Meta’s layoffs of more than 11,000 employees sent shockwaves through the big tech industry, but following massive layoffs on Twitter, the company’s ambitious project, the metaverse, has come into focus. rice field.
Mark Zuckerberg expected online commerce caused by the pandemic to last longer. However, his expectations were misplaced. He admits he miscalculated the revenue growth rate.
“At the start of Covid, the world rapidly moved online, and a surge in e-commerce saw a huge boost in revenue. Many predicted this would be a permanent acceleration that would continue even after the pandemic ended So did I, so I decided to invest significantly more.Unfortunately, this didn’t work out the way I expected it to.The online commerce just went back to the old trend. But the macroeconomic downturn, increased competition and loss of advertising signals have resulted in revenues far below expectations.I made a mistake on this and I take responsibility for it,” he wrote. .
dream of the metaverse
Last October, Facebook changed its name to Meta Platforms. Since then, much has been said about the company’s metaverse vision.
“The Metaverse isn’t made by a company. It’s the next chapter of the Internet as a whole. Our goal is to help build the underlying technology to bring the Metaverse to life,” Zuckerberg said this year. He made a virtual appearance at the event in March to speak.
He emphasized that Meta is shifting its focus from social media products to the Metaverse. According to him, the future of the Metaverse “belongs with the most interested companies”.
In a recent major pruning, employees from various business units were shown doors including “both the app family and Reality Labs.”
Reality Labs is at the heart of Meta’s grand vision for the Metaverse project. From January 2019 to September 2022, Meta invested his $36 billion in Reality Labs. And this year alone, Reality Labs has spent over $9.4 billion on research and development.
So what does cutting headcount at Reality Labs mean for his much-touted vision for the Metaverse? shows how difficult
Meta, like other tech majors, observes that it faces headwinds in a post-pandemic world. Lloyd Mathias, Business Strategist and Investor.
“When COVID hit in early 2020, the world moved online at a rapid pace, and this surge significantly increased revenues for all online businesses. There were hopes that it would continue after that, but now that doesn’t seem to be the case.The amount of time we spend online is declining as people return to the physical space with a vengeance.Netflix will be out in 2022 We lost more than a million customers in the first half, and our share price fell 60%,” says Matthias.
For Meta, he said, a combination of rapid inflation, rising interest rates, and other economic issues are impacting the digital advertising dollars the company relies on. “With revenue declining for the first time and competitors like Tik-Tok growing rapidly in the US market, the outlook for Meta is clearly bleak. Timely action is needed to calm the market.” and this seems to have led to a reduction in personnel and projects,” he adds.
Experts say it’s too early for the Metaverse to become a viable reality, at least as Zuckerberg envisions it.
It’s like gambling, analysts say Paolo Pescatore, Technology, Media and Communications Analyst, PP ForesightAccording to him, Meta’s journey ahead will not be easy. Pescatore feels that the Metaverse is a big gamble and will obviously require a large investment. Success is not guaranteed, he says.
“Given the economic crisis, this feels like a big gamble. Yes, and even its name (the Metaverse) confuses the average person on the boulevard.Price is always a factor, but creating demand is far more complex than driving down prices.New devices are still expensive toys. Meta has been there for a long time, and it’s going to be a long, hard road ahead,” says Pescatore.
According to him, it’s one big gamble that will take years to come to fruition. Cost reduction measures will be welcomed by key stakeholders Unfortunately more needs to be done VR/AR market is still in its infancy It still feels like a solution looking problem.There seem to be a lot of use cases, but adoption and awareness are still lackluster,” he said.
TRA Research CEO N Chandra Mouli We also feel that Zuckerberg’s big bet on the metaverse may be premature. He feels that the metaverse as a concept is still in its infancy and, like the first others, some will adopt it early, while the rest will inertia tag along with the metaverse bandwagon. increase.
“Zuckerberg’s big bet on the AR/VR-powered metaverse may be a premature bet, especially for publicly traded companies whose quarterly earnings are watched closely by analysts. Meta’s share price is down almost 30% after its recent earnings release, but that’s just one sign of how bleak the future could be for Zuckerberg,” Chandra Mouri said. says.
According to him, technology industry hiring and employee benefits have often baffled industry watchers. At the same time, Meta, Google and YouTube ad revenues are all showing declines as ad spending is streamlined and VC funding slows. Investing in new projects into uncharted territory like the Metaverse should be done with caution, not an all-in poker bet.
A difficult dream?
“The pressures facing businesses in the metaverse in 2022 are serious and significant, not metaverse-related. is far behind his imagination.” told the New York Times.
Now, it’s about timing. Zuckerberg seemed in a hurry, which prompted him to invest heavily in the Metaverse project. Horizon Worlds, Meta’s much-hyped virtual reality game, turned out to be lackluster. After user complaints, the company implemented a quality lockdown.
