Zuckerberg's Metaverse rush paused for 'Quality Insurance'

Zuckerberg’s Metaverse rush paused for ‘Quality Insurance’

in early september, Mark Zuckerberg He rushed to the Meta Lab in Pittsburgh, sat in front of more than 100 HD cameras and prepared to prove his die-hard critics wrong.

The shoot was designed to create a more realistic Meta CEO-style avatar, as the social media giant scrambled to prove that its $10 billion-a-year bet on a 3D digital world known as the metaverse wasn’t a failure.

In the weeks before that, the Facebook founder faced public derision after a former cartoon-like selfie went viral for all the wrong reasons.

This primal image was widely derided as “embarrassing” and “soulless,” adding to the pressure on Zuckerberg to prove that he had not miscalculated his company’s future based on a metavertical vision that had already incurred more than $27 billion in operating losses over the course of the year. the past three years. Years.

But the selfie ring is just one hurdle facing Zuckerberg, who believes the metaverse is the next normal Evolution in online socialization The new avatar is expected to be revealed as soon as next week.

According to memos and conversations with 10 current and former employees, his powerful social media empire of 3 billion users is experiencing turmoil and challenges as part of its pivot. deadand already had to delay future launches and adjust expectations.

In a September note seen by the Financial Times, Vishal Shah, vice president of the metaverse arm of Meta, warned that users and creators had complained that Horizon Worlds — the social virtual reality experience and the closest thing it has to the metaverse to date — was low quality and riddled with bugs.

He ordered a “quality shutdown” for the rest of the year, telling employees they needed to improve on fundamentals before any major expansion. Shah said employees working on the product had to “reprioritize or slow down some of the things we had planned,” adding that he was lowering target users for the second half of the year.

Mark Zuckerberg has faced ridicule over his archetypal metaverse avatar, which has been described as “regressed” and “soulless”

Some employees warned that morale was suffering as teams were restructured to accommodate Zuckerberg’s new vision, which many have yet to agree with. “There are a lot of people in there who never wear [virtual reality] One of the metaverse employees said.

In a statement, Meta said the company is “confident that the metaverse is the future of computing and that it should be built around people.” She added, “Of course we’re always making quality improvements and acting on feedback from our creator community. This is a multi-year journey, and we’ll continue to improve what we’re building.”

in metaverse

it has been about a year Since Zuckerberg announced the axis meta. His plan was ultimately to attract one billion users and “hundreds of billions of dollars of digital commerce per day,” a move that could take five to ten years, he said.

From now on, Zuckerberg declared that “we’ll be metaverses first, not Facebook first,” displacing the social network he founded in 2004 — and bringing the vast majority of its $118 billion in annual revenue today — to a subordinate position. Reality Labs, the division dedicated to metaverses, will see its workforce double to 20,000 engineers.

Meta currently has more than 83,000 employees after rapidly expanding during the pandemic, and it has acquired augmented and virtual reality engineering talent from rivals Microsoft and Apple as it looks to bolster its metaverse team.

But the rush to the other side comes as the group’s market valuation has fallen from $1 trillion to less than $400 billion over the past 14 months. The company faces several headwinds: a decline in digital advertising revenue, slower user growth on its Facebook platform, and increased competition from China-owned rival TikTok.

Last week, Zuckerberg announced a hiring freeze on most teams and a tightening of the belt until 2023 due to a difficult macroeconomic background. Zuckerberg also ordered employees to work with “increasing intensity” and “a sense of urgency,” according to a July memo.

Line chart of Meta share price (in dollars) showing Facebook's bumpy ride into the metaverse

Analysts and employees said the coming years will determine whether its reverse transformation is the answer to these problems — new lines of revenue to attract the next generation of Internet users, or a giant distraction that consumes resources and limits the company’s ability to revive its old product and rebuild its advertising infrastructure.

“The challenge is that they are so focused on overseas that they don’t invest in the core product which is Facebook and Instagram. This is all a sideshow from the real problem that Meta continues to clean its watch with TikTok,” said Rich Greenfield, an analyst at LightShed Partners.

He added that the level of Meta’s investment in the metaverse was “disturbing” for investors. “The metaverse as the Meta envisions is not investable today. Nobody is buying the Meta for the metaverse.”

big investment

Since the beginning of 2019, more than $27 billion in operating losses have been reported for Reality Labs and the Metaverse and Virtual Reality division of Meta.

According to people familiar with the situation, investments have been largely focused on developing hardware, such as virtual and augmented reality headsets, that can be used to log into the metaverse, along with software for its 3D world and the basic infrastructure needed to support the system.

In addition to avatars that will represent users in the metaverse, the company is working on activities that go beyond just socializing to give them something they can do, from training in virtual fitness programs to playing games and even education venues.

In its latest results in July, the company said it had $24 billion in irrevocable contract commitments “primarily related to our investments in Reality Labs’ servers, network infrastructure and consumer hardware products.”

Meanwhile, revenue from this division, which comes largely from VR headset sales, remains meager, in part due to the fact that the entire VR industry has developed more slowly than expected. In the second quarter, Reality Labs took $452 million of total revenue of $28 billion, and the company cautioned that it expects Reality Labs’ revenue next quarter to be even lower.

“It’s a huge gamble,” said one advertising executive. “If I get the schedule wrong [too early] By 10 years, the company is really at risk given how capital intensive it is.”

The recent restructuring and abandonment of several projects in order to prioritize the metaverse has dampened morale, according to several current and former employees, with some reporting an unhelpful division between employees focused on the metaverse and those in the older part of the business.

Devon Copley, CEO of Avatour, a virtual meeting company, said Meta has been an “industry leader” when it comes to hardware development.

However, he cautioned that the company has faced an even greater challenge developing software for the metaverse.

“The problem lies in the fragmented nature of the various software product teams and initiatives within the Meta org,” he said, citing ongoing reorganizations, “frequent changes of direction,” and the lack of a “coherent vision” for a social network that includes virtual and augmented reality.

Already, the company is struggling to impress creators who develop social experiences in the metaverse. According to a Meta note shared by one person on their Facebook profile, creators at a roundtable last month complained that Horizon Worlds was “unstable and unreliable” and that Meta employees did not provide them with updates when they reported bugs or before launch.

“Staff don’t communicate well or there can be understaffing and things fall through the cracks,” said one employee.

In Shah’s note, first published by The Verge, the Meta CEO said the Horizon Worlds team had purposely pivoted to “shipping faster” but that this prompted employees to “trade quality for speed.”

Shah noted that the bugs and stability issues were so bad, that Meta employees didn’t even use the product.

He added, “The simple fact is, if we don’t like it, how can we expect our users to like it?”

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