Meta (Facebook) Problems – Part 1: The Metaverse

I have maintained a position over the last several months (starting in Feb when I launched a three-part Metaverser series) that Meta’s vision of Metaverse is not the one people will buy into. Just to be clear, whoever believes that Metaverse will replace every aspect of human interaction is wrong and will not make it to the finish line.

If you are looking for more details on my three part Metaverse series follow the following links:
Part 1 – Metaverse Explained
Part 2 – Three things we need to make the Metaverse happen
Part 3 – Metaverse and numbers: Cost and TAM of Metaverse

The Tech industry has defined Metaverse based on what suits their profile. Some say it is a game life, for some it’s a social life, and for some companies, it is restricted to professional life. There is another concept as described by Neal Stephenson as an alternate reality. Well, what is it? One this is for sure, for Meta it’s everything and that is where they are wrong.

I have been a long proponent that the Metaverse will succeed in-game life. For me all other Metaverse’s fall short on promises. The Pandemic proved we cannot be caged. The more we are caged, the more we want to escape and experience the world. Going to Japan is ok, but being physically present is what I want. The economy is telling us, how quickly people switched from spending on goods and virtual life to services (travel, meeting people, going to offices, etc).

Meta’s Problem with the Metaverse

There is a problem with Meta’s Horizon World. It’s empty. It is running behind its target to reach 500,000 by almost 50%. Most users have not returned to the horizon after their first visit. Per the WSJ report:

According to internal statistics, only 9% of worlds built by creators are ever visited by at least 50 people. Most are never visited at all. “An empty world is a sad world,” said one document summarizing the company’s efforts to herd users toward venues where they would encounter others.

I am not too worried about the low population in Horizon at this point, Every product struggles with user acquisition but there are real concerns that would be hard for Meta to address. Such as accessibility, competition, creators’ economy, and regulations.

What exacerbates the issue at this point is that Meta itself believes it has not found a product market fit. Even Meta employees are spending no time in Horizon which is a problem because if they don’t love their own product, how can the users? See this statement snippet from The Verge:

Shah said the teams working on Horizon needed to collaborate better together and expect more changes to come. “Today, we are not operating with enough flexibility,” his memo reads. “I want to be clear on this point. We are working on a product that has not found product market fit. If you are on Horizon, I need you to fully embrace ambiguity and change.”

Meta’s problems are not only limited to the accessibility and economics of making Horizon work. Competition is lethal. Metaverse has become a crowded space, even within Big Tech. Meta is competing with some of the biggest gaming giants which are already popular in an alternate reality including Decentraland.

Let’s start with Microsoft. Microsoft has an entire tech stack primed towards building a virtual world, from cloud computing (Azure), Maps (Azure maps), and Analytics (Synapse) to AR/VR (Hololense and Microsoft Mesh). On top of this, its own suite of gaming platforms and the console provides easy entry into building a Metaverse.

Some key gaming companies that are way ahead in Metaverse technology than Facebook include Second Life and Unity Software. Unity is building its own map of Earth for gamers. Roblox already has a world in which Gucci land, Chipotle, and Nike.

The Economics

For Meta, the value of the metaverse is extracted from users as consumers. For the economics of Metaverse to work, the barriers to entry should be minimum. Facebook’s Horizon world requires a $400 headset to enter. With Quest Pro costing $1500. High Hardware cost is the barrier. Unless the cost of headsets becomes more affordable for users and creators, this will continue to be a barrier.

Assuming Meta is able to produce cheap headsets, adoption will still be a problem. Let us look at Mobiles for example. The reason mobiles work is that they provide a plethora of applications in one device. This is clear in the gaming use case for Cell Phones. Mobiles have taken over consoles as the biggest gaming platform in the world. As soon as we were able to add more power and graphics to the small screen, the shift occurred.

Mobile Is the Biggest Games Platform in the World
Newzoo Report

Humans are lazy animals, we want convenience. I want to be able to play, work, chat, and socialize all from my couch without moving. Mobile does that. Metaverse (outside of console gaming) will have an adoption issue.

I Still Don’t Trust Facebook With My Data Issue.

Last but not the least, Meta will be grappling with antitrust issues, especially with the use of cameras in the headset that captures your face and eye scans. The data is collected from the user’s face and eye movement which can also be broadcasted to companies beyond Meta. This will grant access to developers outside Meta to abstract gaze and facial expressions to animate characters. Right there is the privacy invasion.

The success of Quest Pro depends on Meta’s ability to convince users that their data is safe BUT it will be difficult coming from a company that has a record of failing to protect user data. It’s true. I mean Facebook’s primary business is selling ads and ad business requires user data.

Further, Meta’s acquisition of VR company “Within Unlimited” was stopped citing an anit-competitive market strategy by Meta.

Kavya Pearlman, the founder of the XR Safety Initiative, nonprofit advising businesses and government regulators on safety and ethics in the metaverse, also has concerns. “My background suggests that we are on a very dangerous path and if we aren’t careful our autonomy, free will, and agency are at risk,” says Pearlman. She says companies working on VR should publicly discuss what data they collect and share and should set tight limits on the inferences they will ever make about people.

Technology is neat but is there users?

In Part 2 of this blog, I will talk about Meta’s challenge with TikTok.


Nikhil Varshney

Nikhil Varshney is a product manager by profession and technologist by nature. Through this blog he wants to showcase disruption in the technology world. The idea is to break the concept into simple layman words to help everyone understand the basics