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  • Writer's pictureMarc Primo

The current challenges hounding the Metaverse

This is an article ‘The current challenges hounding the Metaverse’ by Marc Primo

After augmented and virtual reality giant Meta introduced a whole new world of possibilities on Web3 platforms, significant challenges continue hounding the platform based on its current earnings report. For one, its Reality Labs division suffered a significant setback during the 3rd quarter of the year with a whopping $3.7 billion in losses. With Meta CEO Mark Zuckerberg determined to realize an ambitious Metaverse vision to life, more significant spending costs are expected to increase, and no one can say right now if the losses are all worth it.

Meta reports indicate twice its spending numbers compared to its year-to-date from 2021, with the 4th quarter still spiking more expenses. While spending billions for the division, the platform’s Reality Labs was only able to bring in $285 in revenue so far, adding more impact to its 2nd quarter losses of $2.8 billion.

Such blowback has prompted Meta’s pool of investors to call for a reduction in spending, particularly on upcoming projects lined up, which Zuckerberg insists remain crucial. Based on recent interviews, the Meta CEO admitted that the platform will experience more losses by 2023, but future developments are surefire investments worth every cent. He maintains that focus areas for development in the Metaverse are crucial to the future.

Dropping numbers

However, being optimistic about the company’s overall operating income for the long term doesn’t seem to help its falling shares, which dipped to 60% so far this year. During the 3rd quarter of last year, the company registered net earnings of $9.2 million – a far cry from the same period this year of $4.4 million, decreasing its total revenue by 4% year-on-year. Of course, fluctuating foreign exchange rates also contributed to lower numbers this year.

Fortunately for Zuckerberg, Meta’s other platforms, such as Facebook and its ad impressions, showed significant increases over the year, including a 3% increase in daily active users. Instagram registered a 50% increase on over 140 billion Reels played over the past six months.

Despite the losses, information technology, digital marketing, and non-fungible token (NFT) experts still see great opportunities for the Metaverse. Imagining an extensive digital world where avatars can interact and transact opens many possibilities for producers, developers, creators, and consumers. As long as developers can create equal and accessible spaces for digital marketers in the Metaverse, more experiential ad campaigns are on the horizon, which can solve the company’s current problems with its ads business.

Right now, digital marketers are bracing themselves for new issues revolving around data privacy in the Metaverse, which could entirely map out new marketing models that prioritize user safety. Without third-party cookies available until next year, experiential and transparent ad campaigns via the platform need to be more creative. With Facebook’s previous controversies on user data, digital marketing within the Metaverse might be more complicated than resorting to other social media platforms.

The promise of endless possibilities

Many internet users have already considered residency in the virtual world and are willing to invest in digital goods and real estate. From entertainment to gaming entities, the Metaverse is slowly filling up with enterprises that look to outdo their competitors by investing early.

If it were up to Web3 experts, every company should look into possible investments via the Metaverse to take advantage of extended reality opportunities such as service or training applications and even remote work. From the looks of it, modern business is steering its way deeper into the digital space, and the Metaverse is very much open for business. As the company ramps up its efforts on merger and acquisition strategies, big-name brands, including Nike, Microsoft’s Activision Blizzard, and Gucci, have already started working with Metaverse teams as early as 2021.

From its initial concept of introducing a world driven by augmented and virtual realities, the Metaverse has morphed into a consumer-oriented platform, particularly in manufacturing and healthcare enterprises. Allowing employees to get safe and proper training via virtual reality scored well among companies that aim to improve productivity and collaboration at lower costs. Today, automotive giants like Hyundai and BMW, both of which sought help from IT brands Unity and Nvidia, are building meta-factories.

Digital immigrants on the rise amid challenges

With a multi-sectoral appeal that reimagines how industries do business in the digital space, it might just be enough to convince the company’s investors to go along with Zuckerberg’s plans for the future of the Metaverse. Even Bill Gates is convinced that remote work meetings will soon migrate to the platform in less than three years. Of course, Microsoft has already adapted to the shift.

However, there’s no denying that the current financial problems hounding the platform are still too high a hurdle to overcome quickly. The S&P 500 had already named Meta as this year’s worst performer, which does no favors to Zuckerberg’s Forbes ranking as the 29th richest with an estimated net worth drop of around $72 billion this year. He was the third richest man in 2021. The company’s valuation likewise dropped to being the 34th largest public company after reaching a high rank of 5th.

Aside from its significant losses, Meta has faced other major difficulties since it rebranded, mainly driven by its shifted focus on the ambitious world of the Metaverse. Considering its enormity and prominence in digital tech, it’s always big news when a giant company seems to be falling on its knees. Somehow, introducing a new environment to comfortable social media folk who would instead check out TikTok than learn and make digital Web3 investments can be enormously challenging. Add to this more stringent regulatory scrutiny from the government concerning user privacy and NFT taxation, among others. Due to antitrust issues, the Federal Trade Commission recently drew a line in Meta’s acquisition of the virtual fitness app Within.

Nonetheless, Zuckerberg is adamant about assuring investors that all experiments on the drawing board align with how the entire business world is moving. While there are no surefire ways to determine how well Meta’s family of apps and developments might perform, the main objective is to solve all the issues. Among the most pressing ones would be Apple’s privacy updates limiting third-party cookies collection, ad business problems, and a looming recession.

Still, the CEO is confident that the long-term plans will provide greater returns over time. Even if this promise comes with fresh news of how Meta laid off 11,000 of its employees as part of its drastic move to shift priorities.


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