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How Meta failed in its first year as a metaverse company


A year ago, Meta was at the height of the metaverse. The company just completed a rebranding from Facebook to Meta. The social network, as Mark Zuckerberg explains, is no longer the sole focus of the company. “From now on, we will use the metaverse first, not Facebook first,” he said.

Now, as Meta wraps up its first year as a “metaverse company,” the outlook is significantly less bright. The company has lost billions of dollars to Reality Labs, the division that oversees its metadata work. Its securities were destroyed. The company laid off thousands of employees for the first time Mass layoffs. Even longtime shareholders are starting to do what was previously unthinkable: question Zuckerberg’s vision for the future.

At the same time, Meta has yet to articulate what the metaverse is or explain why the billions of people currently using its social media apps want to be part of the “internet embodiment.” Worse still, the company’s original metaverse product proved underpowered and turned the metaverse into a pivot point, rather than a source of prediction.

Meta and Zuckerberg have come up with different definitions over the past year. Metaverse is “the successor to the mobile internet” and “an internet that represents where you are.” It’s virtual reality, but also (ultimately) augmented reality. Somehow it will also link to our existing social graphs on Facebook and Instagram. However, unlike Facebook and Instagram, it will be compatible with other companies’ platforms. It may be related to NFT and web3.

“The defining feature of the metaverse is that you really feel like you’re present with other people or somewhere else,” Zuckerberg said in an interview at SXSW in February. “You can see the document, you can see the website, but in the future you will In it.”

Zuckerberg may think this is explaining the beginnings of some great vision of the future Internet, but it also sounds a lot like old fashioned virtual reality. Furthermore, it says that one of his prime examples is “see the docs”. In the past year, the company has made great efforts Horizon officeIts social VR experience is geared towards office workers.

Meta's is integrating Zoom and Microsoft Teams into VR meetings with Horizon Workrooms.

meta

When the company introduced its new premium Quest Pro, it offered Horizon Workrooms as one of the key experiences optimized for the new headset. You can now recreate an entire virtual workspace in VR. Soon you will be able to use turn of office and productivity software, from Zoom to Microsoft Word.

But the idea of ​​working in VR with a headset is still a long way off for most people. And there are a very small number of jobs and industries where working in VR is even remotely demonstrated.

Perhaps most telling is that Meta has clearly struggled to convince its employees to use the Workroom. Although making Quest 2 . headphones free of charge for all employees last year, a recent push from Zuckerberg for teams to start holding meetings in VR revealed that many people either didn’t take advantage of the offer or hadn’t set up a headset yet, The New York Times report.

Without a clear vision, critics of Meta become too easily caught up in aesthetic and other issues. Currently, the closest thing Meta has to the “super universe” is Horizon Worlds, its social VR playground where users can freely explore as their avatar. But the experience of actually using it is a far cry from the polished videos and demos Meta has shared.

This has never been clearer than when Zuckerberg seriously posted a screenshot of his profile picture in front of the Eiffel Tower and Barcelona’s Sagrada Familia to mark the launch of Horizon World in France and Spain. The screenshot is funny and quickly took on a life of its own as people mocked the “1995 level graphics”.

Mark Zuckerberg's Horizon avatar.

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Zuckerberg was quick to promise new and improved avatars and more realistic portrayals of himself, saying that “the graphics in Horizon are capable of so much more.” (ONE parcel on LinkedIn, which was later removed, later revealing that the “improved” Zuck avatar took about a month and “40 iterations” to complete.)

Then, at the company’s Connect event, Zuckerberg promised an even bigger step forward: foot. Soon, Horizon’s animated, amputated avatars will be replaced by walking, life-like avatars. We watched Zuckerberg’s “full-body” avatar casually strolling around Horizon Worlds. But while it was supposed to be a turning point at first—adding foot tracking to VR was a notoriously difficult affair—it turned out that this particular demo was more stage rather than actual innovation. The company later confirmed that the demo was created with motion capture and not live VR.

Meta still says that its avatar will eventually have legs, but it’s unclear when or if the feature will be like a demo.

It can’t be overlooked that Zuckerberg’s pivot also coincides with the company’s worst financial performance in recent memory. Meta’s revenue has been shrink for the first time in two consecutive quarters. Its shares have lost more than 60% of their value this year, losing billions of dollars.

To be fair, the metaverse isn’t entirely to blame. Apple’s anti-tracking changes in iOS have affected the company’s advertising business. And the entire industry is reeling from an economic downturn that affects even the biggest tech giants.

At the same time, it is undeniable that Meta is losing a large amount of money on its investments in the metaverse. The Lab actually lost $10 billion in 2021, and 2022’s loss hit $9 billion in the third quarter. Those losses are expected “significant growth” by 2023, according to the company’s chief financial officer.

Mark Zuckerberg in the company's new VR headset.

meta

It’s no surprise, then, that Meta investors are starting to question whether all of this super upside is really worth it. The CEO of Altimeter Capital, a longtime Meta shareholder, made headlines when he wrote an open letter to Mark Zuckerberg earlier this year, calling the company’s super-reverse investments “super large and worthwhile.” fear, even by Silicon Valley standards.”

During the company’s most recent earnings call, where Zuckerberg often raised the tougher questions about the company’s advertising business, one analyst also raised the issue of “test bets versus put bets.” proven bet”.

“I think everyone wants to hear why you think this works,” he asked. Zuckerberg, who seemed a bit confused by the question, replied that “the metaverse work is a collection of more long-term efforts that we’re working on, but I think it’s going to end well.” Patience will pay off, he said.

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