Meta Ray-Ban, Ads in AI Chats
I have reviewed Meta Ray-Ban glasses a couple of years ago, and I have remained a DAU since then. I mostly listen to audio (music/podcast) and receive calls through my glasses. It also allowed to capture lots of spontaneous images/videos during my daily walk. Here’s one of my recent strolls around UC Berkeley (video at 2x speed):
Meta is trying to brand these glasses as “AI Glasses”. Ironically, I barely use Meta AI; I don’t prefer to talk to any of the AIs as I still like to write my queries to ChatGPT and read its response. But we don’t have to rely on my personal anecdotes; EssilorLuxottica (see my Deep Dive here) yesterday during their 2Q’25 earnings call shared some helpful data points about how these glasses are selling.
Ray-Ban Meta glasses sales increased by 200% YoY and they specifically called out the rollout of the Live AI, including new features like the real-time translation and the wider adoption of transition lenses fueling such growth. In fact, 60% of Ray-Ban Meta that were dispensed in Sunglass Hut had transition lenses attached to it. I too use the transition lenses.
While there is still a lot we don’t know the economic details about the partnership between Meta and EssilorLuxottica, Essilor confirmed that these glasses are margin dilutive for them. They also emphasized that is the least of their concern. From the call:
“…would like really to comment on this dilution and how its dilution seems to be a bad word. But honestly, what I care is about the money that I can make and the earnings per share that I can really give to my shareholders. And Meta, also with less margin is making a lot of money. And since the volumes are growing very, very fast, that will help the company really for the future investment and also for our journey in the med tech.
we really, with some positive view, we believe that at a certain point, we will also have the necessity to increase this capacity above the 10 million pieces that we expected now.
Essilor recounted the difficulties of selling the first version of these glasses. But today? These glasses are “the easiest product to sell”. From the call:
“…because we are the only one into the market. So there is no one that it can help us in this adventure. And this is what is -- makes the rollout quite tough at the beginning but we see the same trend that we saw on the Meta when we launched the story, Ray-Ban story at the beginning.
It was something really very difficult to communicate and also was difficult from the customer's point to understand how to use it. Now it seems very easy. Everybody are just getting in the store, asked for the AI glasses Ray-Ban Meta, Oakley Meta now is already. We have a customer that are coming in the store and they're asking. And this seems to be the easiest product to sell.
These are very encouraging words for Meta shareholders given Meta is probably spending $10-15 Billion/year on investments related to AR glasses. I am really looking forward to the next iteration of the glasses to see what they’re cooking inside Reality Labs.
Inevitability of Ads in AI Chats
Rohit Krishnan wrote about the inevitability of ads being placed in our chats with AI. From his piece:
“…imagine if Elon Musk is using Claude to have a conversation, the answer to which might well be worth trillions of dollars of his new company. If he only paid you $20 for the monthly subscription, or even $200, that would be grossly underpaying you for the privilege of providing him with the conversation. It’s presumably worth 100 or 1000x that price.
Or if you're using it to just randomly create stories for your kids, or to learn languages, or if you're using it to write an investment memo, those are widely varying activities in terms of economic value, and surely shouldn't be priced the same. But how do you get one person to pay $20k per month and other to pay $0.2? The only way we know how to do this is via ads.
And if you do it it helps in another way - it even helps you open up even your best models, even if rate limited, to a much wider group of people. Subscription businesses are a flat edge that only captures part of the pyramid.”
As someone running a subscription business, I am well aware of the limitations of subscriptions. Whether you are a billionaire or a sophomore in college, you both pay the same to read my work. If I wanted to capture the value proportionately, I would have to switch to an entirely different business e.g. managing other people’s money.
While many people seem to have preconceived notion about pros and cons about one model over the other, the reality is there are trade-offs no matter which path you take. People who think subscriptions are some sort of panacea to all the ills derived from ad dependent business models often choose to ignore ground reality. Again, from Krishnan’s piece:
I also think this is a good thing. I know this pits me against much of the prevailing wisdom, which thinks of ads as a sloptimised hyper evil that will lead us all into temptation and beyond. But honestly whether it’s ads or not every company wants you to use their product as much as possible. That’s what they’re selling! I don’t particularly think of Slack optimising the sound of its pings or games A/B testing the right upskill level for a newbie as immune to the pull of optimisation because they don’t have ads.
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