Connect with us

Metaverse November 29, 2022

Meta’s Metaverse Bleeds Investor Billions

Avatar photo

Published

on

Meta's Metaverse Bleeds Investor Billions

Meta lost $9.4 billion in the first nine months of the year in its metaverse unit Reality Labs and sees significantly wider operating losses going forward. But its not just Meta that is suffering in the technology sector. A slowing economy have seen companies cutting marketing budgets. 

To make the ambitious dream of creating a metaverse a reality, just about a year ago Facebook/Meta announced it was hiring 10,000 software engineers over the next five years – the biggest ever hire in tech history – to build its metaverse, a mix of reality, virtual reality (VR) and augmented reality (AR) realms.

The technology giant’s valuation at the time was close to $1 trillion, a princely market capitalisation usually reserved for the US’ premier blue chip corporates like Apple.

“Digital goods will be an important way to express yourself in the metaverse and a big driver of the creative economy. I am excited to bring more brands and bring VR soon too,” Zuckerberg said at the time.

Yet barely a year after Mark Zuckerberg’s big Meta presentation, the company’s stock has plunged by more than 70%, bleeding investors billions.

Now, Meta is worth only $300 billion, just a third of its market value a year ago.

Old Facebook Profitable While Meta's Metaverse Bleeds Investor Billions

Analysts and industry experts say Zuckerberg’s fixation with the metaverse has come at a high price for the company.

“The obsession with the (metaverse) project has done tremendous harm to the brand,” CircleIt founder and CEO Art Shaikh tells MetaNews.

In the quarter to September, revenue came down 4% from $29 billion to $27.7 billion.

Meta’s results have raised questions on whether Zuckerberg’s all-in bet on the metaverse was the smartest play and whether its gamble on the future will pay off eventually.Old Facebook Profitable While Meta's Metaverse Bleeds Investor Billions“Meta’s results …was an absolute train wreck that speaks to pervasive digital advertising doldrums ahead for Zuckerberg & Co as they make the risky and head scratching bet on the metaverse,” Wedbush analysts Dan Ives said in its report.

Concerns have also been raised on whether Meta can transform itself into a virtual reality behemoth and power the company’s next phase of growth.

Analysts say such strategic pivots take a while for big tech companies to implement and reap financial benefits from in the near term.

“Every new technology takes years to first convince the marketplace of users, workers and investors, and then to create something that captures the imagination of the marketplace,” Jeff Kagan, a technology industry analyst tells MetaNews.

Meta lost $9.4 billion in the first nine months of the year in its Reality Labs, its metaverse unit and sees significantly wider operating loss in fiscal year 2023 (FY23).

But its not just Meta that is suffering in the technology sector. A slowing economy have seen companies cutting marketing budgets. 

Even tech companies like Alphabet, the parent company of Google, have not been spared with top line earnings declining in the period to $54.5 billion from $56.3 billion.

What went wrong with the meta pivot?

“It was a matter of timing”, Kagan says.

“The metaverse was still in its early years and the marketplace of users and investors simply had no clue what to expect,” Kagan says.

“That is where Facebook or Meta was wrong. They moved too quickly. They jumped over too many important steps. That is why this company is stuck in the metaverse mud today.”

But Zuckerberg painted a picture of an entity holding a fort in the market. 

User engagement for its apps is at its peak, he says. A total of 3.7 billion people now use one of Meta’s apps monthly. The number of people using Facebook, Meta’s flagship application, is the highest it has ever been, he says.

Instagram has more than 2 billion monthly actives while Whatsapp, its messenger application service, has more than 2 billion daily actives.

Its Reels product, a video sharing service positioned to compete with Tik Tok that is integrated into the Facebook application, is also doing well, he added.

This number represents a 50% growth in the past six months, he said.

All the numbers look promising elsewhere except in Meta’s new baby, the Metaverse.

Horizon Worlds, the name of Meta’s new virtual space, slashed its target for monthly active users to only 280,000 monthly from an initial 500,000. In reality, the space is only attracting about 200,000 people at the time of writing.

Investors are getting increasingly impatient with Zuckerberg and his metaverse.

