Zuckerberg’s “meta universe”, Facebook’s second curve?

Zuckerberg's "meta universe", Facebook's second curve?

“Meta universe” is a popular concept in today’s game circle, also known as “Transcendence Universe”. It first appeared in Neil Stephenson’s science fiction novel “Avalanche” in 1992. There are a lot of scenes such as virtual avatars and cyberpunks. Appeared among them.

Zach Burke said last month that he hopes to build Facebook into a “meta universe” company in the next five years. This is a new revolution after the mobile Internet. What exactly is “Meta Universe”? In the face of Facebook’s zero DAU growth in the US, can Metaverse become the second curve of Facebook’s growth?

 

This year, social platforms will generally face two major risks: one is the slowdown in growth caused by the high base in the same period last year; the other is the impact of Apple’s new privacy policy on social platforms starting in the second quarter.

Social giant Facebook announced its second-quarter earnings report after the market on Wednesday. The management once again issued a warning that the two major risks will be exposed to Facebook in the second half of the year. Affected by this, Facebook fell more than 3% after the market, and it is currently the only social company that has underperformed its stock price after its earnings report.

Zuckerberg's "meta universe", Facebook's second curve?

Screenshot from Tiger Securities

iOS privacy policy is “demon”, Facebook revenue growth slowed down in the second half of the year

Since the beginning of the year, various economic activities in the United States have resumed one after another, which has fully stimulated a strong rebound in demand for digital advertising. Facebook’s core advertising revenue in the Q2 quarter increased by 56% year-on-year, higher than market expectations; net profit was 10.394 billion US dollars, compared with the same period last year. Compared with the profit of 5.178 billion US dollars, an increase of 101%. This quarter’s revenue exceeding expectations was mainly driven by a sharp increase of 47% in the average price of unit advertising and a 6% increase in the number of advertisements placed on a year-on-year basis. It is expected that the increase in advertising prices in the second half of the year will continue to promote the growth of Facebook advertising revenue.

However, the management issued a warning on the conference call that advertising revenue will encounter more resistance due to iOS privacy adjustments, and the impact in the third quarter will be greater than in the second quarter. iOS changes to privacy rules make it more difficult for advertisers to track user data, which will hit the third quarter’s earnings performance, which dampens investor confidence.

Zuckerberg's "meta universe", Facebook's second curve?

In fact, Facebook has issued an early warning after the first quarter’s financial report, saying that the company’s revenue growth will slow down significantly in the third and fourth quarters, but the market reaction was not violent at that time. For a long time, Facebook’s performance guidelines have been relatively conservative, and there is a suspicion of deliberately lowering expectations. After another warning this quarter, market volatility has increased.

In addition to reiterating the significant year-on-year growth in total revenue in the second half of the year, the management also added other descriptions: Even if the impact of the epidemic is excluded, if the total revenue in the second half of this year is compared with two years ago, the increase will be higher than in the second quarter of this year. The growth rate slowed slightly. In other words, iOS privacy adjustment is the main reason for the future slowdown in revenue.

Earlier this year, Apple made privacy changes to the iOS system, requiring each app to obtain permission before tracking users. This caused advertisers to worry because users often choose to “not be tracked”, which makes it difficult for advertisers. Precisely locate target customers for advertising.

The U.S. market has zero daily livelihoods for the fifth consecutive quarter, and Facebook user growth is deadlocked

In the Q2 quarter, the number of monthly active users of Facebook APP was 2.9 billion, and the number of daily active users was 1.91 billion, both increased by 7% year-on-year, which was in line with market expectations and management expectations. The total monthly active users of “family application groups” such as the main app, Instagram, Messenger and WhatsApp were 3.51 billion, a month-on-month increase of 1.7% and a year-on-year increase of 12%, which was higher than market expectations of 3.49 billion; total daily active users were 2.76 billion, an increase from the previous month 1.5%, an increase of 12% year-on-year, higher than the 2.72 billion expected.

