Meta’s bet on the metaverse: ‘It’s not really clear when it’s going to pay off’

Early struggles seen in pitching the nascent virtual reality space to consumers.

By Sean SaldanaOctober 17, 2022 2:00 pm,

Last fall, Facebook made a big announcement: The company would change its name to Meta.

The move was meant to represent the organization’s investments in the metaverse, a virtual reality world that Meta believes will become more integral to human interactions in the future.

So far, the company has sunk billions of dollars into the technology but has yet to see mass-adoption by the general public.

Adi Robertson is a senior reporter for The Verge who recently reported on the release of the Meta Quest Pro, the company’s $1,499 VR headset set to release next week. 

She joined the Texas Standard to talk about the state of the Metaverse. Listen to the story above or read the transcript below.

This transcript has been lightly edited for clarity:

Texas Standard: How would you describe the metaverse?

Adi Robertson: The metaverse is a concept that’s bigger than Facebook or Meta. It’s sort of a general, broad term for whatever comes after the Internet, but it often refers to a 3D sort of spatial virtual world. It’s a virtual world where you do things you associate with real life.

So, for instance, shopping for groceries or something along those lines.

Virtual groceries, yes.

Virtual. And I guess that’s the rub, right? It’s where that connection is between the virtual world and the person with the goggles on and the headset, the whole deal. Earlier this year, it came out that, in 2021, Meta lost something like $10 billion on its Reality Labs division, and that’s the division working on this virtual reality space. When is this investment supposed to pay off and are people really using it?

I think it’s not really clear when it’s going to pay off. And it’s sort of split into two divisions. There’s the hardware division and then there’s the software side, which is right now concentrated in a platform called Horizon. And Horizon Worlds, the big social space, is really struggling. It seems like, according to internal documents, they have about 200,000 monthly active users, which is just a really tiny number compared to large numbers of other social networks that are not in the “metaverse.” 

Did you say 200,000 users?

Monthly active users. So more people have accounts. But that’s the latest number for how many people visit there regularly in a month. 

Yikes. I mean, that’s the first word that comes to mind given those low numbers. I was just reading a story and an analyst was saying that Mark Zuckerberg – the head of formerly Facebook, now Meta – is telling us he doesn’t think he has a core business by moving away from Facebook and moving into this virtual space, which it may take a long time to realize profits from. Is that fair?

Yeah. Although it’s important to say that Horizon and Worlds is not a big part or even remotely the majority of VR or of Meta’s VR business. There are huge numbers of games that have sold massively larger quantities. There are virtual worlds you can access inside metaverse headsets that are bigger than this. It’s a really small niche of a niche. But if they want this to be this VR version of Facebook, they’re a really long ways away.

It’s my understanding that Meta has had a real tough time trying to explain that this technology they’re hoping to build out has applications for education, fitness, other aspects of life. So are they making that connection or what is it that they need to do if they’re not?

I think that they’ve seen success in some areas. So there are some very popular virtual reality games – fitness is actually a surprisingly popular category, but they’ve really struggled trying to make the leap to it being the kind of ubiquitous platform that they want it to be like a phone or a computer. But I think they haven’t come up with a terribly convincing pitch for that yet. 

Well, one of the things that defenders of Zuckerberg will tell you is that, “look, people didn’t know that they wanted an iPhone either and people didn’t know that they’ve wanted some of these innovations. And you have to have visionaries to get out there and develop this space before people will realize, ‘oh, this is yeah, this is what I’ve been looking for.’” Do you think that argument holds water?

I think that you could maybe make that argument – not for the iPhone, but for the very early first smartphones or the attempts at PDAs. But it is kind of important to note that those early devices weren’t ultimately successful. People didn’t realize that they actually wanted them. It was just that they laid the groundwork for something that would come in later tech generations that did change everything. 

So where does Meta fit along that scale? 

It’s hard to say because most of those companies were not the absolutely massive successes that Meta is right now. It’s still just a huge web company. And so it’s kind of hard for me to say where it goes from there. 

Let me ask you a Meta question in a sense. Does this company, even if it has a vision, have a business plan that will keep it financially upright for the course of however long it takes to reach this virtual reality paradigm that Zuckerberg imagines?

I think it depends on how well they can maintain their existing businesses, mainly Facebook and Instagram and a couple of other services, while they’re trying to build up the metaverse to a place where it would make any money. And right now, Zuckerberg doesn’t seem terribly interested in that, which is a really bad sign. But it’s possible that they’re going to manage to balance that transition – assuming that the transition ever comes.

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