At the Connect conference last October, Facebook officially announced that the company had changed its name to Meta, focusing its business on developing the metaverse.
At the time, Facebook founder Zuckerberg said that the metaverse was the next frontier, and that companies would put the metaverse first, not Facebook first. All applications and technologies originally owned by Facebook will be integrated into this new company brand.
In July of the same year, Zuckerberg boasted that the company would fully transform into a Metaverse company by 2025.
Now that one year has passed, this year’s Connect conference is held again, and Meta has announced the latest progress on the Metaverse.
In the year when the name changed to All in Metaverse, the stock price plummeted, the net worth plummeted, the results were questioned after layoffs and huge investment, Zuckerberg and Meta were going through a sea change.
Meta spends $27 billion on the Metaverse in 3 years
Zuckerberg has a deep understanding of the long-term investment and short-term unprofitability of the Metaverse.
At the 2021Q3 earnings meeting before he changed his name to Meta, Zuckerberg bluntly stated that the next one to three years is a stage of laying the foundation, and it is impossible to achieve profitability in the short term.
In Zuckerberg’s vision, the first few years were the construction of infrastructure such as software and hardware, and the real contribution to the company’s performance may have to be viewed in a decade or so.
After the name change, Meta’s business is also divided into two parts: one is the social network business with Facebook as the core; the other is the Reality Labs business, a virtual reality laboratory with the Metaverse as the core.
At last year’s Connect conference, Zuckerberg unveiled the detailed layout of his metaverse.
At that time, Zuckerberg delivered a keynote speech, announcing the new tools for building the metaverse, the latest VR headset and XR glasses information, sharing the metaverse experience in the next ten years in eight fields including social connections, games, education and business, and announced an investment of 150 $100 million to cultivate Metaverse content creation talents.
Research and development, recruitment, mergers and acquisitions, and various attempts require a lot of financial support.
In May of this year, The Verge released a report that the Meta virtual reality laboratory department has more than 17,000 employees, an increase of 7,000 in one year, and the total number of departments also accounts for 21% of the company’s total employees.
During the year, Meta also announced a large number of new research results and plans. In September of this year, Meta also acquired Lofelt, a German haptic feedback technology manufacturer, to provide Meta headset users with a better haptic experience and effects.
In February of this year, Meta released its first financial report after changing its name. The earnings report shows that the Reality Labs division will lose $10.2 billion in 2021. At that time, Meta suffered its largest one-day loss in history, with its share price plummeting 26%, wiping out more than $200 billion in market value.
It is understood that Meta’s Reality Labs division lost $4.5 billion, $6.6 billion, and $10.2 billion in 2019, 2020, and 2021, respectively, and lost more than $5.7 billion in the first half of 2022.
To put that in perspective, Meta has spent $27 billion on the Metaverse. In 2022, there is a high probability that it will lose tens of billions of dollars.
Weak growth of core advertising business
In addition to the continuous huge losses in the Metaverse business, Meta’s traditional core business advertising has also experienced growth bottlenecks.
In the fourth quarter of 2021, revenue was US$33.671 billion and net profit was US$10.285 billion, which was the first time the company experienced a year-on-year decline in profit (-8%) since the second quarter of 2019.
According to the financial report for the second quarter of 2022, Meta’s revenue fell by 1% to about US$28.8 billion, which was the first year-on-year decline in revenue since its listing, and its net profit declined for three consecutive quarters. Among them, the growth of the advertising business, which is the mainstay of revenue, slowed down. During the period, advertising revenue fell by 1.5% year-on-year to approximately US$28.1 billion.
Zuckerberg said, “The first 18 years of the company, each of which has been growing rapidly, has recently been flat or slightly down for the first time ever.”
As for the reasons for the decline in the advertising business, one is that Apple’s privacy policy has had a certain impact on Meta’s advertising business, and the other is that Tik Tok is constantly robbing Meta’s users.
The earnings report shows that Facebook lost about 500,000 global daily users in the fourth quarter of 2021 compared to the previous quarter. This is the first time in 17 years that Facebook has seen its total number of users drop.
Although Facebook’s daily active data has regained its growth in the following two quarters, the increase has been very small.
From the outside, the era of rapid growth of Meta users is over. For a social company, this means that the trend of the platform’s aging is beginning to appear.
Layoffs, executive departures
Facing the pressure, Meta began to make adjustments.
In July of this year, Meta said it would downsize some of its teams in order to focus on higher-priority businesses. At the time, Meta fired 368 outsourced workers at its California headquarters, including some security personnel.
Entering September, it was reported that Meta plans to cut expenses by at least 10% in the next few months. Meta will take a series of measures, including reducing management costs, cutting outsourcing budgets, reforming and restructuring non-business units, and layoffs.
The news of Meta layoffs was subsequently confirmed.
On September 29, Bloomberg reported that for the first time, Meta announced plans to lay off staff and restructure the team in order to cut budgets. It was the company’s first major budget cut since its founding in 2004, and could mark the end of Meta’s period of rapid growth.
Zuckerberg said the company plans to freeze hiring, lay off employees and restructure some teams in order to cut expenses and adjust priorities.
