According to Metaversed, the Metaverse recorded 600 million monthly active users globally by the end of Q4 2023. The most noteworthy stat in the report is that 519 million users are kids and teenagers.
This pales in comparison to Facebook, which recorded 3.03 billion monthly active users as of October 2023. Only 3.4% of those users were between 13 and 17 years of age. The data is clear—at the moment, Facebook has better monetization prospects than the metaverse.
But somehow, Mark Zuckerberg is so convinced of the metaverse’s potential that in October 2021, he changed the company’s name from Facebook to Meta.
So, is Facebook’s pivot to the metaverse a genius move, or is it a short walk to inevitable doom? That’s what we’re here to find out.
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The State of the Metaverse
After acquiring Oculus and CTRL-Labs, Meta formed Reality Labs and transferred all of Facebook’s AI-related activity to the new division in 2021.
Despite spending a reported $1 billion monthly in research and development, the company is still years away from maturity or providing a polished experience.
Currently, the metaverse is a mishmash of conflicting platforms with no clear direction. Meta has Horizon World, which the company hopes will be the go-to solution for commerce, gaming, and socializing.
Meta is championing Horizon World as the platform to conduct business in the virtual and real world. Brands such as Burberry and Lucid Motors have purchased metaverse real estate, while artists like Travis Scott and Ariana Grande have staged live events.
Possibilities and Potential Impact of the Metaverse Bet
By spearheading the shift toward the metaverse, Meta hopes to rise above the competition and become dominant. Reality Labs, Meta’s metaverse division, reported $2.16 billion in revenue collection for 2022, which is impressive for a company formed in 2021.
An Ernst and Young/Nokia survey shows that only 2% of the respondents believed the metaverse was a fad. 80% of early adopters believe the metaverse will have a transformative impact.
If Meta succeeds, the metaverse could present the following possibilities:
- More immersive social media experience.
- Enhanced entertainment choices, like 360° theater, virtual concerts, and 3D gaming.
- Virtual economies where members can spend virtual currencies and sell virtual assets.
- It will spur advances in AI, machine learning, augmented and virtual reality, and other technologies that could potentially improve our virtual and real world.
- Could enhance how educators present lessons when teaching and provide a wider reach for lectures.
- People can visit the most remote locations from the comfort of their living spaces.
- People won’t miss meetings due to travel restrictions or timezone differences.
Meta expects the platform to be an integral part of global economic activity, contributing as much as $3 trillion by 2031. The potential comes from integrating with existing markets like education, wellness, and commerce.
Furthermore, emerging markets and business models could transform how we use the metaverse and supercharge its adoption. Already, companies are realizing improved remote working experiences despite a 9% adoption rate in the US.
Risks and Challenges of the Metaverse Bet
While the metaverse division in Meta brought in 2.16 billion in revenue in 2022, this was a drop from the $2.27 billion collected in 2021. In total, the division made a $13.72 billion loss in 2022.
Despite Zuckerberg proclaiming that 2023 would be the “year of efficiency” in a bid to tame losses, the data paints a different picture. As of Q3 2023, Reality Labs had incurred an $11.4 billion loss while only bringing in $825 million in revenue. By October 2022, Meta had spent a total of $36 billion in developing the metaverse, and they plan to spend more.
Besides, 98% of Meta’s revenue comes from advertising. Facebook is a platform where the consumers are the product. This raises the question: Has Meta figured out how to ensure engagement and keep audiences glued to the metaverse?
Facebook has had issues with privacy and data security in the past, so the fact it wants to be the dominant platform in a centralized virtual world is off-putting to some users.
Some observers note that the virtual world could be a conduit for escapism from reality, potentially leading to addiction.
If the metaverse is not developed responsibly (Meta has a dismal record here), there are fears it could lead to dystopian scenarios with severe social implications among users who don’t have the tools to differentiate between virtual and reality.
Marginalized communities will have issues accessing the technology, considering its current prohibitive pricing of $500. Meta must also contend with ethical considerations such as identity, user privacy, stealing, and false representation of identities in the metaverse.
Conclusion
Zuckerberg is convinced the metaverse is the future of computing. On the one hand, the metaverse provides an engaging environment, which is perfect for enhancing commerce, meetings, learning, and socializing.
On the other hand, there are fears the metaverse could provide an excuse for people looking to escape reality, which could be addictive. Furthermore, Facebook has a poor record of safeguarding members’ data and privacy. Would-be users are wary of the company misusing their data if it were to become the dominant platform for the metaverse.
Unless Meta acts fast to arrest waning interest in the metaverse, it risks losing the race for widespread adoption.
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Kevin is an experienced business development strategist and content writer specializing in finance and stock market topics. He has a proven track record of driving sales and enhancing communications for small businesses by blending academic knowledge with practical experience to create engaging and accurate content.
