Mark Zuckerberg showed these prototype headsets to build support for his $10 billion metaverse bet

The company formerly known as Facebook is going to spend $10 billion this year on research and development on virtual reality and augmented reality technologies, including computerized glasses or headsets.

On Monday, Meta CEO Mark Zuckerberg showed off how much progress the social media company has made towards that goal by revealing many of the unfinished headset prototypes the company has built in its labs.

Zuckerberg has bet the future of the social networking company he founded on virtual reality, which immerses users in a computer-generated world, and augmented reality, which superimposes computer-generated objects over the real world. Last year, the company changed its name to Meta to highlight the company’s new emphasis on the metaverse, a virtual world where Zuckerberg imagines people will spend increasing amounts of time — ideally, through advanced computerized glasses.

If Zuckerberg succeeds in making head-worn computers mainstream, then Meta would have a new revenue stream of hardware sales, and it would control its own hardware platform, which would make it less susceptible to platform changes from other companies. For instance, on its last earnings call, Meta said that recent privacy changes Apple made to the iPhone could cost it $10 billion in foregone revenue this year, as it hampers the company’s ability to target ads to precise audiences.

The VR market is currently small and there are questions about how big it could get. Meta currently dominates headset sales, with its current $299 Quest 2 accounting 78% of all headset sales in 2021, according to an estimate from IDC. But there were only 11.2 million VR headsets sold total during the year — a far smaller number than smartphones or PCs.

Meanwhile, investors are skeptical about Meta’s pivot away from its core business of ads and apps. The stock has fallen over 53% so far in 2022 on fears of growing expenses, light growth forecasts, increased competition from TikTok, and effects from Apple’s iPhone privacy change that hampered mobile ads.

Monday’s demonstration did little to calm those fears — Meta’s stock was down more than 4% in late-day trading Tuesday, despite a broader rally in tech stocks. (U.S. markets were closed Monday for the Juneteenth holiday observation.)

Meta is developing next-generation virtual reality displays designed to provide a realistic enough experience for users to feel like they’re in the same room with other virtual people, Zuckerberg said during his demonstration. Current displays have low resolution, display distortion artifacts, and can’t be worn for long periods of time.

“It’s not going to be that long before we can create scenes in perfect fidelity,” Zuckerberg said on a call with media about the company’s virtual reality efforts. “Only instead of looking at them on a screen, you’ll feel like you’re there.”

“The issue today is that the vividness of screens that we have now compared to what your eye sees in the physical world is off by an order of magnitude or more,” Zuckerberg said.

For the past few years Meta has regularly shown its progress working on virtual reality headsets and augmented reality glasses to partners and the press, to encourage investors to regard the project as worthwhile, and to help recruit highly-paid developers and executives with experience in VR and AR.

In these roundtable presentations, Meta regularly shows off unfinished prototypes for use in research, which is unusual in consumer electronics. Gadget companies like to complete products and figure out how they are going to be manufactured before talking about them with the press. For example, Apple, which is working on headsets of its own, never shows off prototypes.

“These prototypes, they’re custom and bespoke models that we built in our lab, so they’re not products that are ready to ship,” Zuckerberg said.

Here were the prototypes he showed:

Butterscotch. Butterscotch is designed to test higher-resolution displays that have pixels small enough so that the human eye can’t tell them apart. Butterscotch has a new lens Meta developed that limits the headset’s field of view, making it possible to present fine text and display increased realism.

However, Meta says the prototype was “nowhere near shippable” because of how heavy and bulky it is — plus, the prototype still has exposed circuit boards.

Half Dome 3. Meta has been working on Half Dome headsets since at least 2017 in order to test a kind of display that can shift how far away the focus point of the headset’s optics is. With Half Dome’s technology, Meta says, the resolution and image quality could improve enough for users to create giant computer monitors inside a headset to work on. The newest version, 3, replaces mechanical parts with liquid crystal lenses.

Holocake 2. Meta says this is the thinnest and lightest VR headset it’s made and that it’s fully capable of running any VR software if it’s hooked up to a PC. However, it requires specialized lasers that are too expensive for consumer use and require additional safety precautions.

“In most VR headsets, the lenses are pretty thick and they have to be positioned a few inches from the display so they can properly focus and direct light directly into your eyes,” Zuckerberg said. In Holocake 2, Meta uses a flat, holographic lens to reduce bulk (in addition to the lasers.)

Starburst. Starburst is a research prototype focusing on high-dynamic range displays which are brighter and show a wider range of colors. Meta says that HDR is the single technology that’s most linked to additional realism and depth.

“The goal of all this work is to identify which technical paths are going to allow us to meaningfully improve in ways that start to approach the visual realism that we need,” Zuckerberg said.

Mirror Lake. Meta also showed off a concept design called Mirror Lake for a ski-goggle style headset. Mirror Lake is designed to combine all the different Meta headset technologies it’s developing into a single, next-generation display.

“The Mirror Lake concept is promising, but right now it’s only a concept with no fully functional headset yet built to conclusively prove out the architecture,” Meta Reality Labs chief scientist Michael Abrash said. “But if it does pan out, it will be a game changer for the VR visual experience.”