Where is all the money going?
Goalthe corporation formerly known as Facebookhe has invested impressive amounts of money in what he calls “the metaverse”, the paradise world of virtual reality that for Mark Zuckerberg represents the future of human connections.
However, for me, the most interesting questions about the metaverse are less sociological and more financial. When I put on the company’s latest virtual reality (VR) headset, the Meta Quest Pro, which costs $1,500and I parachuted to Horizon Worlds, Meta’s virtual theme park, I was not left pondering the future of human communication. Rather, in the state of Meta’s accounting department.
The Zuckerberg’s Xanadu is a cartoonish wasteland. Everywhere you look there are ads promising great fun: concerts, arcades, open mic sing-alongs, dance halls, bowling alleys, escape rooms and much more. However, almost everything is a joke. Most of these places are abandoned; you’ll be lucky if you find many enclosures populated with more than one avatar. Every corner of Meta’s metaverse reeks of eerie abandon, like post-apocalyptic America from the game series fallout. Plus, as you wander around that desolate place, you can’t help but think about how all those billions of dollars have burned up: Did Zuckerberg spend all that money… on this? How? Why? What was he thinking about? Are they blackmailing him?
The amounts are puzzling. In an earnings report last month, the company announced that Reality Labs, its metaverse business, had blown away nearly $4 billion in the latest financial quarter. The division spent plus of 10,000 million dollars so far this year, a pace that surpassed the $12 billion it spent on the metaverse last year. In just a few years, Meta’s VR investments have exceeded what the United States spent on the manhattan project (adjusted for inflation).
Of course, many of the technology companies spend a lot of money on new initiatives. Netflix has invested tens of billions of dollars worth of movies and TV shows. Tesla this spending vigorously to establish its car and battery operations. And every year amazon spends billions and billions of dollars on data centers Y logistics warehouses.
Nevertheless, Meta spending is different because of how staggeringly little you have to show for that money. At least Netflix’s billions of dollars gave us stranger things Y the squid game. Tesla money is revolutionizing the car industry. Amazon’s endless investments allow me to receive same-day shipments of toothpaste and toilet paper. On the other hand, Meta’s spending on VR seems only slightly more fruitful than putting the money in a furnace. The $12 billion Reality Labs invested in costs resulted in just $2.3 billion in revenue last year; so far this year, revenue is only slightly higher, while costs are up more than a quarter.
Meta’s big spend might make sense if it used the money to subsidize the cost of its VR headsets: thereby lowering their price enough to make the device a massive hit. However, as I said, the company’s latest VR device sells for a pretty penny: 1500 dollars.
Meta’s Quest Pro is pretty good. It is more comfortable than the older and cheaper versionsand its monitor and motion tracking system work much more smoothly, eliminating even the slightest dizziness and eye strain that I’ve felt in previous VR devices.
However, it is way out of the price range for most consumers. According to Target, the device is intended for professionals they want VR to be a big part of their remote offices, but even that seems like overkill. It’s still a big, bulky thing on the head; I had trouble getting more than an hour into any VR session before my head started to hurt. I doubt there are many office workers who turn to this viewer as their primary work device.
And the cheapest Meta viewer is hardly cheap. Costing $399, Meta’s Quest 2 it’s just as expensive as many high-end video game consoles…and a lot less useful. While an Xbox Series S or PlayStation 5 console abounds with games and a huge community of users to play against, much of the Meta Quest ecosystem feels like a work in progress. There are many apps and games available in the Meta VR store and few are very fun; however, most of them look like beta products, asking you for $10 or $20 for games that offer barely an hour of entertainment.
And then there’s Horizon Worlds, the social corner of the Meta metaverse. Horizon Worlds aims to be the VR equivalent of the Facebook app: It’s a place to hang out, to chat with friends and strangers, to play games, to explore the digital future of human relationships. It seems to be Zuckerberg’s favorite part of VR: He often posts pictures of his adventures through horizon worlds and often describes it as the future of digital socialization. However, in a call with investors last month, he admitted that Horizon Worlds “is still a long way from being what we aspire it to be.”
Wow yes. Citing internal company documents, The Wall Street Journal reported last month that Meta had been forced to lower its growth expectations for Horizon Worlds. The company once sought to reach 500,000 monthly active users by the end of the year, but currently has less than 200,000.
“An empty world is a sad world,” noted a company document cited by the Journal. So it seemed to me. My time in Horizon Worlds often felt more melancholy than fun.. It’s the premier social app on the biggest new device from the internet’s biggest social media company… and it’s a lo-fi, empty, flawed mess where the avatars don’t even have legs (yet), where most of the “worlds” I visited were deserted and the most populous places I encountered barely had dozens of people, and where conversations often go little further than “Hello” and “How are you?”.
I’m not ruling out socializing in VR; it is possible that one day someone will find a way to have a good time in virtual worlds. However, the great expense of Meta is not getting us there. She is a company with too much money and too few original and innovative ideas. She’s blowing billions of dollars on a party no one wants to go to.
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A visit to the metaverse: Mark Zuckerberg’s Xanadu is a wasteland