Meta turns to Reels and the metaverse to recover from its first ever revenue loss

 

For the first time ever since going public in 2007, Meta  facebook a decline in quarterly revenue year over year. The company’s revenue was $28.82 billion — a 1% decrease from $29b  in the second quarter of 2021.

What’s worse, it forecasts that growth in the third quarter could fall even more, in the range of $26-28.5 billion.

Who’s to blame?

Meta attributes this to “the continuation of the weak advertising demand environment” they experienced throughout the second quarter, which they believe “is being driven by the broader macroeconomic uncertainty.”

 

 

 

Zuck’s three-step recovery scheme

While Zuckerberg noted that he can’t predict how long the cycle of economic downturn will last, he believes that the situation “seems worse than it did a year ago.”

And, of course, he has a heroic plan to save the day.

 

 

Reels engagement is growing quickly, according to Zuckerberg. Last quarter, It made up 20% of the time people spent on Instagram, and this quarter, it saw a 30% increase on both Instagram and Facebook.

He believes that Meta’s dull transition to AI-powered recommendation systems (right now, 15% of Facebook recommendations are done by AI), will further improve things.

While Reels doesn’t monetize at the same rate as Feeds or Stories, the faster it grows, the more revenue it’ll bring.

As per Zuckerberg, Reels’ monetization efficiency is growing faster than expected, having crossed 1$ billion in annual revenue rate from ads.

 

 he ace in Meta’s sleeve is unsurprisingly the metaverse.

“Given some of the product and business constraints we face now, I feel even more strongly now that developing these (metaverse) platforms will unlock hundreds of billions of dollars, if not trillions, over time,” he noted.

“This is obviously a very expensive undertaking over the next several years, but as the metaverse becomes more important in every part of how we live, I’m confident we’re going to be glad that we played an important role in building this.”

As part of this goal, Meta will continue to expand Horizon — its socia