Meta executive reaffirms commitment to building metaverse

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A top executive at Meta has refuted claims that the company is no longer interested in building the metaverse. At a press event in New York City, Nicola Mendelsohn, the head of Meta’s Global Business Group, said that the company remains interested in the metaverse and that CEO Mark Zuckerberg has been clear about the company’s plans.

“There’s been a thing out there that we aren’t interested in the metaverse anymore. We are really interested in the metaverse,” Mendelsohn said. “But we’re also really clear that this whole thing is going to be five, 10 years before it really realizes the vision of what we’re talking about.”

Mendelsohn’s comments come in response to mounting speculation that Meta was abandoning its metaverse plans and focusing instead on generative AI tools. However, Meta believes that generative AI will play a key role in building the eventual metaverse.

Regarding the shifting focus to generative AI, Mendelsohn explained that Meta’s new adware suite, AI Sandbox, which uses generative AI to create text for ad copy and crop photos and videos, could be used to build 3D spaces in the future.

“AI will help us develop the metaverse more effectively,” John Hegeman, VP of Monetization at Meta, said.

The concept of an immersive and interactive internet future exploded after Meta’s announcement and name change in 2021, but the excitement quickly faded. Mendelsohn’s comments, however, indicate that the company remains committed to its metaverse plans, albeit with a longer timeline than originally anticipated.

Meta’s metaverse quest drags profits

Facebook’s parent company recently reported a 23 percent drop in profits during Q1 2022 as it faced a challenging business environment and a weaker economy. Although the company surpassed Wall Street expectations, its profits declined from $7.4 billion to $5.7 billion in the same period last year.

Meta relies mainly on advertising revenue, which totaled $28 billion for the quarter. The latest earnings report also showed an increase in advertising revenue compared to last year.

Despite focusing on its metaverse push since its rebranding in 2021, Meta is still losing significant money. During the first quarter of 2023, Meta’s metaverse-focused Reality Labs reported a loss of $3.9 billion, compared to last year’s $2.9 billion.

To overcome the challenging business environment and competition from social media platforms like TikTok, Meta has announced plans to restructure and scrap low-priority projects. Additionally, Apple’s expected entry into the metaverse hardware market with its mixed-reality headset could pose a challenge to Meta’s plans.

Despite the challenges, Zuckerberg remained committed to the metaverse, calling it “central to defining the future of social connection” during Meta’s Q1 earnings call.

Metaverse’s potential for global economy

Deloitte’s recent report released earlier this week unveils the staggering potential of metaverse services. It suggests that after a decade, the metaverse could contribute up to $760 billion in annual U.S. GDP and 2.8 percent to the global GDP. This report adds credibility to Zuckerberg’s optimistic predictions for the future of the metaverse.

The report also highlights the growing trend of businesses using metaverse solutions to optimize their existing revenue streams, create new ones and improve online communication. Additionally, it creates new opportunities for frontline workers.

Despite the remaining challenges, such as infrastructure development, inclusivity and technology innovation, a KPMG report shows that 84 percent of businesses in the U.K. plan to maintain or increase their investments in enterprise-grade metaverse services. So it appears that the business world is ready to embrace the potential of the metaverse and invest in its development.


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