A year ago, Meta was riding high on the metaverse. The company had just completed its rebranding from Facebook to Meta. Social networks, as Mark Zuckerberg explained, were no longer a singular focus for the company. “From now on, we’re going to be metaverse-first, not Facebook first,” he said.

Now, as Meta finishes its first full year as a “metaverse company,” the outlook is considerably less rosy. The company has lost billions of dollars on Reality Labs, the division overseeing its metaverse work. Its stock has cratered. The company has, for the first time, shed thousands of employees in mass layoffs. Even longtime shareholders are starting to do what was once unthinkable: question Zuckerberg’s vision for the future.

At the same time, Meta still hasn’t clearly articulated what the metaverse is or effectively made the case for why the billions of people currently using its social media apps would want to be part of an “embodied internet.” Worse still, the company’s initial metaverse product has proved underwhelming, and turned the metaverse into a punchline, rather than a source of anticipation.

We still don’t know what the metaverse is for

Meta and Zuckerberg have offered various definitions over the last year. The metaverse is the “successor to the mobile internet,” and “an embodied internet where you’re in the experience.” It’s virtual reality, but also (eventually) augmented reality. It will also, somehow, tie into our existing social graphs on Facebook and Instagram. But, unlike Facebook and Instagram, it will be interoperable with other companies’ platforms. It might have something to do with NFTs and web3.

“The defining characteristic of the metaverse is that you really feel like you’re present with other people or in another place,” Zuckerberg said during an interview at SXSW in February. “You might look at documents, you might look at a website but in the future you’re going to be in it.”

Zuckerberg might think this is explaining the beginnings of some grand vision for a future internet, but it also just sounds a lot like plain old virtual reality. Moreover, it’s telling that one of his go-to examples is “looking at documents.” Over the last year, the company has leaned hard into Horizon Workrooms, its social VR experience geared toward office workers.

Meta's is integrating Zoom and Microsoft Teams into VR meetings with Horizon Workrooms.
Meta

When the company showed off its new high-end Quest Pro, it offered up Horizon Workrooms as one of the key experiences optimized for the new headset. You can now recreate a whole virtual workspace in VR. Soon, you’ll be able to use a slew of office and productivity software, from Zoom to Microsoft Word.

But the idea of working in VR with a headset strapped to your face is still pretty far from appealing to most people. And there are a vanishingly small number of jobs and industries where working in VR is even remotely justified.

Perhaps what’s most telling is that Meta has apparently struggled to persuade its own employees to use Workrooms. Despite making Quest 2 headsets free to all employees last year, a recent push from Zuckerberg for teams to start holding meetings in VR revealed that many either hadn’t taken advantage of the offer or hadn’t set the headset up, The New York Timesreported.

Meta’s metaverse is a meme for bad graphics

Without a clear vision, it became far too easy for Meta’s critics to seize on aesthetic issues and other problems. For now, the closest thing Meta has to the “metaverse” is Horizon Worlds, its social VR playground where users are free to explore as their avatar. But the experience of actually using it is far different than the polished videos and demos Meta has shared.

This was never more apparent than when Zuckerberg earnestly posted a screenshot of his avatar in front of the Eiffel Tower and Barcelona’s Sagrada Familia to mark Horizon World’s launch in France and Spain. The screenshot was hilariously bad and quickly took on a life of its own as people mocked the “1995 level graphics.”

Mark Zuckerberg's Horizon avatar.
Meta

Zuckerberg quickly promised new and improved avatars, and showed off a more realistic likeness of himself, saying that “graphics in Horizon are capable of much more.” (A post on LinkedIn, which has since been deleted, later revealed that the “improved” Zuck avatar took about a month and “40 iterations” to complete.)

Then, at the company’s Connect event, Zuckerberg promised an even bigger advancement: legs. Soon, Horizon’s cartoonish, legless avatars would be replaced with ones resembling actual, walking humans. We watched as Zuckerberg’s “full body” avatar casually strolled around Horizon Worlds. But while it was first thought to be a turning point — adding leg tracking to VR has been a notoriously tricky problem — it turned out this particular demo was more stagecraft than actual innovation. The company later confirmed that the demo was created with motion capture and wasn’t live VR.

Meta still says that its avatars will eventually have legs, but it’s not clear when, or if the feature will even look like the demo.

The metaverse is a money pit

It’s impossible to ignore that Zuckerberg’s metaverse pivot has also coincided with the company’s worst financial performance in recent memory. Meta’s revenue has shrunk for two straight quarters for the first time ever. Its stock has lost more than 60 percent of its value this year, wiping out billions of dollars.

To be fair, the metaverse isn’t entirely to blame. Apple’s anti-tracking changes in iOS have hurt the company’s advertising business. And the entire industry is reeling from an economic downturn that’s affected even the largest tech giants.

At the same time, Meta is undeniably losing vast amounts of money on its metaverse investments. Reality Labs lost $10 billion in 2021, and 2022’s losses already amounted to $9 billion by the third quarter. Those losses are expected to “grow significantly” in 2023, according to the company’s CFO.

Mark Zuckerberg in what's likely the company's new VR headset.
Meta

It’s no surprise, then, that Meta’s investors are starting to question whether all this metaverse stuff is really worth it. The CEO of Altimeter Capital, a longtime Meta shareholder, made headlines when he wrote an open letter to Mark Zuckerberg earlier this year that called the company’s metaverse investments “super-sized and terrifying, even by Silicon Valley standards.”

In the company’s most recent earnings call, where Zuckerberg more often fields peppy questions about the company’s ad business, one analyst also raised the issue of “experimental bets versus proven bets.”

“I think everyone wants to hear why you think this pays off,” he asked. Zuckerberg, who seemed a bit flustered by the question, replied that “the metaverse work is a longer term set of efforts that we’re working on, but I think that it’s going to end up working.” Patience, he said, will be rewarded.