Not so long ago, in a galaxy not so far away, resident corporate alien Mark Zuckerberg read the room, didn’t like what he saw and bet the company (formerly known as Facebook) by going all-in on the nascent metaverse. Zuckerberg’s Meta move was a practical one, for sure. His rebranding play served as a convenient (if not utterly transparent) diversionary tactic – a distancing from the relentless beating Facebook was justifiably receiving from all corners for its missteps in social media.
But, not surprisingly, his Meta move was also an arrogant one. Zuck banked on his belief that he and his billions alone would guarantee success by convincing the world to follow him and his increasingly stagnant company into a new immersive world of social VR. But something happened along the way to Zuck’s newly-imagined, digitally-driven immersive promised land. And just over one year since Facebook’s flip to Meta, it all now looks like one big flop.
The obvious signs are everywhere. Meta’s recent Q3 earnings were bleak, with revenues dropping 4% year over year. Even worse, it was Meta’s promised immersive growth engine that dragged the company down. That part of its business lost $3.6 billion in Q3 alone, massively more than its $2.6 billion in losses one year earlier. And now Meta’s stock is down nearly 75% from its market highs just over one year ago – back to 2015 levels. That’s not only awful for investors, it’s not too great for employees who banked on endless growth when they justified their commitment to Facebook/Instagram and its well-documented parade of horribles (teen depression, society destruction) by taking stock options that they assumed would guarantee wealth and enable them to ultimately “cut and run.” But now the exodus from Meta is accelerating for an unwillingness to be complicit, especially when there’s no money in it. (And that was before the company signaled plans to lay off thousands from its 87,000-strong workforce.)
But let’s dig deeper. First, despite Zuckerberg self-lionizing himself for being a great innovator (and even philanthropist) who would create the ideal vision for the metaverse, let’s not forget that Meta/Facebook hasn’t been particularly innovative (and certainly not philanthropic). He started Facebook by objectifying women and causing angst from the very beginning. In other words, a certain nihilism has always permeated Facebook and is inextricably linked to its DNA. Facebook evolved into something seemingly friendlier. But looks can be deceiving, and the company’s destruction to teen self-esteem and society’s fabric only accelerate via “growth at all costs” algorithms that fuel tragic consequences by preying on, and amplifying, human fear factors and tribalism.
Zuckerberg created a Big Tech juggernaut that seemed to be unstoppable not so long ago. But here’s the thing. The company didn’t particularly grow from its own innovation. Much of the company’s pre-Meta growth came from the innovation of others. Facebook was always strong on paranoia. It sensed a major threat in Instagram, so Zuckerberg bought it. WhatsApp was knocking on Facebook’s customer doors, so he bought that too. And yes, when I say “he” bought it, he really did. Zuckerberg controls well over 50% of the company. That means essentially no one can challenge his moves. What he says, goes.
Which brings us back to his moves into the immersive sector that, at least thus far, have no legs – and I mean that both literally and figuratively. Right now, those few who have avatars in Meta’s Horizon Worlds VR platform rather creepily sport heads and torsos only. Where’s the beef (apart from Zuck’s own pumped-up avatar that relentlessly crashes our screens)? Meta has already banked (and burned) $15 billion on taking us even further out of our physical lives and into a promised fully immersive utopia. The The Wall Street Journal recently sounded significant alarm bells, reporting that Meta’s Horizon Worlds has 50% fewer active users today than it did earlier this year – the number dropped from 300,000 active users in February to less than 200,000 today.
To add insult to injury, half of those who have tried Horizon Worlds reportedly abandon it after their first month. Not particularly sticky. And fewer than 10% of the “worlds” in Horizon receive more than 50 visitors (the majority receive zero!). Even Zuck’s own employees charged with the Metaverse mission barely use it. That’s never a good thing when the passionate team you need to drive innovation exhibits no passion for the project itself. The company’s own internal documents bemoaned the reality. “An empty world is a sad world,” one read. Maybe social VR is not the killer app for the metaverse, after all. Games dominate now, and there’s no reason on the horizon (so to speak) for that to change anytime soon.
And let’s go back to Meta’s “leg problem” — well actually, the avatars’ “uncanny valley” legless problem. In a rare moment, Zuckerberg recently acknowledged the issue and delivered a mea culpa of sorts. He promised legs soon and flooded the press with a video to prove it. That video did, in fact, show Zuckerberg’s avatar in full form jumping and dancing. But even that demo was all smoke and mirrors. Zuckerberg’s seemingly seamless lower body movements weren’t due to any Meta innovation at all. Instead, the company was forced to admit that Zuck’s demo “featured animations created from motion capture.” Yet another ruse. Shocking, I know.
Ultimately, Zuckerberg’s unrelenting focus on the metaverse is all about control. In his rather diabolical vision, he is creating an all-encompassing new closed environment he governs by his rules and controls via hardware he pushes. It is a full software/hardware stack that has eluded him to date, since Facebook and its progeny have always been dependent on (and vulnerable to) access via the hardware of others, particularly Apple.
Speaking of Apple, let’s not forget that Tim Cook and his crew from Cupertino are nearing their own immersion into the metaverse via their long-anticipated AR and VR wearables. Apple already dominates the wearables market, of course, with AirPods alone generating $12 billion-plus in 2021. And unlike Facebook, Apple screams innovation. Home-grown innovation, rather than innovation via acquisition of other innovators.
So in this game of metaverse poker, where would you lay your bets? And, who do you trust?
For those of you interested in learning more, visit Peter’s firm Creative Media at creativemedia.biz and follow him on Twitter @pcsathy.