In October 2021 Mark Zuckerberg announced a bold new vision for the next wave of technology that would transform how people work, play and interact: the Metaverse.
He painted a novel picture of the Metaverse would look like in this open letter:
In this future, you will be able to teleport instantly as a hologram to be at the office without a commute, at a concert with friends, or in your parents’ living room to catch up. This will open up more opportunity no matter where you live. You’ll be able to spend more time on what matters to you, cut down time in traffic, and reduce your carbon footprint.
Think about how many physical things you have today that could just be holograms in the future. Your TV, your perfect work setup with multiple monitors, your board games and more — instead of physical things assembled in factories, they’ll be holograms designed by creators around the world.
You’ll move across these experiences on different devices — augmented reality glasses to stay present in the physical world, virtual reality to be fully immersed, and phones and computers to jump in from existing platforms. This isn’t about spending more time on screens; it’s about making the time we already spend better.
This vision is either exciting or dystopian, depending on your perspective.
But there’s no denying that it was an extremely ambitious move to commit to completely repositioning one of the world’s largest and most profitable businesses ever. It’s no small feat to lead the charge towards a brave new world where VR headsets are commonplace and real-world interactions are replaced with virtual ones.
A cynical take is that the Metaverse hype was a PR tactic to distract from the growing threat of TikTok especially among teens, the massive threat of Apple’s privacy changes on Facebook’s advertising business (the company now knows much less about its users on iPhones), and a steady drip of leaked documents that shone a light on the chaos and disarray inside the company - among countless other headwinds.
Of course, it was also a decision made to cash in on what Zuckerberg saw as a key driver of his company’s future revenue:
Our hope is that within the next decade, the Metaverse will reach a billion people, host hundreds of billions of dollars of digital commerce, and support jobs for millions of creators and developers.
And to his credit, he put his money where his mouth was, committing to spending at least US$10 billion towards building the Metaverse in 2021, and expecting to increase investments in the years to follow. Not to mention renaming his company accordingly.
But if you’ve followed
Search interest for Metaverse-related search terms have been consistently dropping since January 2022. As the chart below shows, this decline started just a few months after Mark Zuckerberg renamed Facebook to “Meta” and announced his vision for the Metaverse.
Search interest trends are far from perfect as a metric, but they are a great proxy to show how interest in particular topics has changed over time.
This chart is the opposite of what you would expect if the Metaverse really was the “Next Big Thing”, as the world was led to believe.
And if you look at Meta’s own numbers, they tell a similar story.
In 2022, Meta’s “Reality Labs” unit made a loss of more than $13.7 billion - in part because people just aren’t excited enough about the Metaverse to actually use it..
The jewel in the crown of Zuckerberg’s Metaverse empire is the Horizon Worlds platform, a free online game/community/experience accessed via the Meta Quest VR headset.
Meta set an initial target of 500,000 users by the end of 2022 for Horizon Worlds, but had less than 200,000 actual users by then, according to the WSJ. And of those, most visitors generally don’t return to the app after the first month, with the user base steadily declining for most of the year. As reported in the same article:
Horizon is designed to be a sprawling collection of interactive virtual spaces, or worlds, in which users appearing as avatars can shop, party and work. Yet there are rarely any girls in the Hot Girl Summer Rooftop Pool Party, and in Murder Village there is often no one to kill. Even the company’s showcase worlds, such as Questy’s, a virtual arcade featured in a Super Bowl commercial earlier this year, are mostly barren of users.
According to internal statistics, only 9% of worlds built by creators are ever visited by at least 50 people. Most are never visited at all.
Given that 2.87 billion people use at least one of Meta’s products daily, and they are one of the world’s most profitable and influential companies, you would think they would be able to nudge 0.01742% of their users onto their newest platform. Sadly no.
There are a myriad of potential reasons for this. The Meta Quest headset costs US$400. Graphics in Horizon Worlds are so basic and uninspiring to be meme-worthy. There have been widespread reports of harassment and “virtual groping”.
But more fundamentally, the Metaverse sounds like a solution to a problem that doesn’t quite exist. Given the hassle of buying and wearing a headset, you would expect the virtual experience it enables to make it worthwhile. In the early days, Facebook had games like Farmville to help keep users coming back - not to mention all the updates from friends. But the killer app for widespread adoption of Horizon Worlds doesn’t seem to have been invented yet.
In September 2022, less than a year after the rebranding of Facebook to Meta, the company announced that Horizon Worlds was going into a “quality lockdown” for the rest of the year and that performance issues would be improved before it was opened up to more users.
Meanwhile, as Meta has struggled to build a world that nobody asked for, there’s a new kid in town: generative AI, with the most well-known example being ChatGPT.
Already, search interest in ChatGPT has dwarfed the buzz around the Metaverse - and at a truly massive scale.
And after spending more than US$1 billion per month on the Metaverse, Mark Zuckerberg now has a new focus.
Publicly, he has quietly stopped talking about the Metaverse in the way he used to. While laying off tens of thousands of employees, he has committed to making AI the new focus for Meta:
Our single largest investment is in advancing AI and building it into every one of our products.
And privately, he and other senior executives including chief product officer Chris Cox and chief technology officer Andrew Bosworth are spending most of their time working on AI.
So far Meta has introduced a response to ChatGPT with their own large language model LLaMA and made it available to researchers. And we can expect more AI-enabled features to be made available to Facebook, Instagram and WhatsApp very soon.
In 2021, Meta repositioned based on what the company’s leaders thought was going to be the “next big thing” - immersive VR experiences. After backing the wrong horse, the company is now going through a similar exercise with AI. Only time will tell if this bet will be more successful.