So, Bos, there's a lot of news that we can talk about, so that's fun. Maybe we should start with last week. And I was actually rereading your 2025 memo, where you were talking about Reality Labs, and you wrote...
Yeah, my internal memo. Yeah.
Which, like many, I have leaked many over the years. Others have leaked many.
I appreciate that about you.
You wrote, 'This year likely determines whether this entire effort will go down as the work of visionaries or a legendary misadventurer.' Which one was it?
Inconclusive. Less so than I thought. You know, I think there's two reasons for that. One of which is we kind of, I think in 2025, you go back to this point last year, we thought 2025 was going to be the AI turning point year. It kind of wasn't. I think 26 is setting itself up to be actually 26 is off to an incredible start in that on that front already in terms of what we're seeing in terms of internal disruption of how people work and how different it is and how we're roadmapping differently and we're structuring our organizations differently. So that ended up not being the case. And as a consequence, I think 25 was ended up being inconclusive. Now, on one particular piece, we did kind of give up the ghost, which was we had been working for a long time instead of our metaverse constructs at this very unified idea of the software layer of Horizon and VR. And you know, Horizon started in VR and it was like it's the social platform layer for VR. As we've started to build out over the course of 25 on mobile, obviously we know there's a much bigger audience on mobile and it's having a really really positive pickup on mobile. Well, here you've got a team that actually has product market fit in a huge market on mobile phones and they're kind of having to build everything twice. They're building it once for the mobile phone. They're building it again for VR. There's a pretty easy way to increase their velocity which is just like let them build for mobile. So Horizon is very focused now on mobile not exclusively but almost exclusively in turn. VR which has been building a very maximalist vision and I think we've gotten a lot of complaints even from the community in this space where it's like you know VR we want to be able to do certainly immersive gaming is the kind of cornerstone use case, all the mixed reality productivity interactive use cases including things like Supernatural and fitness all these pieces, and then layering on these social integrated social use cases. It's a lot to ask an operating system to do. You put the headset on, you boot in, you want to be there quickly, and you want to be able to do everything like if be physically co-present with other people and also have and it was a pretty overwrought OS like in terms of the visual design and the weight of it even in terms of the compute power, the thermals, the boot times. So VR comes out of this with a lot more focus on kind of the fundamentals on immersive content especially the third-party content libraries on media, and on productivity and kind of mixed reality use cases. It's a little more focused on these obviously you're still social you're still able to do those things those things are happening but those things are kind of much more at the application layer than being at the system layer. And so everything gets a little bit faster. It's kind of one of the things there's a real lack of nuance in how these things gets covered which is a shame.
Yeah. You can it's like we're still invest...
Talking about the layoffs. We haven't said that but...
Oh yeah. Sorry. So we made some changes to the metaverse side of Reality Labs a week and a half ago and we're still investing a ton in VR. We're still committed to it. We've you know we I think it's officially leaked we've got you know two devices on the road map that we're super excited about coming out over the course of a period of time. We think they're in a time. That's this year, right? I'm real careful about how I say that. No, see that's a period of time. It could be anything. Could be tomorrow, you know. And so we're being really we're still continuing to be investing heavily in the space, but you basically, you know, obviously VR has grown less quickly than we hoped. Like that's we know that that's true. And so you want to make sure that your investment is right sized.
I mean, I remember the marks like 10 years ago saying a billion people in VR by now, right?
Yeah. Yeah. Safe to say that hasn't happened.
No, no, that's right. So we've anticipated faster growth. On the flip side, look, we hit our sales goals last year. Like, it's growing well. Yeah. And the engagement's good and like this. So, the sales are good, the engagement's good, but it's also not gone vertical. Like, we know it hasn't totally cracked the mainstream. So, we're just right sizing that investment. We're still by far the biggest investors in the space. We're probably still investing more in VR content, for example, than we were even like 2020. But for the community, it's tough like you see any of these changes go. I think it's probably a good thing for third-party devs. Like I think they're going to have a lot more you know the third party the focus on the third party app store is going to be a much bigger part of the platform going forward. It's been big in the past and then they got kind of frustrated as it got muddled up with other competing interests. I think it's going to be clearer now. So it's I don't think it's all bad news but obviously very tough for the people affected and it's the loss of an idea. We had this idea of this super integrated operating system right throughout it and now we're taking a much cleaner look at it.
Okay. Yeah. I you retweeted something from Palmer Luckey the the founder of Oculus which I thought was interesting. He said this is not a disaster. Basically what you just said Oculus had a strong internal mandate to not be Nintendo and instead build things that build the ecosystem. Returning to that is good. So this is Palmer and you you retweeted that. So I assume you you agree with that.
Yeah. Palmer and I never spoke about this stuff and I didn't know he's going to do that but man you really nailed it. That is what's happening is basically you're you're giving up on being Nintendo.
I don't think we we never wanted to be Nintendo. People forget this is one of the things that's so I love about our industry but it's also tough is the memories are so short. Five years ago, six years ago, there's a tremendous consolidation in the gaming space and every studio is getting bought up and made exclusive and it was...
You guys were doing a lot of that too.
