Meta lost $9.4 billion in the first nine months of the year in its metaverse unit Reality Labs and sees significantly wider operating losses going forward. But its not just Meta that is suffering in the technology sector. A slowing economy have seen companies cutting marketing budgets. 

To make the ambitious dream of creating a metaverse a reality, just about a year ago Facebook/Meta announced it was hiring 10,000 software engineers over the next five years – the biggest ever hire in tech history – to build its metaverse, a mix of reality, virtual reality (VR) and augmented reality (AR) realms.

The technology giant’s valuation at the time was close to $1 trillion, a princely market capitalisation usually reserved for the US’ premier blue chip corporates like Apple.

“Digital goods will be an important way to express yourself in the metaverse and a big driver of the creative economy. I am excited to bring more brands and bring VR soon too,” Zuckerberg said at the time.

Yet barely a year after Mark Zuckerberg’s big Meta presentation, the company’s stock has plunged by more than 70%, bleeding investors billions.

Now, Meta is worth only $300 billion, just a third of its market value a year ago.

Analysts and industry experts say Zuckerberg’s fixation with the metaverse has come at a high price for the company.

“The obsession with the (metaverse) project has done tremendous harm to the brand,” CircleIt founder and CEO Art Shaikh tells MetaNews.

In the quarter to September, revenue came down 4% from $29 billion to $27.7 billion.

Meta’s results have raised questions on whether Zuckerberg’s all-in bet on the metaverse was the smartest play and whether its gamble on the future will pay off eventually.“Meta’s results …was an absolute train wreck that speaks to pervasive digital advertising doldrums ahead for Zuckerberg & Co as they make the risky and head scratching bet on the metaverse,” Wedbush analysts Dan Ives said in its report.

Concerns have also been raised on whether Meta can transform itself into a virtual reality behemoth and power the company’s next phase of growth.

Analysts say such strategic pivots take a while for big tech companies to implement and reap financial benefits from in the near term.

“Every new technology takes years to first convince the marketplace of users, workers and investors, and then to create something that captures the imagination of the marketplace,” Jeff Kagan, a technology industry analyst tells MetaNews.

Meta lost $9.4 billion in the first nine months of the year in its Reality Labs, its metaverse unit and sees significantly wider operating loss in fiscal year 2023 (FY23).

But its not just Meta that is suffering in the technology sector. A slowing economy have seen companies cutting marketing budgets. 

Even tech companies like Alphabet, the parent company of Google, have not been spared with top line earnings declining in the period to $54.5 billion from $56.3 billion.

What went wrong with the meta pivot?

“It was a matter of timing”, Kagan says.

“The metaverse was still in its early years and the marketplace of users and investors simply had no clue what to expect,” Kagan says.

“That is where Facebook or Meta was wrong. They moved too quickly. They jumped over too many important steps. That is why this company is stuck in the metaverse mud today.”

But Zuckerberg painted a picture of an entity holding a fort in the market. 

User engagement for its apps is at its peak, he says. A total of 3.7 billion people now use one of Meta’s apps monthly. The number of people using Facebook, Meta’s flagship application, is the highest it has ever been, he says.

Instagram has more than 2 billion monthly actives while Whatsapp, its messenger application service, has more than 2 billion daily actives.

Its Reels product, a video sharing service positioned to compete with Tik Tok that is integrated into the Facebook application, is also doing well, he added.

This number represents a 50% growth in the past six months, he said.

All the numbers look promising elsewhere except in Meta’s new baby, the Metaverse.

Horizon Worlds, the name of Meta’s new virtual space, slashed its target for monthly active users to only 280,000 monthly from an initial 500,000. In reality, the space is only attracting about 200,000 people at the time of writing.

Investors are getting increasingly impatient with Zuckerberg and his metaverse.

What will it be? Facebook 2.0? Or something completely different?

While it generally takes longer in Silicon Valley to build a business, Wall Street tends to value businesses based on nearer returns rather than foggier forecasts that stretch out for years.

It’s a view Kagan shares too.

“However, every new technology takes years to first convince the marketplace of users, workers and investors, and then to create something that captures the imagination of the marketplace,” Kagan says.

“Smartphones had been with us for more than a decade or two to one degree or another with Blackberry, Palm Pilot and others. The marketplace now understood the smartphone marketplace, so when the Apple iPhone and Google Android were released, they were an instant success.”

Even Zuckerberg realises this now.

“There is still a long road ahead to build the next computing platform, but we are clearly doing leading work here,” he said. “This is a massive undertaking and it will often take a few versions of each product before they become mainstream.”

If he gets it rights, he reckons it is going to be of “historic importance”, adding it will create an entirely new way humans interact with each other “as well as a foundation for the long term of our business.” 

Rumors of Zuckerberg stepping down

For the first time in years rumors that Zuckerberg could be made to walk the plank, have emerged as investor concerns rise with falling earnings.

Infinity, or a pair of glasses?

Meta’s director of communications, Andy Stone, made the unusual decision to publicly respond to unsubstantiated market rumors that claimed Zuckerberg could step down as the group’s CEO during 2023. 

In response to the rumor, Stone wrote on Twitter, “this is false.”

For FY23, Zuckerberg is being coy about the metaverse, preferring to focus on what he described as a “small number of high priority growth areas.”

This, he says, will involve working on the “AI discovery engine powering Reels”  and other “recommendation experiences, our ads and business messaging platforms and the metaverse.”

