Saudi Arabia’s sovereign wealth fund took control of augmented reality pioneer Magic Leap for $450 million, The Telegraph reported Tuesday.
The Florida-based company, founded in 2010 by Rony Abovitz, has burned through billions developing a headset that projects holograms onto the real world, intended to make users feel like they are immersed in the digital landscape.
“Our goal is to make our interactions with the metaverse a more natural extension of how we view and operate in the physical world,” CEO Peggy Johnson said in a recent blog post.
The company was a hit at the Consumer Electronics Show in 2016, drawing buzzy interest and eventually more than $4 billion in funding from tech behemoths like Google and China’s Alibaba, along with telecom giant AT&T, chip maker Qualcomm, major investment banks like JPMorgan and Morgan Stanley and Hollywood.
Warner Bros. studio, then part of Time Warner, took part in at least one round of funding that poured $793.5 million round into Magic Leap in 2016.
Saudi Arabia led another $400 million funding round for Magic Leap in 2018.
Magic Leap also partnered with New Zealand’s Weta Workshop, the special effects company behind Peter Jackson’s “Lord of the Rings,” on games for the headset.
The hype was that augmented reality could be the engine behind a combined virtual reality, augmented reality market that could top $100 billion by 2021.
But its first prototype, Magic Leap One, launched in 2018, was a flop at $2,300. Its cumbersome design and high price tag kept many consumers from adopting it, particularly among the launch of other products like Facebook’s Oculus and HTC’s Vice headsets.
The company slashed half of its workforce of about 2,000 people in April 2020 amid widespread lockdowns in the early days of the pandemic. At that time, it said it would restructure and prioritize sales to businesses.
Magic Leap 2 went on sale in September, with a more modest scope. The headset costs $3,299 and is mostly aimed at industry customers, The Telegraph said. It is often used by businesses to visualize design or construction work or by medical professionals for surgical planning, the report said.
In a release, the company said it will exhibit at the 2023 Consumer Electronics Show net month, showcasing eight AR products, including an immersive 3D meetings app, training software and more.
The Telegraph reported that Magic Leap had previously raised $150 million in funding and $300 million in debt so far this year, after pulling in $500 million in 2021. In August, it had $223 million in cash, The Telegraph said, citing public filings in Europe.
Saudi Arabia’s sovereign wealth fund, Public Investment Fund, took a stake of more than half of the business, The Telegraph reported, giving it majority control. It is now entitled to appoint four of the company’s eight directors to its board.