Exploring the Extent of Mark Zuckerberg’s Investment in the Metaverse

Mark Zuckerberg’s metaverse has seen limited success in terms of quantifiable achievements. Since 2019, only 20 million Quest virtual reality headsets have been sold. Additionally, Meta Platform Inc.’s flagship virtual reality experience, Horizon Worlds, reportedly has a mere 200,000 active users. However, one significant figure stands out: a staggering $21 billion has been lost in the creation of the Metaverse since the beginning of 2022.

All of this begs the obvious question: How much money is Zuckerberg willing to spend to make his Metaverse a success?

Fortunately, he doesn’t have to answer that yet. Meta’s traditional business – selling online advertising – is tough, and the turnover has grown by double digits for the first time since the end of 2021. That’s enough of a distraction to keep investors from hitting him too hard. Sure, they’re worried that Meta has spent so much money on the metaverse with so little evidence for it – but they’re not mad.

Metaverse’s revenue — which sells headphones and apps and services — fell between 2021 and 2022, and analysts expect it to drop further this year. Reality Labs had $4 billion in expenses in the last quarter alone — a 23% year-over-year increase, not a good sign in Meta’s supposed “year of efficiency.” Reality Labs’ expenses will increase in 2024. “A lot of investors may want us to spend less here in the near future,” Zuckerberg said last week. “My view is that we are pioneers in these areas. I think they will become big over time.”

When bad times come again and advertising sees a slump, Zuckerberg’s metaversal vision needs to be in much stronger shape than it is today. Otherwise, he finds, investors can be much less forgiving.

But if he manages to turn things around, he can thank Apple Inc. The launch of the company’s Vision Pro headset in June drew attention back to the possibilities of virtual and augmented reality that Meta lacks. Apple’s store network is used to bring millions of consumers to the mixed reality experience. “It has caused a buzz,” says analyst Carolina Milanesi from Creative Strategies. Still, “the price of the Vision Pro will make some people look elsewhere,” he added.

Coming out later this year, Meta’s Quest 3 will beat the Vision Pro to market and be a seventh of the price. Meta can get caught up in Apple’s hype like a skateboarder being pulled along by a bus. Apple’s entry has bought Zuckerberg more time with investors — and helped bolster his overall thesis that mixed reality will have a place in millions of homes in the future. If Apple thinks it’s worth it, then maybe it is.

But then again, maybe it isn’t. What cannot be shaken is the underlying feeling that this is a technology that has so far failed to capture the public’s attention or desire. Zuckerberg seems to think this is a problem that can be solved through R&D, making devices lighter and smaller, with sharper graphics and less risk of motion sickness. I think it needs more. VR has proven to be a novelty gaming platform, especially when exercise apps are thrown in. But I still don’t see it as a serious platform for work, networking and productivity. There is a significant possibility that Zuckerberg – and Apple CEO Tim Cook – have grossly misread the public mood. Ask most people today about the role of technology in their lives and most will say that they are looking for less connection.

The meta has shown in the past that it knows when to stop throwing good money after bad. It took the wraps off its critically-acclaimed Portal video chat device earlier this year, and the main takeaway is that just building a great device — which Portal certainly was — isn’t enough to make it a success. You need to convince the consumer that their life is incomplete without it.

It’s clear that Meta isn’t giving up on the Metaverse so easily. First, it would make changing the company name from “Facebook” to “Met” rather awkward. The bigger problem is that it would once again damage Zuckerberg’s credibility as CEO – which has improved recently with the success of Twitter clone Threads.

With a small team, no ads, and only a few months of development, Threads took less than an hour to attract more users than Horizon Worlds has managed in two and a half years. Based on this evidence, Zuckerberg may be wiser to direct more of his resources to building this platform instead of chasing metaverses.

More on Bloomberg’s opinion:

• Mark Zuckerberg is a fad CEO who needs to focus: Parmy Olson
• Does Zuckerberg even want Twitter to replace threads?: Dave Lee
• My eyeball met Sam Altman’s crypto AI scanner: Lionel Laurent

This column does not necessarily reflect the opinion of the editorial board or of Bloomberg LP and its owners.

Dave Lee is a US technology columnist for Bloomberg Opinion. Previously, he was a San Francisco-based correspondent for the Financial Times and BBC News.