Old Facebook Profitable While Meta's Metaverse Bleeds Investor Billions

What will it be? Facebook 2.0? Or something completely different?

While it generally takes longer in Silicon Valley to build a business, Wall Street tends to value businesses based on nearer returns rather than foggier forecasts that stretch out for years.

It’s a view Kagan shares too.

“However, every new technology takes years to first convince the marketplace of users, workers and investors, and then to create something that captures the imagination of the marketplace,” Kagan says.

“Smartphones had been with us for more than a decade or two to one degree or another with Blackberry, Palm Pilot and others. The marketplace now understood the smartphone marketplace, so when the Apple iPhone and Google Android were released, they were an instant success.”

Even Zuckerberg realises this now.

“There is still a long road ahead to build the next computing platform, but we are clearly doing leading work here,” he said. “This is a massive undertaking and it will often take a few versions of each product before they become mainstream.”

If he gets it rights, he reckons it is going to be of “historic importance”, adding it will create an entirely new way humans interact with each other “as well as a foundation for the long term of our business.” 

Rumors of Zuckerberg stepping down

For the first time in years rumors that Zuckerberg could be made to walk the plank, have emerged as investor concerns rise with falling earnings.

Meta's Metaverse Bleeds Investor Billions

Infinity, or a pair of glasses?

Meta’s director of communications, Andy Stone, made the unusual decision to publicly respond to unsubstantiated market rumors that claimed Zuckerberg could step down as the group’s CEO during 2023. 

In response to the rumor, Stone wrote on Twitter, “this is false.”

For FY23, Zuckerberg is being coy about the metaverse, preferring to focus on what he described as a “small number of high priority growth areas.”

This, he says, will involve working on the “AI discovery engine powering Reels”  and other “recommendation experiences, our ads and business messaging platforms and the metaverse.”

In a way, it is a return to the basics.

Also Meta is laying off 13% of its staff, or more than 11000 employees, Zuckerberg announced last week.

“Layoffs might appease investors for a bit, but the overall move away from the metaverse project and focusing on core revenue generating products will be the only way to save things,” Kagan concluded.

MetaNews.

SHARE THIS POST
Image credits: Shutterstock, CC images, Midjourney.

Business

Quest 3 Headset Will Have Better Mixed Reality Tech

Published

on

Quest 3 Headset Will Have Better Mixed Reality Tech, says Zuckerberg
Artist's rendering.

Meta, keen to be a Metaverse giant, plans to launch virtual reality headset Quest 3 later this year, with better mixed reality technology, said CEO Mark Zuckerberg.

Meta confirmed that the release should be called Meta Quest 3. It’s expected to cost between US$300 and US$500, which is about a third of the Quest Pro (the Quest Pro is currently priced at $1,499.99).

Also read: Meta Employees Undermine Zuckerberg’s Metaverse Strategy

The new headset will provide support for Meta Reality, which is technology that enables virtual reality headsets to also be used for augmented reality. This technology allows devices to create mixed reality experiences.

Meta Reality in Next-Gen Consumer Headset

The mixed reality ecosystem is relatively new, but Zuckerberg thinks it’s going to grow a lot in the next few years.

“Later this year, we’re going to launch our next generation consumer headset, which will feature Meta Reality as well, and I expect that this is going to establish this technology as the baseline for all headsets going forward, and eventually of course for AR glasses as well,” said Zuckerberg.

Beyond MR, the broader VR ecosystem continues growing. There are now over 200 apps on Meta’s VR devices that have made more than $1 million in revenue, Zuckerberg said.

How Meta Reality will look in more affordable headsets is yet to be clear.

Meta’s Reported Win over FTC will be Crucial

Meta has reportedly won court approval earlier this week to acquire VR fitness app Supernatural’s maker, Within, which will be a huge boost for Zuckerberg’s ambitious metaverse project.

Meta’s plan was to acquire Within and Supernatural back in October 2021, but it was blocked by the FTC’s complaint file to stop the deal. The FTC’s complaint was justified by saying Meta already owns a “virtual reality empire.”

Zuckerberg’s Meta Quest 2 is arguably the best VR headset, even after a massive hike in its price last year.

