Metaverse before the end? – Meta shifts focus to TikTok-like videos and artificial intelligence

shares in this article

• Investors grumble about big Metaverse investments
• Meta puts marketing focus on reels and AI
• Synergies between AI and Metaverse

In autumn 2021, founder and CEO Mark Zuckerberg renamed his Facebook group Meta. The new name is intended to reflect the company’s new vision, namely to build the so-called “Metaverse”, a three-dimensional interactive and immersive environment that people can access via different devices. This change of name triggered a real hype around the Metaverse. Zuckerberg hopes that the Metaverse will enable his company to free itself from Apple’s and Google’s stranglehold on their ecosystems.

However, the actual final functionality of this new technology is not yet certain, after all, the development of the Metaverse is still in an early phase. Even Meta itself has now acknowledged that much of what the corporation envisions for the Metaverse is about ten years away.

Dissatisfied Investors

But that, coupled with the huge cost of developing Zuckerberg’s virtual reality vision, has angered investors. In the final quarter of 2022, the group had to cope with a 55 percent drop in profits to $4.65 billion. This was largely due to the fact that the Reality Labs division, in which the virtual reality business is bundled, posted an operating loss of around 4.3 billion US dollars.

In response to the deterioration in earnings and the slowdown in the online advertising market, Meta has now announced that it will cut more than 20,000 jobs. 2023 should be a “year of efficiency”, said the CEO when presenting the figures for the fourth quarter.

Focus on reels

There are now also signs that the US company could move away from the Metaverse and instead focus more on the Instagram feature ‘Reels’, with which the US company is attacking the Chinese video platform TikTok. The function allows you to record short videos within the Instagram app and then edit them with various effects. This type of content has become increasingly popular lately.

According to media reports – including “The Information” and “Business Insider” – discussions with advertisers are no longer trying to make the Metaverse palatable. Instead, there are strong incentives to advertise on Reels. A discount of 25 percent is offered when advertisers spend a certain amount to test different advertising products at Reels. As “The Information” reports, citing a major advertiser, this discount is “unusually large”.

AI is strengthened

Zuckerberg also rated the currently highly hyped topic of artificial intelligence as an “exciting area” when presenting the balance sheet for the fourth quarter. According to media reports, in discussions with advertisers, Meta particularly emphasizes its own AI tools, which enable the creation of marketing campaigns and targeted ads tailored to users. They should help to identify which type of advertising is most effective and which target groups can best be reached. Personalized advertising is a mainstay of the business model of the two most important meta-services, Facebook and Instagram.

Turn at Meta?

But does this emphasis on reels and AI really mean that meta’s priorities have shifted? On the other hand, CFO Susan Li confirmed earlier forecasts when presenting the Q4 balance sheet figures, according to which the loss of Reality Labs will be even higher this year. And Zuckerberg asserted that these investments are important for the long-term future.

In any case, only about 20 percent of Meta’s budget is actually used for the Metaverse. “Our largest single investment is the further development of AI and its integration into each of our products,” “Mixed” recently quoted the CEO as saying. According to the online magazine, the two areas of AI and metaverse often flow into one another. Numerous advances in the VR and AR segment are only possible thanks to AI. “In the future, you could simply describe the world you want to create and let the big language model generate this world for you,” says Andrew Bosworth, Meta Technology Director, describing the potential of AI.

“Mixed” speculates that the fact that Meta has recently been talking more about AI than the Metaverse could be less an actual turnaround than just a PR calculation. Because the hype surrounding the Metaverse is over, while artificial intelligence is currently the main topic in Silicon Valley.

Editorial office finanzen.net

Image sources: PopTika / Shutterstock.com, mundissima / Shutterstock.com