Meta Platform’s decline in popularity is driving it to take cost-cutting measures, yet at the same time it is pouring resources into virtual reality.
- Over the last year Meta has lost 58% of its stock value. The company is planning cost cutting measures including hiring freezes and office closures.
- Even with signs of trouble ahead, the company is continuing to put effort into the metaverse in an attempt to show founder Mark Zuckerberg’s vision can become reality.
- Next week, Meta will unveil its newest developments in virtual reality, giving the company a chance to show that it can remain relevant.
Why it’s news
When Zuckerberg announced Facebook’s name change to Meta and unveiled plans for the metaverse, the company was operating within comfortable operating margins and its advertising revenue was up 42%. Since then, much has changed in the world market.
The “Meta Connect” conference is scheduled to start October 11. Meta will use the conference to showcase new tech including a high-end VR headset intended to eventually replace the laptop in the workplace.
Previous models of the VR headset performed well in 2020, prompting some building momentum behind the release of the new headset model. The Quest 2 headset was designed for entertainment purposes, like video-gaming.
VR gaming hasn’t fully caught on yet, even though Meta sold more than 8 million units last year. Meta is the dominant VR gaming provider, but VR gaming only contributed 3% of all gaming revenue last year.
Even with improved technology, the devices have yet to generate much revenue for the company.
Meta’s VR division Reality Labs only contributed 2% of the company’s total revenue. The unit has also lost Meta billions of dollars this year alone.
While Reality Labs fights to become profitable, Meta must still rely on advertising revenue from Facebook. However, changes to Apple’s privacy policies have severely handicapped Facebook’s once finely tuned advertising campaigns.
Combined with fierce competition from newer social media platforms like TikTok, Facebook is looking to cut costs. Some methods include a hiring freeze and shrinking the physical office footprint.
Even while facing these new troubles, Meta is charging ahead with plans to bring the metaverse to life. It’s an expensive venture, but if virtual reality lives up to Zuckerberg’s promises, it could be worthwhile.