“There is a lot of work there that we haven’t actually shipped the product yet. VR, which is starting to ramp, right, Quest 2, I think, did quite well. We have multiple product lines there with the Quest Pro,” said Zuckerberg about Quest 3.

When Meta shipped Quest Pro at the end of last year, it was something their CEO was “really proud of” and believed it was the first mainstream mixed reality device to set the standard for the industry with Meta Reality.

“As always, the reason why we’re focused on building these platforms is to deliver better social experiences than what’s possible today on phones,” said Zuckerberg.

The possible benefit could be expected in Quest 3 through the acquisition of Within.

 

Continue Reading

Metaverse

Interpol Wants to Police Metaverse Crime. But That May Not Be Easy

Published

on

Interpol Wants to Police Metaverse Crime. But That May Not Be Easy

The International Criminal Police Organization, or Interpol, is looking at ways to police crime in the metaverse, according to secretary general Jurgen Stock. However, the agency may find that to be hard in the absence of a universally agreed definition of the “metaverse,” let alone of metaverse crime.

Stock said, “criminals are sophisticated and professional in very quickly adapting to any new technological tool that is available to commit crime. We need to sufficiently respond to that. Sometimes lawmakers, police, and our societies are running a little bit behind.”

“We have seen if we are doing it too late, it already impacts trust in the tools we are using, and therefore the metaverse. In similar platforms that already exist, criminals are using it,” he added, according to the BBC.

Defining the metaverse

The metaverse may be thought of as the idea of a post-physical world in which life is lived virtually on the Internet: “a single, shared, immersive, persistent, 3D virtual space” where humans experience life in ways they could not in the real world.

Also read: Is the World Ready for Music Concerts in the Metaverse?

American author Neal Stephenson is credited with coining the term “metaverse” in his 1992 sci-fi novel Snow Crash. He referred to the metaverse as an all-encompassing digital world that exists parallel to the real world.

However, the word gained significance when Facebook founder Mark Zuckerberg changed the name of the social media company to “Meta” in 2021, a rebrand that focused on building the metaverse.

While at this point users are already utilizing a range of hardware such as headsets to gain access to the immersive experiences of the metaverse, there’s still no universally agreed definition of the metaverse. Much less of metaverse crime.

What does metaverse crime look like for Interpol?

The building blocks of the new form of communication are still being laid down. Anyone can build their own metaverse and define how that specific digital world works. Interpol has now built its own virtual reality (VR) space in order to catch up with criminals operating in the metaverse.

The VR unit is aimed at helping its officers with training for virtual interactions. Announcing the launch of the virtual reality metaverse last October, Interpol said:

“As the number of metaverse users grows and the technology further develops, the list of possible crimes will only expand to potentially include crimes against children, data theft, money laundering, financial fraud, counterfeiting, ransomware, phishing, and sexual assault and harassment.”

Interpol is still having a hard time defining metaverse crime. Madan Oberoi, the executive director of technology and innovation at Interpol, admitted to the BBC that “there are crimes where I don’t know whether it can still be called a crime or not.”

“For example, there have been reported cases of sexual harassment,” he said. “If you look at the definitions of these crimes in physical space, and you try to apply it in the metaverse, there is a difficulty.”

“We don’t know whether we can call them a crime or not, but those threats are definitely there, so those issues are yet to be resolved,” he added.

Oberoi said law enforcement needed to “know about the metaverse” in order to “help people who have been hurt in the metaverse.” It is one of Interpol’s objectives, he explained, “to make sure law enforcement personnel start using the metaverse and they become aware.”

Uphill task

Alex Kim, chief monetization officer at XR platform Sensorium Galaxy, said while discussions around metaverse regulation may help create “safe digital environments” for users, there is still need to strike a balance in implementation.

“The metaverse is being envisioned as a decentralized platform over which no central authority has control over,” Kim told MetaNews.

“This begs the question of who exactly should be tasked with monitoring the metaverse and what powers can this entity potentially have, and over what and whom.” Continuing, Kim added:

“It’s clear that policing the metaverse won’t be as straightforward as some might be hoping, but it’s very positive that the conversation surrounding the topic is moving forward, especially given the rapid pace of current technological developments.”

Software engineer Brandon Church laughed at the idea that the global police agency wanted to play guard to the metaverse.

