After A Year, Meta’s Big Bet Meets Stark Reality
Meta, the rebranded version of Facebook, seems to require a reset after a year.
Facebook’s anticipated entry into decentralised and virtual worlds occurred in October 2021. Since a year ago, Mark Zuckerberg has been investing billions on a plan that emphasises VR headsets as the future’s most important technology, much more so than uploading amusing films that could receive a thumbs-up from parents.
Virtual reality, however, runs into the harsh reality, and this week’s disastrous earnings report and a stock that is trading at multi-year lows serve as a stark reminder that even the most globally renowned businesses, which have amassed a critical mass of hundreds of millions of users, are not immune to major setbacks. The fact that $10 billion is being spent on ecosystem creation, with uncertain returns, lends some gasoline to that argument.
During the most recent investor conference call, Zuckerberg said that “I know that sometimes when we ship a product, and there’s a meme where people say, ‘Hey, you’re spending all this money and you produce this thing,’” he said. “I think that that’s not really the right way to think about it. There’s a number of different products and platforms that we’re building, where we think we’re doing weeding work … launching consumer products.”
Hard to Look Back, Hard to Look Ahead
In the midst of all the launching and pruning, Meta has made huge mistakes in a variety of ventures outside of the social networking, messaging, and video platforms where it once dominated for a decade. This includes the recently abandoned Novi digital wallet project. It includes the widely derided Horizon Worlds, whose 200,000 estimated monthly active users are fewer than the population of a small American city in the Midwest.
And this is the problem with creating ecosystems that, in a perfect world, would host billions of users and trillions of dollars in annual revenue, as the firm had said in a letter written by Zuckerberg a year before. Use breeds use, and making a mistake early on makes it more difficult to persuade others to try something new.
You may feel the boredom when you consider the startling statistic that just 9% of the worlds creators created had at least 50 inhabitants. There hasn’t been the formation of a linked ecosystem, in part because there isn’t a natural extension from one area of the ecosystem (let’s say, with Facebook accounts) to another area of that ecosystem.
In a world where inflation is running at 8% in the United States, the gear, especially the $1,500 headsets, looks a little, well, expensive (and higher elsewhere in the world). Meanwhile, Reality Labs’ operational losses, which totaled $3.7 billion in the most recent quarter alone, were destined to increase dramatically over the course of the next year.
The potential is at least there, as research reveals that 84% of the people in the 11 countries across the world analysed had at least one connected device with 4G capacity. They are 40% more active on non-transactional channels, showing a readiness to lead more digital lives.
“From now on, we will be metaverse-first, not Facebook-first. That means that over time you won’t need a Facebook account to use our other services. As our new brand starts showing up in our products, I hope people around the world come to know the Meta brand and the future we stand for,” Zuckerberg wrote a year ago. When compared to 52 weeks ago, the future seems a little less bright.
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