Toward the end of Meta’s Q3 earnings call, Mark Zuckerberg made an impassioned appeal to investors: “[It] would be a mistake for us to not focus on any of these areas [of the metaverse], which I think are going to be fundamentally important to the future […] People are going to look back on decades from now and talk about the importance of the work that was done here.” Yes, the metaverse has a great deal of disruptive potential. But even Zuckerberg has previously acknowledged that realizing this vision could be a decade or more away. And therein lies the problem with Meta: What’s the company’s business model today?
Meta Has An Identity Crisis
While Meta is betting its future on the metaverse, the company’s other North Star is short-form video — at the expense of its core Feed and Stories business. Is Meta a “metaverse company,” or is it a TikTok wannabe? Can it be both? At the moment, neither business is paying off. Meta Horizon Worlds (at present) is a relative ghost town when compared to other 3D immersive worlds such as Roblox and Fortnite. Roblox has over 50 million daily active users, while Horizon Worlds reportedly has under 200 thousand monthly active users.
Meta expects operating losses at Reality Labs to grow significantly in 2023, and Meta’s short-form video strategy isn’t “reeling” in market share. New data from Forrester’s soon-to-be-published Youth Survey, 2022, shows that just 19% of Gen Z youths (ages 12–17) use Instagram Reels at least weekly, compared to 69% of those who use TikTok. In Meta’s “quest” to future-proof itself, the company is not delivering in the present.
Meta’s Gen Z Exodus Continues
Forrester’s Youth Survey, 2022, further corroborates our previous analysis of Meta’s Gen Z problem. Gen Z continues to exit Facebook. And Reels usage pales in comparison to TikTok. Weekly usage of Facebook among US online youths ages 12–17 dropped 8 percentage points year over year (from 48% to 40%). While weekly usage of Instagram increased 4 percentage points (to 61%), TikTok continues to grow at a faster clip, with a 6-percentage-point year-over-year increase (at 69%).
And fresh data from Forrester’s October 2022 Consumer Energy Index And Retail Pulse Survey shows a quarter (25%) of Gen Z adults (ages 18–25) who indicate that they plan to spend less time on Facebook in 2023, while 7% say they will quit Facebook entirely.
2023 Will Be A Bleak Period For Meta
Heading into an economically volatile year, Meta’s headwinds will only be compounded. CMOs will play it safe in 2023 by consolidating their slashed media budgets toward tried-and-true platforms and channels. Things like experimentation in the “metaverse” will be shelved as the need for short-term growth hits encompasses marketers’ focus. None of this bodes well for Meta in 2023. Forrester predicts that “winter is coming” for the metaverse in 2023.