“[The metaverse] is just an idea at the moment. The problem with ideas is that sometimes they never see the light of day. So these guys [Interpol] are working on policing an idea? I’m seriously wondering [where they are going with this],” Church told MetaNews.

Arseny Myakotnikov, cofounder and CMO of drive-to-earn Metadrive, believes the Interpol initiative goes against the ethos of decentralization, a key foundational principle of the Bitcoin cryptocurrency, and Web3.

“Each metaverse must exist as a separate digital universe, where investors would be able to set their own rules and regulations based on the weight of their votes through decentralized voting within the project’s DAO,” he says

“It’s important to stress that most of the violations mentioned by the Interpol cannot be committed at the current stage of metaverse technology development.”

Interpol is an international organization that facilitates worldwide police cooperation and crime control. It was created 100 years ago and is made of 195 member countries.

Continue Reading

Business

Meta Reportedly Defeats FTC to Receive Court Approval to Acquire Within

Published

on

Meta Reportedly Defeats FTC to Receive Court Approval to Acquire Within

Meta, Facebook and Instagram’s parent company, has reportedly won court approval for the acquisition of VR fitness app Supernatural’s maker, Within, after the Federal Trade Commission attempted to block the deal.

Also read: Lawsuit Filed Against Meta, Snap, TikTok for Mental Health Crisis

A US district judge, Edward Davila in San Jose California, “denied the FTC’s request for a preliminary injunction to block the proposed transaction” in a sealed decision on Wednesday, reported Bloomberg, citing a source familiar with the ruling.

Meta’s plan was to acquire Within and Supernatural back in October 2021, but it was blocked by the FTC’s complaint file to stop the deal. The FTC’s complaint was justified by saying Meta already owns a “virtual reality empire.”

Following the news, shares of Meta were slightly positive on Wednesday afternoon.

Facebook and The FTC also declined to comment with Bloomberg’s query citing the sealed nature of Davila’s decisions.

Push for Metaverse

The reported victory in this case may boost Mark Zuckerberg’s push towards the Metaverse. Zuckerberg’s Meta Quest 2 is arguably the best VR headset, even after a massive hike in its price last year.

Meta Quest Pro for $1500 and Meta Quest 3 are also in the company’s VR line-up, which has already developed VR spaces for work and play.

The Supernatural, developed by Within, was one of the first subscription-based services on the original Meta Quest.

Supernatural, a fitness app that features video instructors and motion-tracked workout routines, carries similarities to Meta’s successful fitness VR music game Beat Saber. Beat Saber was also acquired by Meta in 2019.

 Meta’s Dominance

A trial before the FTC’s administrative judge will start on Feb. 13. The FTC will also decide if it will continue with the case. Lina Khan, the chair of the FTC, was appointed by US President Joe Biden to bolster antitrust enforcement as a key principle of his administration’s economic policy. Hence, if this order stands, this loss to Meta will be a significant setback for Khan.

The FTC sued Meta back in July, arguing this acquisition would expand its dominance in the consumer VR market, highlighting its purchase of Beat Saber three years ago. The agency even emphasized that the addition of Within would even eliminate a “beneficial rivalry” between the two companies.

At the time, “the case was) based on ideology and speculation, not evidence, the idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible,” said a Meta spokesperson in a statement.

It’s still to be decided whether this will be the end of this story or not, as the FTC has declined to comment.

“Out of respect for the court’s orders, the FTC is not in a position to comment at this time,” FTC director of public affairs Douglas Farrar told The Verge.

Within would be the third start-up acquired by social media giants over the last decade if this case ends here and Meta purchases one more VR start-up. Previously, Meta acquired Oculus in 2014 before purchasing Beat Saber in 2019.

 

 

Continue Reading

News Feed

Advertise With Us

Unlock a wide range of advertising
opportunities with MetaNews to reach the
fast-paced meta world.

Publish Your PR

Share your press release with
MetaNews’s growing global audience,
fans, and followers.

Subscribe

Sign up here to get news & updates right to your inbox!

Copyright © 1997 – 2023 MetaNews All Rights Reserved

Copyright © 1997 - 2023 MetaNews All Rights Reserved