Mark Zuckerberg was so sure that the Metaverse was the future of technology that he renamed his multibillion-dollar company after it. It turned out that instead of the Metaverse, AI has proven to be the next big ticket for tech.
Since 2020 Meta’s Reality Labs division, the part of the company that deals with research and development around the Metaverse, VR/AR technologies and their applications, has lost a staggering $30 billion during operations.
This is according to the company’s latest earning results, which for the most part paint a picture that Meta’s social media business is still very viable, with sales up 3 percent and revenues at $28.65 billion.
Despite this, the Metaverse is seemingly appearing more and more like the most expensive pipe dream ever. The latest results indicate that Zuckerberg’s Metaverse division lost around $4 billion in the last year alone.
But as long as Meta can rake in the ad bucks from Facebook, Instagram and WhatsApp, Zuckerberg is seemingly content to put his blind faith into Reality Labs, even as he announced the cutting of 21 000 employees between 2022 and now in the name of improved efficiency.
Other huge companies also ventured into the Metaverse, dipping their toes and their billions in virtual and mixed reality technology, that at one point proclaimed with pride and mystique that everyone could own a piece of “virtual land.”
Giants like Disney and Microsoft spent millions in creating Metaverse wings, and then slowly culled them off. Disney’s shuttering of its Metaverse unit came in March this year.
Meanwhile, Microsoft has been laying off entire teams from its VR divisions even after it acquired a smaller company (AltSpaceVR) for the express purpose of leading its efforts in the Metaverse.
TechSpot cites an analysis that most Metaverse projects across technology firms will be shuttered by 2025. All except for Meta’s Reality Labs, we believe.
And yet, what has Reality Labs managed to do with all these billions? Reports indicate that its Horizon Worlds VR platform still can’t generate legs on user avatars.
In comparison, a far, far less expensive and far more customisable platform VRChat, can generate avatars of whatever a user would like. Literally anything.
VRChat was also released earlier than Horizon Worlds and is more popular among users by leaps and bounds.
In February 2023, Meta’s chief financial officer Susan Li said that Meta expects to continue its operations of Reality Labs to generate losses well into 2023.
“We’re going to continue to invest meaningfully in this area given the significant long-term opportunities that we see,” Li said during an earnings call at the beginning of the year.
“It is a long-duration investment, and our investments here are underpinned by the accompanying need to drive overall operating profit growth while we’re making these investments.”
Yet, the Metaverse’s linchpin ideation formed during the height of the COVID-19 pandemic and subsequent lockdowns, that people would continue to grow more insular and continue migrating more of their lives to the virtual world, has proven incorrect.
We can see this with a sharp decrease in PC shipments being experienced in the last several months, as well as other knock-on effects across the tech industry, such as mass layoffs due to expectations on usership and revenues that simply weren’t there post-pandemic.
As people spend less time online now than they did two years ago, where is the “significant long-term opportunity” that Reality Labs foresees? It would take another pandemic, and while that isn’t an impossible scenario, it doesn’t seem too likely as of right now.
In fact, when the Metaverse does finally begin circling the drain in earnest, we will not be sad to see it go along with all the bad memories brought by the novel coronavirus. To all those that, like Zuckerberg, truly believe in the Metaverse idea, we recommend learning from Roblox, as the best example of how to make money with a virtual world.