Editing by Zhao Hao
If the future metaverse becomes mainstream, then the first year of the metaverse must be 2021. In 2021, tech giants like Microsoft and Nvidia announced their strategies for the future of the metaverse.
On Oct. 28, Zuckerberg announced that he was changing the name of Facebook to Meta, making the company, then the world's seventh most valuable, the "number one player" in its space. But in less than a year, Meta's stock has fallen from above $300 to below $100 a share.
Analysts and Meta shareholders have become increasingly alarmed by the company's rising costs and expenses. Meanwhile, the company's Reality Labs, which is responsible for Metaverse technology, has shown a decline, which has rapidly cooled people's enthusiasm for the development of the company and even the whole field. Many people did not expect the turnaround to come so quickly.
Meta's shares are down three-quarters from their high
Meta's third-quarter revenue fell 4 per cent from a year earlier to $27.7bn, while profit plunged 52 per cent to $4.4bn, according to results released after the US market closed yesterday. Reality Labs, on the other hand, saw revenue drop nearly 50% year over year to $285 million and has lost $9.4 billion this year.
In an open letter to Zuckerberg, Meta shareholder Brad Gerstner recommended cutting employee spending by at least 20 percent and limiting its annual spending on Metaverse projects to $5 billion, half of what the company had planned to spend.
But Meta isn't impressed, writing in its earnings report that it expects Reality Labs' losses to grow significantly year over year in 2023 as it accelerates its investment in the unit to reach its long-term revenue goals earlier.
"Why would Meta be inclined to think that an experimental bet like the Metaverse would pay off?" Jefferies analyst Brent Thill asked on the earnings call. Mr Zuckerberg responded that the company was confident its investments would work in this area and that each improvement was "going in the right direction".
But the reality is that its high-end $1,500 Meta Quest Pro headset is intimidating to consumers, and its Horizon Worlds platform has fewer than 200,000 monthly active users. As of press time, Meta has extended its decline to nearly 23% and lost three-quarters of its market value from its peak, dropping it out of the top 20.
Microsoft: "Not investing enough people or money"
Meta aside, other metaverse players aren't doing so well either. Microsoft, which launched the HoloLens headset seven years ago, recently tried to push the technology, only to encounter technical constraints and corporate management.
Over the past two years, more than 100 employees have reportedly left the HoloLens team, including some longtime leaders. Microsoft recently reorganized the team and cut its budget. Microsoft has shelved plans for HoloLens 3 and a partnership with Samsung, according to former employees.
"We had a chance to own the whole market," Tim Osborne, the former head of HoloLens, told the press recently. "We were ahead of the game in a lot of projects. But Microsoft didn't put enough people and money behind the effort."
Some have complained that Microsoft's strategy for the product is unclear and incoherent. Bar-Zeev, the former HoloLens employee, said the company's struggles with early iterations of AR technology show that future trailblazers need to maintain a high level of focus to succeed.
Other employees said they had been working on the headset and software for years but found it more difficult than many other projects. In recent decades, Microsoft has been a leader in MP3s, tablets, smartphones and, more recently, cloud computing and video games.
"Metaverse technology may be difficult to commercialize."
Recently, Matthew Ball, principal analyst at market researcher Canalys, said that he expects most commercial projects in the Metaverse to end by 2025. He sees Meta as a barometer for the industry, and Meta's struggles reflect how hard it is for the technology to take off commercially.
Ball concedes that the metaverse might be successful in gaming, but "we're in a cost-of-living crisis where people are struggling in the real world, let alone investing in real estate, objects and other NFTS in the virtual world".
Phil Spencer, the head of Microsoft's Xbox brand, went on to criticize the metaverse vision in an interview. When asked what he thought of the metaverse, Spencer described it as "making crappy video games."