but I do believe it's a big deal. So in VRs right now, you sometimes have a camera that kind of tracks your hands and that can be very very lag, like you could be doing something like this and the VR doesn't know exactly what you're doing. the hand tracking that Facebook or Meta Platforms just showed, it shows that it's the precision has increased dramatically and I think this opens up to a whole new world of games available that could be available to their platform. For example, VR Jenga for example back then would have probably been impossible to do because you you just didn't have the precision to do something like that. Now, something like that would probably be more possible because of the high precision.I forget that board game, the doctor where you're like playing surgery, Doctor Surgery, I forget.

Jon Quast: Operation

Jose Najarro: Operation. Thank you, Jon. Something like that would have not been possible back then just because it was so iffy with the with the hand control movement. So sometimes, the technology updates, it seems small, but the simplicity of adding precision can just change the dynamics of the system in a long way. So the hand tracking update with something I enjoyed. Overall, it does seem like Oculus is expected to, they're still focusing there. I do want to say Meta Platforms earnings are this week, I believe Wednesday or Thursday after the market closes. Let me just share screen real quick one more time. We can see Reality Labs which is their new segment for this is such a small portion of total revenue but we can see, it definitely takes a huge hit in operating loss. So I know this is a company that said this court, it's starting in 2022, they're going to be spending more money on capital expenditures and some other forms of investments. So I want to see if there's any major changes in like they're operating loss from just last quarter. How how much are they? Are they already kind of using to kind of fuel this technology? So interesting earnings this week.