Last October, CEO Mark Zuckerberg announced that Facebook was rebranding as Meta and setting its sights on the metaverse, which he dubbed the “successor to the mobile internet.”

But 12 months and more than $15 billion later, the company has little to show for it.

• Meta’s market value dropped 57% this year, about two times more than Amazon and Alphabet and over four times as much as Apple.
• According to The Wall Street Journal, Meta currently has less than 200,000 monthly active users on its Horizon Worlds metaverse platform, though it had big hopes of hitting 500,000 users by the end of the year. (They’ve revised it in recent weeks down to 280,000.)

Here are a few reasons why Meta’s plans for the metaverse have stalled:

Bad timing: Meta had a lot of momentum going into 2022, but a rocky economy has forced the company to hit pause. “Had all of these moves been done approximately a year earlier, then you wouldn’t have run into these inflationary concerns and uncertainty that are causing them to pull back now,” said our director of Briefings Jeremy Goldman.

Isn’t it ironic? One of the (possibly) unintended consequences of Facebook’s rebrand to Meta is the amount of eyes the company now has on its metaverse intentions.

• Had it not rebranded, the company could have made a lot of the same moves, but with less blowback, said Goldman. “Ironically, they would have been more likely to achieve their metaverse ambitions had they not rebranded as Meta.”

The price isn’t right: Earlier this month, Zuckerberg debuted the Meta Quest Pro virtual reality (VR) headset, the company’s latest piece of hardware that will cost $1,500.

• The pricing was a bit unexpected for consumers, said our analyst Gadjo Sevilla, especially since the headset doesn’t improve the VR experience that much.
• Though it is supposedly easier on the eyes, Sevilla notes that users will still experience the graphics on Horizon Worlds are the same resolution as on the less expensive headsets, and the business and productivity experiences Meta is touting aren’t dissimilar from apps on a smartphone or computer.

Mixed reality: Sevilla suggested that consumers may not be sold on VR just yet, though mixed reality and augmented reality are gaining popularity.

• “Right now, mixed reality makes more sense. The applications have been proven. But having to be in an immersive environment with a head[set], they still need to find a compelling use case, and I don’t think that, at this point, it’s there yet.”

A hypothetical: Would Meta still be pursuing the metaverse if it had the ability to acquire other social media platforms without regulatory scrutiny? Goldman and Sevilla say no.

• “I think regulation has put a pin in their plans,” said Sevilla, citing the fact that Meta previously had hopes of acquiring VR workout app Supernatural before the Federal Trade Commission blocked it from doing so.

From our mouths to Zuck’s ears: Sevilla recommends that Meta focuses on short-term goals and keeping its existing user base engaged. “For existing headset users, make the experience better for them. Throw in more applications that skew toward productivity, but make it fun, make it about connecting.”

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