December 4, 2022

Wire Service Canada

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Why Facebook’s super-tech metaverse isn’t working and what Zuckerberg thinks

Presented asMillennium InvestmentBut now she risks becoming one endless financial chasmwith long-range possibilities barely visible on the horizon. Mark Zuckerberg He still believes in the Metaverse, the virtual expansion of the real world of his big technology Half (The company that owns social Facebook and WhatsApp), but the calculations month after month are increasingly negative.

Offsetting is the increase in costs and investments, which went from 18.6 billion to 22 billion. The increase that contributed to Cut profits in half (down from $4.4 billion from $9.2 billion in the same quarter of 2021). This hole is caused by the Metaverse itself. to divide reality labsresponsible for the development of technology, recorded very high losses, equal to 3.7 billionwhich, according to forecasts, appears to be on the rise in the latter part of the year.

All this could not satisfy the shareholders, who in fact penalized the shares on Wall Street. It was a heavy minus sign, with an a 18% decreaseclose to the real crash that occurred in February by 26%, in the days when the stock’s value was meta by $230 billion. Since the beginning of the year, Meta stock has lost 70% of its value.

The reason is that Zuckerberg will now reduce spending on the Metaverse to return to giving Priority for its “core business”. This is evidenced by the fact that in the last quadrant for example Ad sales increased by 17%. Compared to 2021, daily Facebook users are 3% more. However, despite the announcement of general “important changes”, Meta CEO does not change his mind. What is your bet?

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What is the metaverse and what could it become

The metaverse is a virtual expansion of the real world, where you can Live and interact through the avatar And through technology and wearable devices, such as smart glasses, helmets, virtual reality viewers, gloves and haptic suits. digital world where Virtual reality is closely related to the web And where people can live a life parallel to the life of the real world.

The metaverse on Facebook is kind of ‘The Internet comes alive’, or at least rendered in 3D. Zuckerberg described it as a virtual environment that you can enter instead of just looking at it on the screen.

So far, the metaverse is a series of platforms that people can log in with A computer and an internet connection. However, Meta’s intention is to make it real tomorrow immersive universe that extend your life with technology and where you can make appointments and make purchases or financial transactions.

Zuckerberg’s bet

Zuckerberg would like Reaches about 1 billion people subscribed to Metaversewith every transaction hundreds of dollarsBy purchasing digital goods and content and buying virtual things and clothes to express one’s personality“.according to Meta Number One.”Users may also be interested in purchasing items for Be more productive In virtual and augmented reality“.

All this will come true too By making extensive use of artificial intelligencemoving from a system where most of the content you see comes from your circle of friends and/or acquaintances to a system where It’s the AI ​​that informs you of the contentsproducts and financial possibilities that you consider most interesting to you, and learning from the past.

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However, the investment costs a lot because it is necessary Very complex software developmentfull of aspects and possibilities, and because it should be accessible to a large audience, with physical tools for augmented reality to The price may be affordable.

Why is Metaverse not working

The CEO of Meta is convinced that record costs and lower profits are affected by some”Challenge dynamics‘, who returns to him General conditions of the Western economy Now, amid inflation, the energy crisis and the aggressive monetary policies of central banks. Zuckerberg has spoken frankly aboutincreasing competition, Advertising losses The higher costs of our long-term investment‘, emphasizing thatLook our product trends Better than some of the comments show: I am absolutely confident that we are heading in the right direction“.

What he is referring to is the fact that There are many negative comments about Metaverse’s business, with many users abandoning the first services made available by Meta. for example Horizon worldsthe first product from Metaverse for consumers, does not reach i 200K monthly active usersagainst the expected 500,000.

Meta, plan to reduce losses

What probably matters to the CEO of Meta is that the losses recorded so far have not caused an exaggerated slowdown in the company’s revenue (equal to 29 billion in the third quarterdown 4% compared to last year). Now he wants Zuckerberg gives a signal, but it will likely do so in the sense of reducing the number of workers on different teams or some line of expenses. According to Bloomberg, corporate restructuring It will arrive next year and will involve team unification, possibly with a neighboring block Recruit.

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So they could be. Cut budgets for most workgroups, including growing segments, but priorities will always remain Reels (the division created in response to TikTok) and Metaverse. In short, it remains the last future cardAlthough not to convince economic analysts.