Horizon Worlds' Struggle to Gain Traction
Horizon Worlds, Meta's social VR app, was once considered a flagship example of the metaverse, but it has failed to achieve mainstream success. The app's brief appearance at the top of app store charts over the 2024 holidays was largely due to its requirement for setting up new Quest headsets, rather than a surge in interest in the metaverse.
The subsequent underperformance of Quest sales, which led to a 6% year-over-year decline in Reality Labs' revenue, is a concerning sign for Meta's metaverse efforts. The question from Evercore analyst Mark Mahaney about what might reduce the multibillion-dollar losses in Reality Labs highlights the pressure on Meta to turn its metaverse investments into profitable ventures.
The lack of traction for Horizon Worlds and the underperformance of Quest sales suggest that Meta's metaverse strategy may need to be reevaluated. The company may need to consider alternative approaches or prioritize other areas of its business to mitigate the significant losses in Reality Labs.
Note: The struggles of Horizon Worlds and the Reality Labs division raise important questions about the viability of Meta's metaverse ambitions and the potential for the company to achieve a return on its significant investments in this area.
"There are more investments that I think make sense to make," Meta CEO Mark Zuckerberg responded, citing the growth of Meta's AI glasses and a vision to eventually sell tens of millions of units.
Internally, the stakes are high. Meta CTO Andrew Bosworth has said 2025 is the "most critical" year for the company's metaverse effort, warning staff that without real traction, the whole thing could go down as a "legendary misadventure."
Reality Labs, which includes the Quest headsets, Horizon Worlds, and Meta's Ray-Ban smart glasses, is structured into two units: Metaverse and Wearables. In January, Meta quietly reshuffled the division, moving top sales and marketing leads under broader company leadership to align more tightly with its AI push.
For now, Meta is still in the fight, though its momentum has clearly moved elsewhere: to its Llama AI models, Meta AI, and those Ray-Bans. The metaverse may not be dead yet, but it's no longer center stage.
How do you see blockchain integrating into the Metaverse?
How would you describe the Metaverse?
The metaverse refers to the convergence of physical and virtual space accessed through computers and enabled by immersive technologies such as virtual reality, augmented reality and mixed reality. Described by proponents as the next iteration of the internet, this 3D virtual world is envisioned as a persistent, collective, shared space where digital facsimiles of ourselves, or avatars, move freely from one experience to another, taking our identities and monetary assets with us.
Visions of a parallel digital universe where humans can experience life in ways both akin to and not possible in the real world aren't new -- they predate the internet. But the concept of a blended physical and digital reality became more tangible in recent decades as technological advances -- from the near-universal adoption of mobile phones and rollout of high-speed internet to popular games such as Pokémon Go -- made the metaverse seem less far-fetched.