Is the Metaverse Being Abandoned?
After Mark Zuckerberg went all-in on the metaverse two years ago, it now appears that Zuckerberg is doing an about-face on his web3 ambition. In Meta’s latest earnings call, the CEO only mentioned the metaverse once and called 2023 the “year of efficiency.” As other companies are exiting similar ventures, investors ask, is the metaverse being abandoned?
Billions lost, employees laid off
Once hailed by Zuckerberg as the “next chapter of the internet” when his metaverse was launched in October 2021, by its first anniversary Zuckerberg referred to it as a “trough of disillusionment.” The CEO has admitted things have not gone well, but the end product was of such strikingly low quality that it quickly became the object of satire.
Reality Labs, the division of Meta spearheading the metaverse project, lost $4.3 billion in Q4 2022, leading to Meta’s overall loss of $13.7 billion for the year. Meta’s share price plunged 52% in 2022, as did its earnings per share, down 18%. As a result, Zuckerberg laid off 11,000 employees from Reality Labs in November 2022. One employee told the Financial Times, “Honestly, it’s still a mess [...] the year of efficiency is kicking off with a bunch of people getting paid to do nothing.”
Other corporations divesting
Zuckerberg isn’t the only one backing away from the metaverse. Tencent Holdings hired 300 employees in June 2022 to develop a ring-shaped video game controller for its metaverse project. But after realizing a five-year forecast to turn a profit and not enough applicable games or non-gaming applications in the metaverse, Tencent terminated the project.
Microsoft has also disbanded its Industrial Metaverse Group after just four months. The group was formed to bridge metaverse software and industrial robotics.
Is the metaverse being abandoned?
The problem for the metaverse is much the same problem that blockchain technology, NFTs, and cryptocurrency have: a lack of knowledge about their value. People simply don’t understand how these web3 technologies add value to their lives. If metaverse creators need to educate an unwitting market on the value of their product, they are already losing.
This does not mean there is no value in web3 – indeed, there is. But there is a major lack of education about its benefits in the eyes of most people. As these technologies are nascent, building the proper foundation necessary to prove their worth will take time. And shoddy outcomes from the likes of Meta do nothing to help and everything to hinder progress.
The problem for Zuckerberg and other metaverse creators is that the value is placed upon the market where there is no demand. Without demand, it does not matter what a company supplies. The metaverse appears to be misapplied in its potential right now. Developers need to focus on the market first; until then, investors will continue to abandon the metaverse.
