Moneycontrol Pro Panorama | Metaverse will have to wait for its moment in the sun

(Illustration by Suneesh K.)

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When it comes to the crunch, investors want to see profits, cash flows and growth rather than the promise of a brighter future through transformation.

Such is the story of Facebook owner Meta which lost over $200 billion in value in a single day of trading.

Meta has been trying to sell investors its vision for the metaverse — which some call the future of the internet with technologies such as virtual reality and augmented reality.

Venture capitalist Matthew Ball has described the metaverse as a “platform for human leisure, labor, and existence at large” — in a virtual three-dimensional environment, of course.

Meta boss Mark Zuckerberg has been an evangelist of sorts for the metaverse, but the numbers lag the enthusiasm by a wide margin. In its earnings yesterday, Meta shared the numbers for Facebook Reality Labs unit which is spearheading its Metaverse entry — a 2021 loss of $10 billion.

To be sure, Meta is not the only company which is pumped up about the metaverse. Microsoft CEO Satya Nadella, for instance, previously talked about an ‘enterprise metaverse’. Morgan Stanley analysts have already projected an $8 trillion market opportunity for the metaverse.

Great, but the fruits of the metaverse will take time to ripen. Meanwhile, Meta is struggling to shore up growth due to a variety of reasons.

Daily active users fell for the first time in its history as it is losing the battle for eyeballs to rivals such as TikTok.

Its revenue model which relies heavily on targeted advertising has also taken a hit, thanks to new privacy setting in iOS devices manufactured by Apple.

Thus, its revenue guidance of 3-11 percent growth was lower than what the market expected.

It might be too early to say Meta’s transformation and virtual reality success are a failure. However, it certainly needs to figure out ways to win the war for eyeballs lest it becomes an existential crisis before the company can realise the Metaverse ambition.

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Ravi Krishnan

Moneycontrol Pro