Facebook-Meta owner is now in financial trouble after paying VR developers up to $1 million

For several years now, Meta has been promoting a rosy picture of the future of human communication in which people, represented by a diverse array of avatars, can work, play and shop together in immersive virtual worlds that can be accessed via a virtual reality device.

‍

Nevertheless, what the company hasn't said is that it's willing to pay exorbitant salaries to its programmers to turn its vision into a reality. It has been reported that programmers capable of creating virtual reality-powered solutions for games, apps, and technology can earn a total compensation package that reaches as high as $1 million, according to people with inside knowledge of the matter who requested anonymity to discuss internal matters.

‍

As a matter of fact, the parent company of Facebook pays a lot more than many other gaming companies. This is according to the chief executive of Andiamo, Patrick McAdams, whose firm recruits technical talent for large and small companies. "I think it would not be an exaggeration to say that their total compensation is twice or more than twice what you will get from a large gaming company. I think that is not an exaggeration."

‍

“It's not uncommon to be offered a salary that is $500,000 or more,” said McAdams, who added that the most lucrative packages are usually given to highly skilled developers and team leaders.

‍

These eye-popping compensation packages are only a sliver of the multibillion-dollar investment that the company is making in order to build the so-called metaverse, which appears as a nearly believable computer-generated space where users can interact with one another. In his vision for the future of computing, Mark Zuckerberg, CEO of Meta, suggested headsets that are powered by virtual reality will become the next great computing platform, eventually replacing some of the in-person communication with glasses powered by augmented reality, and more. In order to reflect these ambitions, the name of the company was changed from Facebook to Meta in 2021.

‍

It is also ironic that Meta's high salaries and long-term investment in the metaverse come at the same time as a frenetic push to keep costs down across the sprawling company. Last month, the social media giant announced plans to lay off 10,000 workers as part of a months-long downsizing and restructuring effort as part of a downsizing and restructuring effort. Following the 11,000 job cuts made by the company in November, at which time it made its first widespread layoffs in its history, the company is now expecting to cut another 13 percent from its workforce.

‍

The CEO of Facebook has declared the year 2023 the "year of efficiency," in an effort to reduce middle management and cut projects that are not necessary.

‍

Meta declined to comment on the matter.

‍

Several former Meta human resources employees have claimed the company's tendency to pay unusually high salaries to developers building virtual reality products is part of a broader trend in which the company is willing to spend more than its competitors to attract top talent in a wide range of fields.

‍

"There are a lot of roles that they compensate way above market rates for," a former Meta recruiter said. In addition to that, "if we provided an offer ... we would not see much competition from the other companies."

‍

Meta, a company that is heavily dependent on its digital advertising business, has had a difficult time dealing with severe economic challenges over the last few years. New competitors are increasing their efforts to gain advertising dollars and users by offering a variety of short-form video services, such as the short-form video network TikTok, to the company. There has been a lot of market instability in recent months, caused by the new privacy rules from Apple, the war in Ukraine, and rising inflation, which has led some digital advertisers to reduce their spending on social media ads.

‍

"In the context of a volatile macro-environment, I believe that Facebook is facing execution and strategy issues as a result of its mind-boggling spending on the metaverse," said Dan Ives, a financial analyst with Wedbush Securities. "This was compounded by the fact that the company was spending upwards of $30 to $40 million on thirty or forty different types of projects, many of which had nothing to do with social media."

‍

This latest effort by Meta to be leaner and more efficient is part of a wider trend that is seeing more and more technology companies lay off their employees and cut projects as a result of increased economic pressures. In recent months, Google and Amazon as well as a slew of Silicon Valley start-ups have all been slashing jobs, along with a cadre of technology giants that are also in the same boat. Layoffs.fyi, a website that tracks layoffs in the tech industry, reports that over the last two years, the tech industry has shed at least 332,614 jobs, according to a website that tracks layoffs in the tech sector.

‍

In his statement, Zuckerberg said that he ramped up the company's investments during the pandemic because he believed that despite the threat of the Coronavirus pandemic subsisting, the e-commerce market was going to continue to skyrocket – bringing in more advertising revenue – after the threat of the pandemic subsided.

‍

A large part of Meta's overall spending is devoted to Reality Labs, the department of Meta that is in charge of building the products that make up its metaverses, as it revealed last year that 20 percent of Meta's budget is dedicated to the department. Regulatory filings from the company indicate that that division lost more than $13.7 billion last year - up from the $10.2 billion it lost in 2021, according to the company's filings.

‍

The money Meta has earned has been spent in a variety of ways. Quest Pro, a $1,500 virtual reality headset that powered by cutting-edge technology, was released by the company last year. In spite of mixed reviews from critics, these headsets were targeted at corporate workers and businesses as a tool for collaborating with each other.

‍

Furthermore, Meta has invested in research to improve the underlying technology of its devices in order to provide users with an enhanced sense of presence in the metaverse through improvements in the technology. A total of seven virtual reality studios have been acquired by the company as part of its efforts to increase the range of apps available on its devices. After announcing a plan to employ 10,000 highly-skilled employees within the European Union over the next five years, the company announced it was renaming itself from Facebook to Meta in October 2021. Among these would be workers who would help shape the Metaverse.

‍

Meta has said it will take years for its metaverse ambitions to come to fruition in part because it is still working on developing the underlying technology that will enable it to run the metaverse. There are still efforts being made by the company to create glasses that can project computerized images onto the real world as well. Additionally, Meta is still conducting research in order to give users of its virtual reality headsets the illusion that their physical world and the virtual world do not differ from one another. It has been a struggle for Meta's existing headsets to gain mainstream acceptance over the past few years.

‍

Even though the Menlo Park, Calif.-based company has indicated it may cut jobs at Reality Labs, it hasn't backed away from its metaverse bet or its willingness to pay handsomely for talented employees.

‍

As per data from Levels.fyi, which tracks salaries in the technology industry, among the virtual reality developers who were offered jobs at Meta over the last nine months, those who were in the top 90 percentile in terms of total compensation earned an average of $538,800 as per their job descriptions. Data showed that Apple paid its highest-earning developers $495,400, and Google paid its top VR programmers $440,000 and these numbers were higher than what Apple paid its highest-earning developers. As the data indicates, Apple, Google, and Meta all paid comparable salaries at the base level.

‍

Meta is facing more competition for talent in the virtual reality industry as more companies enter the market, according to Anshel Sag, an analyst at Moor Insights & Strategy who covers the virtual reality industry. The PlayStation VR headset was released earlier this year, and it was the company's first venture into virtual reality. A similar high-end device is expected to be unveiled by Apple later this year, according to media reports.

‍

“Demand has gone up [mainly because] there are a lot of companies that are waiting for Apple's launch this year,” Sag said.

‍

Generally, Meta tends to offer its employees higher total compensation packages, which often include stock options and bonus options, than its competitors, according to the data collected by the study. There has been a lot of volatility in Meta's stock price over the last year and a half, which has created uncertainty for workers and candidates about the total payment they can expect. Moreover, some of Facebook's reputational crises, including the Cambridge Analytica scandal and revelations that Russian-based operatives were using Facebook to influence the 2016 presidential election, have made it more difficult for the company to hire talent because of its reputational problems.

‍

An executive at a small gaming company said he lost out on the opportunity to hire a senior developer last year because the candidate told him that Meta was offering $800,000 a year with the chance to earn more than $1 million if they were to receive a performance bonus.

‍

"This candidate was a senior [developer] with a lack of super unique experience [or] skills," said the executive, who requested anonymity because he was discussing internal matters. “Facebook was doing pretty wild stuff a year ago.”