Is Meta in trouble? Everyone is mocking social media giant’s strategy
As Meta is losing both users and advertisers, the success of the company’s trip to another dimension remains shrouded in doubt.
A year ago, when Facebook became Meta, excitement filled the air. The company’s value was huge, and investors flocked to join in Mark Zuckerberg’s experiment. But today, things aren’t looking as well for what once was the world’s biggest social media giant.
The financial community is merciless in reminding that Meta’s shares are down 62.3% since January. This converts to a fall in the market value of nearly $570 billion.
Besides, Facebook is also losing users. According to StreetAccount, the number of daily active users in the US and Canada – the social network’s most important markets – shrank from 198 million in mid-2020 to 197 million in the second quarter of this year. Sure, new users keep popping up in other countries, but they’re not as well financially positioned to attract advertisers.
This means advertisers are reducing spending, and investors are actually dumping the stock. Some analysts are even talking about the stock’s “death spiral” – as if the only possible outcome of the current slump is Meta’s death.
And even though Meta is still one of the most profitable business models on the planet, in the world of finance, the biggest problem is the lack of growth. Jeremy Bondy, CEO of app marketing firm Liftoff, says he doesn’t see Zuckerberg winning the next generation – which has moved to TikTok and the gaining popularity BeReal app.
Zuckerberg is fighting back, or at least trying to. But his strategy to dive into the so-called metaverse and convince people to lead parallel lives via avatars and tools such as virtual reality headsets is destined to fail, according to some critics.
To start with, the image quality of the metaverse, Horizon Worlds, looks outdated and certainly doesn’t associate with the future of digital technology. What’s more, for far too many people, the price of new Meta devices seems outrageous.
Spaghetti on the wall
For example, the Meta Quest Pro headset, unveiled on October 11, is priced at $1499.99 and is several times more expensive than the older Quest 2. The new product also lasts only one to two hours on a single charge – so is obviously not accessible to everyone all the time.
What’s probably most important, users are still not flocking to the metaverse. Even though Zuckerberg admits the transition to the metaverse will take years, the current progress is disappointing.
The Wall Street Journal got hold of internal Meta documents and reported on Saturday that Horizon Worlds has not been living up to expectations. Meta initially set a goal of reaching 500,000 monthly active users by the end of 2022 but had to revise the figure to 280,000 in recent weeks.
The current number is less than 200,000, and documents also show that most visitors to Horizon Worlds do not come back to the app after trying it. This means that the user base is actually declining due to low customer retention rates.
Finally, according to Meta’s internal statistics, only 9% of the meta worlds built by creators are ever visited by 50 people or more. Most worlds simply remain empty all the time.
The New York Times has also reported that Meta’s employees are less than enthused about the metaverse and have complained about frequent strategy shifts that seem related to Zuckerberg’s personal wishlist rather than a cohesive plan.
“The current strategy seems to be to release a string of updates to see what might get people interested – a ‘throw spaghetti at the wall and see what sticks’ approach if you will,” Tanya Basu, a reporter at MIT Technology Review, said.
A New Coke problem
A legendary investor Michael Burry, who successfully predicted the collapse of the subprime loan market which then led to the financial crisis of 2008, said on Twitter he thought that Meta now “has a New Coke problem.”
This has to do with a well-known slump in Coca-Cola sales back in 1985, when the company had been losing market share to PepsiCo and decided to make the famous soft drink sweeter – more similar to its rival.
Customers immediately swamped Coca-Cola with thousands of complaints, and 79 days later, the company announced the return of the original formula. Burry seems to suggest Zuckerberg should also offer a mea culpa and shift his focus back to traditional social media.
However, the billionaire is not giving up. According to some observers, the metaverse could actually be revived with a quite simple trick: opening up Horizon Worlds to mobile and desktop users.
In other words, people without an expensive and often too difficult-to-use headset will be able to access the virtual world. Meta already announced it was going ahead with this step.
Of course, it’s an admission that VR headsets aren’t yet as popular as Meta would like them to be. But opening the virtual worlds to the familiar formats sounds a lot more democratizing and affordable to users who aren’t keen to burn hundreds of dollars on tricky devices.
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