Zuckerberg's "meta universe", Facebook's second curve?

Facebook is facing the user “growth paradox”, and there are significant differences in user growth in different regions: the growth of US users, the largest source of income, is slowing down. Counting the second quarter, daily active users in the US market have zero growth for five consecutive quarters; overall users Growth mainly depends on the support of the rest of the world outside the United States.

Zuckerberg's "meta universe", Facebook's second curve?

On the whole, the stage where Facebook relied on user-driven growth has passed, and the process of user monetization on a global scale has just begun. The company also emphasized on the conference call that monetization takes time. At the same time, the company is also trying various measures to improve its monetization capabilities, such as launching new products such as “Facebook Watch” and “Instagram Reels” to attract advertisers.

In April of this year, Facebook began testing “Instagram Reels” advertising services in India, Brazil, Germany and Australia. The test subjects include brands such as BMW, Louis Vuitton, Netflix and Uber. The purpose is to expand revenue sources and use short video applications to improve Unit user income.

In addition, this quarter, the company also launched Live Audio Rooms and podcasts, as well as a subscription service for creators, Bulletin. Through the integration of Groups, Facebook Live and Live Audio Rooms to inspire creators and enhance commercialization capabilities, the ultimate manifestation is ARPU. (Average revenue per user) .

In the second quarter, Facebook’s ARPU jumped from US$7.05 to US$10.12, higher than analysts’ expectations of US$9.66. Although Facebook’s penetration rate in developed markets such as Europe and the United States has been saturated, there is still a lot of room for growth in developing economies. This rule also applies to ARPU. We see that the ARPU gap between the US and other regions is very obvious. In the future, the ARPU of emerging markets in high-growth areas is expected to show even greater growth.

Zuckerberg's "meta universe", Facebook's second curve?

Can Facebook win the “meta universe” of the Internet’s final battle?

After Zuckerberg publicly mentioned the concept of “meta universe” last month, “meta universe” naturally became the core topic of the conference call. Zuckerberg hopes to build Facebook into a meta-universe company in the next five years, and said that meta-universe is the inevitable end of the next chapter of the Internet, and what Facebook has to do is how to build an immersive virtual world. .

The meta universe will be a physical Internet, and will be jointly operated by many participants in a decentralized manner. Zuckerberg said that the meta universe will not only exist in virtual space. In the future, cross-temporal interactions will not be limited to mobile phones and other computing devices and screens, but can become holographic scenes, just as if they are really together.

At the same time, Meta Universe is not just VR. Although VR is obviously a very high investment part of us, Meta Universe does not only involve VR. It will be used on all our different computing platforms. Many people also think that the meta-universe is mainly about games, and entertainment will obviously be a major part of it. However, the meta-universe not only covers games, it may be a kind of hybrid of the social platforms we see today, but it is also an ability. The environment in which you are immersed.

Metaverse has become the vision of many technology companies and even the entire technology industry. If you study Roblox, the originator of Metaverse, you can find that Metaverse has huge market value. We can also clearly feel Zuckerberg’s passion for Metaverse. Set aside a period of time to explain his future vision of Metaverse to analysts and investors, and at the same time set the direction and tone of Facebook’s future development. Investors are more concerned about how much Facebook will invest in Metaverse and what role it will play in it.

In this regard, the management did not give a clear answer, saying that Metaverse cannot be achieved by a single company. It requires the joint efforts of various companies and many individual creators to create this goal. Facebook has already developed relevant basic technologies. A large amount of investment has been made on the Internet, a new team has been established to develop Metaverse, Roblox-like Metaverse game platform Crayta has been acquired, Oculus has been acquired, and large investments in AR and VR technologies have been made.

Other technology companies, such as Roblox, Microsoft, and Nvidia, are all pioneers of Metaverse, and Facebook’s progress in the field of Metaverse will also attract investors’ attention.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/zuckerbergs-meta-universe-facebooks-second-curve/
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