Well, no, we we are. So, my point is like we were doing it reactively. It's like you you saw Microsoft doing it. You saw these like consolidations happening and you wanted to make sure that there exist we weren't I swear to God we had the conversation at the time. We weren't sure there was going to exist independent game studios who could take on the projects that we wanted to make sure we were doing because we at that point we were already funding these projects. you know yeah but we weren't taking on the entire burden of the team and the company and so that obviously went very differently than anyone foresaw even you know the Microsoft decisions that Microsoft has made and how those were playing out so but that the landscape strategically six years ago was a legitimate concern from us that there was not going to be studios available to build VR games and now you're hoping that there will be in a different way
There are I think yeah this you know it turns out that ecosystem has been quite robust and it continues to kind of thrive So it's a bit bit of a different landscape than it looked like it was going to be 5 years ago.
But the Quest is not done as like a line when...
Yeah. Okay. So you guys are still committed to VR kind of like you said, right sizing it.
So on the mobile side with Horizon, that to me suggests your main competitors now are Roblox and Fortnite. Is that fair?
Any place where people are doing what I think of as a synchronous social experiences. So places that you're in an environment and you're they're together.
Roblox is quite robust. I mean the flywheel they have with ecosystem stuff, with the economy stuff, like that's hard to crack, right?
And they've put 20 years into it, you know, like and they really they put the time into it. We have a few advantages, I think. I mean, I think if you look at the the styles, the visual styles that some of these apps have chosen. I think there's you know, Roblox is they're somewhat limiting to the audience that appeals to. I think it's a great product, by the way. I'm not trying to to crush it. I think it's it's a distinctive choice that they've made. Fortnite on the flip side is just tremendous visual style, but there's a quite a limitation on what you can do as a developer on that platform. that's kind of inside of the constructs that they've produced. But let's be honest, the real tool that's going to change the game, those have they have great huge 150 million plus user base, sticky audiences, creator ecosystems. It's awesome. I love those products. I'm so happy for them. Also, AI is coming. And the thing that will change the most is the ability for people to create new experiences and to be participating in the ecosystems on both sides. When you and I think of user generated content, we think of things where everyone can participate. And you know, one of my favorite things about Facebook, for example, was early on there was no photos because nobody had cameras. And if you had a digital camera, it was like, you know, the old timey, yeah...
Get a memory camera to stick it. It was like a real thing. When phones hit and everybody has a camera, they become predominantly visual. Like photographs are the medium. And then as those as video starts to take off, it's the same thing. So we really see the same likely cycle happening in the richer media of the metaverse where you have these kind of richer worlds. But today to produce that kind of thing you need tremendous expertise on 3D modeling, interactive design. Whereas what we're playing with now and we've put into our developer tools the first generation of already are things that were kind of unthinkably hard years ago. I mean take a trivial example AI NPCs. Anyone who's played games for a long time knows these are so bad that even the best studios in the world have like hilariously bad NPCs. It's like a meme in like youth culture, right? Is like the NPC meme. The GTA...
You only have you only have like one pose. You only have like three things that you can say and you just loop them together.
And that's not going to be the world we live in anymore. It's trivial for somebody who's never even done game development to build an NPC, give them a backstory, give them the boundaries of the script and the environment and like expect them to be a part of the of the game and to act naturally in that environment. So, I think the opportunity here for Horizon is we have a fresh new engine which we're very excited about in terms of what it's capable of graphically in terms of providing a richer range of styles on mobile devices optimized for mobile devices. and then the AI we can layer into it to make it so that something that truly everybody can participate in. and that's the big bet.
Let's circle back to AI, but on the glasses, there was a rumor recently that you all may double production this year to about 20 million units. I think Essilor Luxottica was doing about 10 million units a year. They may double that to 20. Is that happening?
We're tremendously increasing production. This is right. So the Meta Ray-Ban display, the specific rumor was the Meta Ray-Ban displays, the ones that I'm wearing right now.
I thought it was overall else volume.
No, no. So the the volume increases are real everywhere. and it's I it's hard to predict because certainly for the existing product lines we have, yeah, we're seeing like huge multiples on growth. I mean that was true last year. I think it's probably going to be true again this year. but there's also new products coming to market. and then for these the display glasses that I'm wearing, which we had delayed our entry into Europe because the demand has been so great. We haven't been able to fulfill the demand we've had and we've had to dramatically increase production of them. and it's really what a delight. Have fun.
It's kind of the opposite of the Quest story.
Totally new. Well, actually, you know, Quest actually flew off the shelves, too. People forget that. And Quest is still selling really well. So, like I don't want to go too far in the comparison of it. the but certainly the audiences are different. And what's interesting about the the the Meta display glasses, you you not surprised at all that you're kind of early adopter tech enthusiast thinks, 'Oh, this is so cool. I'll get these glasses.' They're very cool. It has been surprising how broadly they've found interest. That's been a surprise like in in segments of society and people who who think they're great. My wife loves them. It's like my wife is like the opposite of a tech early adopter. She would rather she'd rather not. and but like it's like so these are kinds of things. So it's it's been a a real delight and you you know obviously you hope for that when you build these new products and you kind of try to plan conservatively. I did a pod with Alex Himl your your glasses guy recently and he declined a spam call mid podcast with him and I was impressed by that's pretty good. I I didn't know he just I don't want to get myself in too much trouble but I've been using them a lot. I talked about the translations and the the captions use case. I was in a call earlier where a policy question came up and I didn't have an answer to it and these ones have the handwriting so I can handwrite. So I hand wrote to Australia our partnerships lead like on WhatsApp on the glasses like hey where are we on this issue? I just didn't know. And then he texted me back right away and I was able to just like read off.
It actually happened like mid-conversation.
It happened earlier this morning.
Okay. Let me know if you do that during this conversation.
