Facebook sees the growing market for digital clothes, tools, and experiences online as the solution to one of its biggest threats: its declining appeal to kids. But the power it could wield in this metaverse is truly frightening.
It is not often that a company like Facebook, which reported revenue growth of 35% to $29 billion in the three months ending in September, with profits rising 17% to $9.2 billion, can be said to be in trouble. But Facebook is in trouble.
During this week’s earnings call with CEO Mark Zuckerberg, Facebook announced its longer-term goal was to invest heavily in its Reality Labs (FRL), developing technologies like virtual and augmented reality. The plan, it was explained, will enable Facebook to become a significant player in and creator of the so-called metaverse – a future online world of immersive, virtual and shared spaces.
As Zuckerberg puts it, the goal is to transform Facebook from a social media platform into a hub of a new “massive creative economy.” As a signal of how serious he is about this, he told the market that not only will this dent total operating profit by around $10 billion this year, but will do so for years to come as it builds out the infrastructure to realise its vision. To this end, the company will break out its FRL segment into a different reporting unit on its quarterly earnings statements. That segment will be separate from the rest of the company’s so-called “Family of Apps” — Instagram, WhatsApp, Messenger and Facebook proper.
This is not a pipedream. Nor is it solely driven by the fact that the Covid pandemic forced millions of people to live more of their lives digitally, which resulted in considerable growth of virtual reality headsets led by Facebook’s Oculus Quest 2. It is a vision Zuckerberg has held for many years. And it is shared by many Big Tech companies and visionaries.