In a way, it is a return to the basics.

Also Meta is laying off 13% of its staff, or more than 11000 employees, Zuckerberg announced last week.

“Layoffs might appease investors for a bit, but the overall move away from the metaverse project and focusing on core revenue generating products will be the only way to save things,” Kagan concluded.

MetaNews.

Although the Fediverse is still small when compared to the number of users on mainstream platforms, those interested in the future of the internet and regulation should be aware of the Fediverse and how it works, who uses it and why it’s important.

The Fediverse is a network of interconnected servers that communicate with each other based on decentralized networking protocols. These servers have varying uses and different services, such as social media or file hosting. 

So far, the most popular Fediverses are Mastodon, PeerTube (video hosting, similar to YouTube), and Pleroma (social networking and microblogging similar to Mastodon).

In order to have a grasp of how the Fediverse works, there is need to understand the central concepts, namely the software platforms that comprise the Fediverse, and the communication protocols used by those software platforms.

Fediverses aren’t websites

Signing up to a Fediverse service isn’t the same as signing up to Elon Musk’s Twitter or Meta’s Facebook, where one creates an account and uses it to communicate only with other users on that platform.

The Fediverse services aren’t single websites, but pieces of open-source software that allow anyone to run their own social networking service using that particular software’s functions.

Picture this; you are running your own kind of Facebook where you keep all the functionality and features that Facebook’s software incorporates, but you determine who’s allowed onto your Facebook and the rules they have to follow. Sounds cool?

Well, the servers on the Fediverse, are called “instances,” and they federate with other “instances”, so the user experience is that of an integrated social network. 

This leads to a decentralized distribution of authority and responsibility across the network.

In practice, Mastodon, one of the Fediverses, provides microblogging software, but those hosting instances retain complete authority over how they wish their particular community to function. While this structure provides users and instance owners with greater control, it also means that individual instances must manage their own operations and security.

For example, individual instances are responsible for mitigating distributed denial of service (DDoS) attacks themselves—without centralized governance, there’s no centralized protection. 

Which protocols are in use in the Fediverse?

A number of different protocols are in use across the Fediverse, including ActivityPub and diaspora. In Fediverses, shared protocols allow users of different software platforms to communicate with each other. For instance, a Mastodon instance and a non-Mastodon instance can communicate when both use the ActivityPub protocol.

In other words, having an account on Friendica doesn’t limit you to communicating only with other Friendica users—because Friendica is part of the Fediverse, users of other services like Mastodon or Pleroma can communicate with you directly without needing to share a platform.

This would be similar to scrolling an Instagram feed, but Facebook posts from friends and from Twitter users one follows also appear integrated into the platform.

How many users are in the Fediverse?

Although it is difficult to estimate the exact number of Fediverse users because of the decentralization of the services, estimates by third parties, show a growth from about 600,000 users in early 2019 to 4.5 million in late 2021. 

Different audiences have embraced it for a variety of reasons. Some were concerned about remaining on mainstream social media platforms because of trolling and spamming. For instance, Mastodon focused on its ability to provide a more curated space free from the “toxic behavior” generally prevalent on platforms like Twitter. 

In 2017, federated services were described as appealing to “queer and trans” demographic groups who “fled Twitter due to harassment.” 

This movement was due in part to the increased power of moderation tools to allow users to curate their own online experiences. For example, Mastodon introduced “defederation” in 2017, which allows instances to block all content from another instance considered problematic or harmful. Instances can also choose to only federate with a small number of other instances vetted for, for example, friendliness to LGBTQ users.

While mainstream social media platforms allow individual users to block others, the Fediverse allows for community-level engagement with, or disengagement from, other communities. 

For MetaNews.

Invisible Universe, an internet-first animation studio, released The R3al Metaverse. The initiative will mint 7200 Producer Pass NFTs, allowing the community to influence the show’s creative direction and have their NFTs animated.

The R3al Metaverse parodies top reality house shows like “The Real World” or “Big Brother” and follows five NFT characters who move to Los Angeles from the metaverse. The 3D-rigged, professionally-voiced cast comprises characters from Bored Ape Yacht Club, World of Women, Doodles, Cool Cats, and Robotos. Fans will root for their favorites as they become friends, quarrel, make up, make jokes, make blunders, and maybe make out.

Alexis Ohanian, founder of Seven Seven Six and investor in Invisible Universe, said other animated programs take years to develop and market. Invisible Universe can debut a whole series and NFT collection in months.

Producers Pass NFT holders can write confessional interviews and create storylines following the series debut. The Producers Pass NFTs, created by award-winning artists and animators, combine iconic Los Angeles sites and the cast into a Twitter banner. NFT holders of the five towns featured in the first season may see their character animated and incorporated into the programme for a cameo.

Invisible Universe has built memorable animated IP on social media

“We approach storytelling without ego, listening to what the community loves and wants more of.” Tricia Biggio, CEO of Invisible Universe, believes the next generation of customers will want more involvement in entertainment franchises. “This series has infinite potential for a spinoff, new characters, or a longer run. Season 2 and beyond will depend on our community.”

Invisible Universe is contextualizing NFTs, communities, and the metaverse so consumers can grasp web3 on traditional media. The animation company applied lessons from Qai Qai, Squeaky & Roy, Clydeo, and Ember. The R3al Metaverse will feature new characters who will spin off into their own shows or planets, like Invisible Universe’s present characters.

For MetaNews.