It’s been almost a year since social media giant Facebook pivoted to become Meta. In aligning its name with its new mission, the company effectively embarked on what it believed will be the technology to power tomorrow’s social connections; the metaverse.
And, they were not alone in this. Following its announcement late last year a number of individuals and brands followed suit. Companies hired “chief metaverse officers”. Some sold metaverse real estate while luxury brands like Balenciaga and Prada joined with Meta to promote digital clothes. Heck, even liquor makers such as Absolut Vodka opened bars and distilleries in the metaverse. The metaverse train had taken off and there was no stopping it.
Or so it seemed.
There were issues beneath the hype from the get-go. Just a few months after the switch to Meta, a number of investors had started to become sceptical about the whole idea. Stock prices started plunging soon after. To date, Meta has burnt through approximately $10 billion in pursuit of an unproven idea.
Moreover, the road to the metaverse has not been as smooth as I first thought. The project is taking longer than expected and things that seemed like mere speed bumps along the way now look like insurmountable obstacles.
If the recent viral demonstration of the Metaverse by Zuckerberg is anything to go by there is still a long road ahead. Images are too clunky and the technology is glitchy at best. The truth is, after a year and billions spent in development, Meta has little to show for its efforts.
This factor has also been reflected in market reception. The company’s flagship metaverse offering for consumers, Horizon Worlds, is falling short of internal performance expectations. The company was forced to revise its initial goal of 500,000 monthly users down to 280,000. Even then it still couldn’t meet its target attracting only 200,000 monthly visitors to its world.
According to internal statistics, most users do not return to the app after the first month. Also, only about 9% of worlds currently are visited by at least 50 people monthly.
It also doesn’t help that Meta’s headsets prices are quite hefty. The entry model costs north of $400 while the more technical one for professionals can set creators back up to $1000.
A survey conducted by Meta researchers found that Horizon users couldn’t find worlds that they liked and also couldn’t find people to hang out with. Others complained that “people do not look real” and more specifically that they don’t have legs.
With these complaints, it is easy to see exactly why optimism surrounding the Metaverse has somewhat dissipated. Moreover, the company faces increased pressure on its digital ads business from its key rival TikTok.
The Chinese-based social media platform has taken the world by storm and Meta is feeling the effects. Shares are down more than 60% in the past year losing the company about $700 billion in market value.
And yet Mark Zuckerberg still persists with his mission. So, the question to ask is with the company bleeding billions annually is the risk worth it? Will it finally pay off?
Well, other tech companies seem to think so. Tech giants like Microsoft and Apple have all announced plans to delve into the metaverse. Like Meta, a number of companies retain the belief that the Metaverse is the next big thing in technology.
And maybe they do have a point. As tech companies with arguably the best collection of tech talent globally, these organizations do have a good beat on everything technology. If anyone is going to make a good bet on the future of technology then it is going to be them.
Despite the naysayers, the metaverse does seem to hold a lot of promise. It may revolutionize the way we interact with each other online. Instead of sending each other texts, videos and images, we could immerse ourselves in realistic worlds that may even be more entertaining than our real one.
So, I also concur. Yes, the billions of dollars and hours spent on developing the metaverse is very much worth it. What Meta is trying to do is not just a tiny improvement on an already proven idea. The company is building a completely novel technology. One that will change the future as we know it.
In an internal memo, Meta’s Metaverse Vice President Vishal Shah describes this perfectly saying; “I want to be clear on this point. We are working on a product that has not found product market fit. If you are on Horizon, I need you to fully embrace ambiguity and change.”