Mark Zuckerberg urged to spend less on Metaverse after suffering ‘outrageous and appalling losses’ business news
Facebook’s parent company is under pressure to focus less on the Metaverse — what investors say is an experimental bet that’s causing “outrageous and staggering losses.”
The tech giant changed its name to Meta last year to build a virtual world that would be used by millions of people.
But Mark Zuckerberg’s Metaverse has been plagued by technical issues, with user counts well below targets set by executives.
The latest figures show Reality Labs, the division building the Metaverse, lost £3.16 billion between July and September, compared to £2.27 billion in the same period last year.
Investors rushed to sell off Meta’s shares after the company warned that Metaverse-related losses would “increase significantly” over the next year.
When asked why his company is focusing on experimental betting, Zuckerberg said, “It would be a mistake if we didn’t focus on one of these areas that are going to be fundamental to our future.”
However, analysts have said that the metaverse “feels like a big gamble” – especially given the current economic crisis – and fear the road ahead will be “long and painful”.
The virtual reality headsets required for the best experience in Meta’s virtual world are expensive. One costs £1,300, which is out of reach for many consumers.
PP Foresight’s Paolo Pescatore said: “People don’t rush out of their seats to buy a VR headset or even watch 360 video… The new device still feels like an expensive toy.”
Earlier this week, a fund investing in Meta asked the company to cut its annual investment in the Metaverse from $10 billion to $5 billion.
Altimeter Capital CEO Brad Gerstner warned, “Meta has drifted into the land of excess – too many people, too many ideas, too little urgency.
“This lack of focus and fitness is masked when growth is easy but deadly when growth slows and technology changes.”
Meanwhile, Insider Intelligence analyst Debra Aho Williamson has warned that Meta needs to transform its business — focus less on the Metaverse and more on repairing its core business.
“As Facebook Inc., it was a revolutionary company that changed the way people communicate and how marketers interact with consumers. Today it’s not that innovative and groundbreaking anymore.”
Meta — which owns Facebook, Instagram, and WhatsApp — has other clouds on the horizon as it grapples with falling ad sales and stiff competition from TikTok.
Revenue fell to £23.83 billion for the second straight quarter in the third quarter.
Meta’s stock price is threatening to fall to its lowest level in six years — and the stock is down 61.6% year-to-date.