Facebook’s parent company is under increasing pressure to reduce its focus on the metaverse — an experimental bet that could lead to “massive and dire losses,” as investors warned.
The tech giant, which changed its name to Meta last year, plans to build a virtual world that can be used by millions of people.
But Mark Zuckerberg’s virtual world has been dominated by technical problems, with user numbers well below the goals set by executives.
The latest figures show Reality Labs, the unit that builds virtual worlds, lost £3.16bn between July and September, compared with £2.27bn a year earlier.
Investors dumped Meta shares after Metaverse warned that losses related to the Metaverse “will grow significantly” next year.
Asked why his company was focusing on experimental bets, Zuckerberg said: “It would be a mistake if we didn’t focus on these areas that are critical to our future.”
But analysts say virtual worlds “feel like a big gamble” — especially given the current economic crisis — and fear the road ahead will be “long and painful.”
The virtual reality headsets you need to get the best experience in Meta’s virtual world come at a price. One costs £1,300 – something that puts many consumers off.
Paolo Pescatore from PP Foresight said: “People don’t rush out of their seats to buy a VR headset or even watch a 360-degree video… The new device still feels like an expensive toy.”
Earlier this week, a fund investing in the Metaverse called on the company to cut its annual investment in the Metaverse from $10 billion to $5 billion.
Brad Gerstner, chief executive of Altimeter Capital, warned: “Meta has fallen into excess – too many people, too many ideas, too little urgency.
“This lack of focus and fitness can be masked when growth is easy, but it can be fatal when growth slows and technology changes.”
Meanwhile, Insider Intelligence analyst Debra Aho Williamson warned that Meta needs to turn its business around — focusing less on Metaverse and more on repairing its core business.
“As a Facebook company, it was a revolutionary company that changed the way people communicated and the way marketers interacted with consumers. Today, it’s no longer the pioneer of that innovation.”
Meta, which owns Facebook, Instagram and WhatsApp, has other dark clouds as it battles slumping ad sales and stiff competition from TikTok.
Third-quarter revenue fell for the second time in a row to £23.83 billion.
Meta’s stock is in danger of falling to its lowest level in six years — it has plunged 61.6% since the start of the year.