Social networking platform Facebook witnessed slower user growth in its biggest market India in the December quarter of 2021 due to an increase in data package pricing, Meta CFO Dave Wehner said.
During the company's earnings conference call on February 2, he also mentioned that Covid resurgences during prior periods pulled forward user growth in Asia Pacific and rest of the world. However, he didn't disclose any further details.
While the company doesn't provide a country-wise breakup of its user base, Facebook has an estimated 350 million users in the country, according to the market research firm Statista.
In Asia Pacific, Facebook reported a monthly active user base of 1.278 billion in Q4, of which 806 million users are daily active users, which is flat growth from 1.278 billion monthly active users and 805 million daily active users in Q3 2021. Globally, the firm reported its first-ever quarterly decline of daily users, to 1.929 billion from 1.93 billion.
That said, Asia Pacific is a smaller market for Meta in terms of advertising revenues. The region posted revenues of $6.24 billion for the quarter, of which $6.18 billion came from advertising sales.
The average revenue per user in the region increased to $4.89 in Q4 2021 from $4.30 in Q3 2021 and it accounted for a modest 18.5% share of the company's overall quarterly revenue that stood at $33.67 billion.
Another factor for the drop in user growth is increased competition from other apps. "We believe competitive services are negatively impacting growth, particularly with younger audiences," Wehner said.
Meta CEO Mark Zuckerberg also mentioned TikTok as a key competitor for its short video offering Reels.
While short-form video is already the biggest contributor to engagement growth on Instagram and one of the biggest contributors to positive engagement on Facebook, Zuckerberg said the dynamics are a little bit different with Reels from what they have seen with other formats such as Stories and mobile feed in the past.
"The thing that is somewhat unique here is that TikTok is so big as a competitor already and also continues to grow at quite a faster rate off of a very large base...it takes us longer to kind of get to where we want on this. Even though we're compounding extremely quickly, we also have a competitor that is compounding at a pretty quick rate," Zuckerberg said.
TikTok is currently banned in India, which has proved to be beneficial for Instagram over the past year. Instagram was the top app in terms of total global downloads in Q4 2021, registering a 10% increase in app installs from Q3 2021, according to app intelligence firm Sensor Tower.
Zuckerberg said they are currently in the middle of transitioning their services towards short-form video like Reels due to which they are replacing "some time in News Feed and other higher monetizing surfaces".
This could put some pressure on impression growth in the near term but is the "right short-term tradeoff to make in order to get long-term gains", he said.
"While video has historically been slower to monetize, we believe that over time short-form video is going to monetize more like feed or Stories than like Watch – so I’m optimistic that we’ll get to where we need to be with Reels too" Zuckerberg said.
Going forward, Meta plans to invest in simplifying video across Instagram, building more creative and monetization tools for creators, and helping more people discover and interact with relevant Reels, he added.
Investment into metaverse
In October, Zuckerberg had also announced plans to spend at least $10 billion this year on Reality Labs as it looks to build the 'metaverse' - billed to be the next big computing platform.
While the platform is expected to take at least 5-10 years to materialise, some building blocks are starting to emerge in mature markets.
Meta recently introduced 3D avatars to Instagram Stories and direct messages in the United States, Canada, and Mexico with plans to roll it out to more regions in the coming months.
In December, the company rolled out Meta Avatars SDK to all Unity developers on Quest, Rift and Windows-based virtual reality (VR) platforms, enabling developers bring Meta Avatars to their own VR experiences.
Meta also opened up access to its social VR platform Horizon Worlds to all users above the age of 18 in the United States and Canada on December 9. The platform allows users to build new digital spaces (worlds) or experiences, discover new places with their friends, or form teams to solve puzzles among others.
In August, the company also launched an open beta version of Horizon Workrooms, a VR experience meant to facilitate remote work collaboration and business meetings.
"For software, Horizon is core to our metaverse vision. This year, we plan to launch a version of Horizon on mobile too, that will bring early metaverse experiences to more surfaces beyond VR" Zuckerberg said.
Apart from Reels and Metaverse, other key investment areas this year will be community messaging, commerce, ads, privacy, and artificial intelligence, Zuckerberg said during the earnings conference call. "These are the areas that we’re putting a lot more talent and budget towards," he said.
Overall, Meta posted a profit of $10.3 billion on top of revenues of $33.67 billion for the fourth quarter. The company which recently changed its corporate name from Facebook to Meta, also broke out Reality Labs as a separate reporting segment for the first time this quarter.
The unit, responsible for the company's augmented and virtual reality-related hardware, software and content, posted an operating loss of $3.3 billion over revenues of $877 million for the quarter. For the entire year 2021, the unit posted an operating loss of $10.2 billion over revenues of $2.27 billion.
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