Mark Zuckerberg goes all in for the metaverse, but he needs to focus on other things again. The Meta CEO must prioritize growing engagement and revenue for the company’s core apps. Meta will report Q3 results next week and analysts have called it a “make-or-break quarter.” Loading Something is loading.
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Meta, the company formerly known as Facebook, should refocus on making Facebook Facebook.
For the past year, CEO Mark Zuckerberg has delved into his passion project: the metaverse. It’s a squishy concept that can describe any number of things, but in its broadest sense, it’s the idea that people interact through virtual worlds rather than through a traditional social network.
But as I wrote recently, Meta’s big linchpin in the metaverse was a disaster, with little but a mediocre experience, increasingly expensive headsets, and inventory down more than 60% this year.
Zuckerberg should instead lower that and prioritize strengthening his company’s core apps, Facebook, Instagram and WhatsApp, which have felt largely neglected as Meta donated $15 billion into his metaverse project.
Staring at the barrel of a potential recession, Meta should increase the engagement and revenue of those apps, which have billions of users worldwide. Meanwhile, Horizon Worlds, Meta’s main metaverse app, has just 200,000 monthly active users, The Wall Street Journal recently reported.
Above all, even with Instagram having had some headwinds lately, it’s still Meta’s crown jewel. Keeping users happy with the app and making a plan for it over the next few years should be the company’s #1 priority. Meta said in its Q2 earnings that Reels grew and accounted for 20% of the time people spend on Instagram.
Rather than pissing users off by trying to make Instagram more of a TikTok clone, Meta should spend its time and energy threading the needle to monetize that use as much as possible without turning people off.
It should also try to do the same with WhatsApp, the most popular communication app in the world. The platform contains no ads, trying first and foremost to maintain its identity as a user-friendly service. But Meta has promised to capitalize on its popularity in other ways to monetize, including paid features.
But instead of focusing on its tried-and-true apps, Meta is investing billions of dollars in an idea that might pay off five or ten years later.
Left unchecked, a bet of this magnitude risks alienating investors — and staff — as they face tumultuous economic waters.
Zuckerberg will show us his report later this week
Mark Zuckerberg as avatar during Connect 2022 Facebook/Meta
Meta will report its Q3 results next week and Wall Street is already shocked. Analyst Neil Campling called a recent metaverse presentation by Zuckerberg “desperate” and said “no wonder investors are in despair.”
Investment firm Bernstein called it a “make or break quarter” in a recent note and said engagement numbers will be “critical” for the company this quarter.
“We believe that if Meta doesn’t provide incremental information on the call, suggesting overall engagement with its family of apps is stable, the bear case will only get louder,” Bernstein analysts wrote.
The analysts think a turnaround is possible by the end of the year and in 2023 if Meta increases the ad tax on its TikTok-like video product Reels, among other things.
Meta’s revenue declined in the second quarter, the first time it had done so in the company’s ten years of public service. Zuckerberg blames an “economic downturn” that impacted the digital advertising business.
Apple was a major part of the problem. Last year, the tech giant introduced an iOS privacy change that asked users to opt out of tracking other companies’ apps. Meta responded at the time, saying advertisers may see “an overall decline in ad performance and personalization and an increase in cost per action.”
Trying to escape a future scenario where Apple is a dominant force that can cripple his company with a single software burst, Zuckerberg tries to invent the next future platform.
But it’s rarely the incumbents who create the next big platform, which is why Zuckerberg’s metaverse vision sounds better suited to a VC-backed startup than a company-wide rallying cry.
Apple has also explored future platforms, but much quieter than Meta (its own VR headset is reportedly coming soon). But the company has not been penalized by Wall Street for it, as it is still focused on growing its core business – unlike Meta.
That hasn’t stopped Zuckerberg from making his metaverse a Meta vs. Apple competition to push, so it obviously takes up space.
“This is a competition of philosophies and ideas, where they believe that by doing everything themselves and integrating closely, they can build a better consumer experience,” Zuckerberg said of Apple’s strategy in a meeting with all employees this year, according to the report. The Verge. .
But maybe Zuckerberg should take a page out of Apple’s book, prioritize the proven cash cows to keep investors happy, and relegate the metaverse stuff to the garage where moonshot projects belong.