The problem is that even some meta employees aren’t confident about the metaverse project. According to a confidential survey of 1,000 Meta employees, only 58% understood Meta’s Metaverse strategy. And when employees were asked to meet virtually within Meta’s Horizon Workrooms app, many didn’t even have VR headsets. They went to great lengths to equip themselves with the device. Even among Meta employees, there are complaints about Zuckerberg’s strategy (or lack thereof). Citing an internal memo, The Verge revealed that even the team members working on the Horizon metaverse app aren’t using it.
It will undoubtedly be a difficult road for Meta to live up to its Metaverse dreams. Kruthika Ravindran, Associate Director – New Business, TheSmallBigIdea.
While the company is focused on building great things quickly, she says, it’s looking to build things that have a long-term impact. It will undoubtedly be a difficult road for the two to go hand in hand. The “profitable metaverse” is still in the distant future!
Shradha Agarwal, co-founder and CEO of Grapes, I feel that the metaverse concept will take time to come to fruition. According to her, her Meta isn’t the only one facing loss of revenue. All major tech giants struggle to generate profits given volatile market dynamics. The concept of interacting, socializing, working and playing via VR and AR devices will take time (perhaps a decade or more) to come to fruition, and current investors cannot align with this vision,” says Agarwal. says Mr.
She feels that the Metaverse is the future of the digital universe. According to her, the decision to invest heavily in Reality Labs after seeing promising market trends during COVID was a hasty decision that required concrete changes.
“While the company must continue its work on the metaverse, it cannot ignore the foundations/pillars that have made it so famous. Generating revenue would be a more realistic approach to performing fairly well in a market that is currently plummeting.
Does the metaverse store meta?
Last year, Meta reported a $10 billion loss in its AR and VR division. Oculus Chief Technology Officer John Carmack blames the bureaucracy of big companies and concerns about diversity and privacy for the slow development of the Metaverse.
As of April 2022, over 10,000 people are working on Metaverse projects, more than a tenth of our workforce. Does Meta’s layoffs indicate that the Metaverse may not be able to save the company? In fact, it’s been around for months. “Realistically, there are probably a lot of people in the company who probably shouldn’t be here,” Zuckerberg warned in a June 30 conference call, angered by slowing growth.
According to Shradha Agarwal, a full investment in the metaverse will not save the meta at this point. “The Metaverse’s futuristic concept has weighed on its performance. But there are other factors contributing to the company’s weak performance. Acting as a resistance to targeting, the new policy discourages small businesses from acquiring new customers from Facebook ads.Focusing entirely on the Metaverse alone is not a viable option for the current company. It doesn’t help, you have to reframe your strategy and prioritize with a kaleidoscopic view,” she says.
Kruthika Ravindran believes the move from Facebook to Meta underscores the company’s metaverse ambitions. “Despite job cuts and losses, the metaverse is truly the future of meta and will continue to be a priority for the company. What will save the company now is how to rebuild resources and reach breakeven. ‘ she affirms.
Mathias does not take the view that this setback will significantly weaken Meta’s strong position as a leader in the emerging sector. The company also has his three main platforms (Facebook, Instagram, and WhatsApp), all of which are leaders in their respective fields, and will continue to dominate the web.
According to him, the Metaverse is a bet the company has taken as the next big leap in the digital world.
“As the dominant leader in the web space, the only other direct digital competitors in the digital advertising space are Alphabet, owner of Google and YouTube. In fact, he’s the clear leader in what he believes could be the next big thing.
Was Zuckerberg’s Metaverse efforts too costly and misguided to completely derail the company?
Mark Zuckerberg’s Metaverse efforts may have been a bit of a hit so far, but not big enough to drive the whole company crazy, says Mathias, adding, “Meta is about three big platforms (Facebook, Facebook, Instagram and WhatsApp) can generate huge revenues and provide long-term monetization opportunities, and while there may be some impact in the short term, this downsizing should help mitigate that. It might help.”
Kruthika Ravindran, on the other hand, admits that this is an expensive vision for Meta. “The concept of the metaverse is literally changing with each innovation that no one could have predicted a few months ago. “It will increase,” she predicts.
This is like a ‘karmic comeback’ for Meta, says Chandra Mouli. “As a whistleblower told the U.S. Congress in 2021, Zuckerberg is a key driver of the company’s decisions. Facebook has previously put profits ahead of toxic content and personal privacy. So when analysts and investors focus on the meta’s current gains over future bets, it’s sort of a karmic comeback. The tracks are certainly shaking, but it may take more than a few moments for Zuckerberg’s jerky movements to derail,” he jokes.