Zuckerberg also said the company will reduce the budgets of most teams, and even those that are growing may face layoffs. At the same time, the company will also suspend internal transfers to avoid transferring employees to other teams.
In addition to the change of ordinary employees, many Meta executives also chose to leave.
Jerome Pesenti, vice president of research at Meta AI, chose to leave. In August, Vivek Sharma, vice president of Horizon, a virtual reality social platform owned by Meta, left. According to reports, Sharma is mainly responsible for the development of “long-lasting immersive virtual environment experience” and VR equipment including Oculus headsets.
In June of this year, Meta COO Sandberg announced his resignation. She’s worked at Meta for 14 years and is second only to Zuckerberg.
Sandberg has great influence in Silicon Valley and is a legend in the American Internet field. After the news of her departure came out, it even caused huge fluctuations in Meta’s stock price.
Meta’s market value has shrunk to 2017 levels, and Zuckerberg’s worth has fallen out of the world’s top ten
The growth of the advertising business is sluggish, the innovation business has suffered huge losses, and Meta and Zuckerberg are also negatively affected.
Before announcing their name change last year, the Zuckerbergs were hit by a scandal. Two former employees at the time brought a series of allegations against the Zuckerbergs and their private security executives: unpaid wages, sexual harassment, discrimination…
On November 8, 2021, Frances Haugen, a former employee of the US “Facebook” company, testified in the European Parliament, identifying the US social media giant as “profit-seeking, violating user privacy, and endangering children’s safety”, suggesting that new rules be used to ” Facebook” to regulate
The Cambridge scandal that broke out in 2018 has also plagued Meta. Even if the name was changed to Meta, Zuckerberg had to testify for the “Cambridge Analytica scandal”.
Under a series of influences, Meta’s stock price kept dropping.
Since the beginning of this year, Meta’s stock price has fallen by nearly 60%. As of the close of U.S. stocks on the 11th local time, Meta’s market value closed at $300 billion, which has shrunk to the level of 2017. The gap with Apple, Microsoft, Amazon, Tesla, etc. is further widened. Tesla’s market cap is nearly twice that of Meta.
And Zuckerberg’s personal wealth quickly evaporated again.
At the end of September this year, according to foreign media reports, Zuckerberg’s net worth has evaporated by 71 billion US dollars this year.
Zuckerberg has slipped to 20th on the world’s richest list with a fortune of $55.9 billion, his lowest ranking since 2014, according to the Bloomberg Billionaires Index. At the same time last year, Zuckerberg’s fortune was as high as $142 billion.
The Metaverse still has a long way to go
In a sense, Meta wants to be the “Apple” in the metaverse.
In 2014, Facebook at the time spent $2 billion to acquire Oculus, which was seen by the outside world as Facebook’s move to pay for the future.
Subsequently, Oculus’ headsets grabbed the market with excellent performance and affordable prices.
According to VR Gyro statistics, the global shipments of VR headsets in the first half of 2022 are about 6.84 million units, of which the cumulative sales of Quest 2 in the first half of the year are about 5.9 million units. It can be said that in the field of headsets, Meta is the undisputed industry leader.
However, although the sales volume is leading in the industry, the penetration rate and ownership of head-mounted display devices are not optimistic. It is understood that in the past five years, the total sales of Oculus have only been more than 10 million units, and this is not equal to the sales of PS5 or Switch in one year.
Overall, headsets are still a toy for a few people. The market still needs a long education process. If you think of headsets as mobile phones, the current stage is like the years when smartphones were first invented.
Of course, good hardware is only half the battle, and content is the top priority. Smartphones that can only make calls are hard to attract.
Meta is all about hardware and software from the very beginning. At last year’s Connect conference, Zuckerberg showcased the metaverse experience of the next decade in eight areas including social connections, gaming, education and business.
Meta launched the virtual reality social platform Horizon as early as 2019, and later launched the Horizon Home platform, the Horizon World platform, and the Horizon Workrooms platform, corresponding to different scenarios. Of course, the support of third-party games is also indispensable.
However, Meta’s metaverse game has been ridiculed by netizens for its “low quality”. In August of this year, in order to promote his Horizon World platform, Zuckerberg uploaded a self-portrait of himself in the game, but was criticized for being too ugly. Horizon, as Meta’s core software platform, is really disappointing.
At this year’s Connect conference, Zuckerberg showed off a new way to play Horizon World. That is, Meta’s virtual human is finally not half-length, it has legs. In addition, on the basis of the legs, the Meta virtual human will also display a wider range of facial expressions and reactions to better express people’s feelings.
In fact, after Meta raised the banner of the metaverse, it also led to the development of the domestic metaverse industry. However, unlike Meta’s ALL in, the domestic giants are not so radical. Of course, there are also many companies that are rubbing hot spots and speculating concepts. There are even Metaverse startups that are already dead on the way.
At present, the metaverse is still in its early stage, and even the concepts are not unified. However, most people think that there is enough potential for the future of the metaverse.
The world’s largest technology company, Apple, has also repeatedly reported that it will launch a headset device, which is also seen as a sign that Apple will enter the Metaverse.
Zuckerberg gave the metaverse ten years, and maybe five years from now, we can see what kind of metaverse world this will be.
