On Wednesday, Mark Zuckerberg, CEO of Meta Platforms, told CNBC’s Jim Cramer that the metaverse may be a significant component of the social network operator’s business in the second half of the decade.
“We hope to basically get to around a billion people in the metaverse doing hundreds of dollars of commerce, each buying digital goods, digital content, different things to express themselves, so whether that’s clothing for their avatar or different digital goods for their virtual home or things to decorate their virtual conference room, utilities to be able to be more productive in virtual and augmented reality and across the metaverse overall,” he said.
This year, investors have slashed the company’s market worth in half as growth has halted and the number of daily active users has decreased sequentially for the first time in the last two quarters. Zuckerberg has been gradually steering the company toward what he sees as the next generation of content, a virtual world in which users can buy and trade digital products in exchange for avatars that can converse with one another. Earlier this month, the company’s ticker symbol was changed from FB, a vestige of its past as a pure social network provider, to META.
However, the business has been investing in augmented and virtual reality since 2014, when it spent $2 billion for headgear maker Oculus VR. Shipments of headsets have not surpassed those of PCs or smartphones. Zuckerberg expressed confidence in the performance of the company’s current-generation Meta Quest 2, which starts at $299.
“Quest 2 has been a hit,” Zuckerberg told the “Mad Money” host.
“I’ve been really happy with how that’s gone. It has exceeded my expectations. But I still think it’s going to take a while for it to get to the scale of several hundreds of millions or even billions of people in the metaverse, just because things take some time to get there. So that’s the north star. I think we will get there. But, you know, the other services that we run are at a somewhat larger scale already today.”
Experiences in the metaverse can be more immersive than text, photographs, or videos, which are prevalent on Meta’s Facebook and Instagram, and Zuckerberg predicts that it will be a major theme for Meta over the next decade.
Cramer and Zuckerberg met in the metaverse. According to the Facebook co-founder, such events can develop a sense of belonging even when people are physically on the other side of the country. He claims that it is feasible to create eye contact, which is not always possible on video chats, and to employ spatial audio, which allows for quiet side dialogues.
According to him, the technology “essentially adds up to make it provide this lifelike sensation of presence.”
To bring that to customers over the next few years, Meta will need to deliver a slew of hardware, software, and experiences.
“We are at this point, you know, a company that can afford to make some big long-term research investments, and this is a big focus,” he said.
He expects the metaverse’s economy to be vast, he says.
In the first quarter, Meta Platforms had 3.64 billion monthly active users across its family of products, a 6% increase year over year. WhatsApp will have 2 billion users by 2020, and Zuckerberg sees room for expansion in this area.
“You know, our playbook over time has been build services, try to serve as many people as possible — you know, get our services to a billion, two billion, three billion people, and then we basically scale the monetization after that,” Zuckerberg said. “And we’ve done that with Facebook and Instagram. WhatsApp is really going to be the next chapter, with business messaging and commerce being a big thing there.”
In addition to its metaverse investment, Meta is heavily investing in the development of artificial intelligence, which can boost advertising — which accounts for roughly 97 per cent of revenue — and the company’s existing services, according to Zuckerberg.
“We’re basically shifting from having most of the content that you see in Facebook and Instagram come from your friend or follow graph, to now, you know, over time, having more and more of that content just come from AI recommendations,” Zuckerberg said. “And as the AI recommendations get better, you get access to, you know, not just the content from the people who you follow but the whole universe of content that’s out there.”
TikTok, which is owned by China’s ByteDance, exploited this approach to catapult itself to a billion monthly active users. Meta attempted to respond to the significant development by introducing the Instagram Reels feature in 2020. Zuckerberg told analysts on Meta’s first-quarter earnings call in April that reels account for more than one-fifth of the time people spend on Instagram. He now anticipates that AI improvements will make Reels more appealing to Instagram users.
“Our AI system can choose based on what it knows about you and what you personally are going to be interested in and learn about, what you want to see,” he said. “So as we get better at that, you know, our engineers are shipping improvements to the models every week. We check something and, you know, relevance goes up by a few percent. And then we repeat and do that the next week. And, you know, this is just a huge part of what I’ve always focused on in running this company, is getting the velocity to be very quick, so we can keep on making fast improvements to this.”
Meta, like other huge technology companies such as Alphabet and Microsoft, is investing in AI hardware.
“We just brought online the AI research supercluster, which, you know, we believe is going to be the fastest AI supercomputer when it’s fully built out later this year, so that our researchers can build new and bigger models to both make the ranking and recommendations across our social media services and ads better.”
In the event of a recession, the business will reduce its investment in artificial intelligence, according to Zuckerberg.
(Adapted from CNBC.com)