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Recently, Meta initiated layoffs of more than 1000 employees and the rumor mill is churning that layoffs will continue with reports that more than 10,000 layoffs are expected in the coming months. With this rise in job uncertainty and Meta being the biggest investor in the VR industry, many are asking what these layoffs mean for the future of virtual reality development. So in this article, we will be going over what we know about the Meta Layoffs, What we don’t know, and does it mean the end of virtual reality as we know it?
What We Know About the Layoffs at Meta
Many are reporting that Meta will be firing an additional 10,000 people at their company but we need to be aware that these layoffs have not occurred yet. The anticipated layoffs are being reported because back in 2022, Mark Zuckerberg is quoted to be announcing more layoffs around March or April, and more layoffs may extend throughout the rest of 2023.
We also know that Mark Zuckerberg is planning on tightening the budget of side projects within Meta over the next few years.
“I think we should prepare ourselves for the possibility that this new economic reality will continue for many years.” – Mark Zuckerberg in 2022.
Lastly, we know that Meta is primarily cutting down on middle managers as the primary cost-cutting metric. Some reports indicate Meta will ask managers to become individual contributors instead of direct reporters in the company resulting in a flatter and more linear management style.
Why is Meta Laying Off So Many People Right Now?
Back in the fall, Meta fired about 13% of its workforce approximating around 11,000 jobs according to Reuters in 2023. Ironically, this was right after a burst hiring spree that brought many new faces to the VR and social media holding company. But according to Bezinga, Meta’s 10000 Layoffs will save the company about $5 billion over the course of 2023. The short answer is Meta is laying off so many people right now to help reduce costs as we enter into the 2nd year of a global recession. The long answer is Meta is attempting to overcorrect for previous mistakes that have plagued the Tech industry.
Tech Companies Are Experiencing a Market Correction Resulting in Mass Layoffs
Meta is not alone in needing to scale back their costs. In 2023, the recession is in full swing and the companies hit the most by it are tech companies. Tech companies are experiencing a bit of a market correction this year with companies like Microsoft, Facebook, Twitter, Netflix, and dozens of other software companies needing to scale back their costs to keep themselves afloat.
Tech Companies have experienced a big boom over the last 10 years and have frequently overspent or overextended their debts in order to remain competitive. The dirty secret of Silicon Valley is that much of the industry is funded largely by debt. So when people stop buying their products or their software becomes less profitable in the short term, tech companies still need to cover their debts but often need to find ways to cover that debt immediately. In short, when the money stops coming in, tech companies cut down on middle management and cut jobs to save money.
Why Meta is Laying Off So Many People
Mark Zuckerberg, CEO of Meta, is determined to make 2023 the “year of efficiency,” wherein the metaverse would be a success. An official filing submitted to the Securities and Exchange Commission outlined that cost-reduction measures such as layoffs could potentially help Meta save up to $5 billion in running costs.
For VR enthusiasts, Mark Zuckerberg’s determination to create the metaverse is absolutely necessary for the future of VR technology. His goal to make the metaverse a reality in 2023 and turn it into an efficient, immersive experience for users does come with a cost though. Like many VR enthusiasts, he believes that this platform will revolutionize how people interact with each other, enabling them to communicate and collaborate in ways never before possible.
With Zuckerberg’s commitment to efficiency, this could be the year that the metaverse finally takes off as VR development has been historically very inefficient with many VR technologies requiring a ton of custom coding instead of being able to rely on open-source development.
What We Don’t Know about the Layoffs at Meta
We know that Meta is Laying off an additional 10,000 employees this year and we know that Meta plans on implementing more cost-saving metrics later this year.
Is VR Profitable for Meta right now?
In short, the answer is no. Meta’s ambition to jump into the VR space has not been the most profitable venture. Despite sinking $36 billion into game development studios and purchasing the Oculus brand, Meta’s earnings reports still seem to be primarily coming from their ad revenue and projections from the company don’t leave us feeling confident that Meta will be profitable in their VR venture for the foreseeable future.
The Upside to the Meta Layoffs and How It Could Benefit the VR Industry as a Whole
The recent layoffs of Meta, a leading Virtual Reality (VR) company, have been met with disappointment and concern. However, there may be a silver lining to these layoffs that could benefit the VR industry as a whole. By analyzing the positive effect of meta layoffs on the VR industry, we can better understand how this event could lead to more opportunities for innovation and growth within the space.
Meta’s Layoffs Mark a Return to Agile and Efficient Development
Although it is never a good thing for people to lose employment, Meta’s layoffs can be looked at as an opportunity, not a failure. As discussed previously, tech companies like Meta in times of economic success will often hire for a ton of research and expansion projects that may not be necessary. R&D spending is famously the biggest reason why Apple continues to be a big player in the technology market.
But when R&D spending gets out of control, projects can get a bit too grand which can result in projects with little to no commercial purpose for consumers. We suspect Meta suffers uniquely here, as developing in the Metaverse is not standardized and in many ways, Meta is paving the way forward in this industry.
How can Meta make VR profitable?
VR is still a very new industry and we are still seeing most VR companies trying to find ways to be profitable. Meta has only been able to justify the low price of the Quest 2 by supplementing the purchase of the Quest 2 with the data it provides. As its a new industry, data generated in VR is very valuable for businesses and industries trying to target individuals or businesses already using VR.
Meta Needs More Successful hardware like the Quest 2.
As previously discussed, Meta is using VR as a way to get into the hardware game. But the biggest benefit to being in the hardware game comes when you can routinely bring revenue out of the hardware. Apple uses the iPhone to encourage you to purchase other items in the product portfolio like the iPad, Mac, or Apple watch.
Unfortunately, the only product that has been an absolute hit for Meta has been the Quest 2. Other products released like the Quest Pro and the Facebook Portal have been notable tech flops with most consumers fearing their privacy. Hence the brand name changed from Facebook to Meta.
Meta could find great ways of boosting their profitability by selling great accessories like VR face covers, portable battery packs, additional body tracking for full body VR, or other business essential tools that make the Quest 2 or Quest pro a valuable potential add-on for businesses and individuals.
Meta Could Start to Run Advertisements to make VR more profitable.
With Facebook and Instagram being the most profitable products that Meta owns, they ought to examine the elements of these products that bring in money – namely advertising revenue. Using data collected on Instagram and Facebook, Meta is able to sell the opportunity to get in front of target audiences to small businesses in a way that was previously unthinkable.
Meta could offer the same opportunity for businesses to sell and advertise to a very niche market that may not be available anywhere else. Quest 2 users are often older but use their Quest 2 daily to work out, meditate, or socialize online in a way that feels more authentic.
Why Ads in VR could actually make VR more realistic
Despite many people feeling hesitant about VR getting ads targeting users, Ads could actually bridge the gap between Virtual Reality and Physical Reality. One of the biggest frustrations of the metaverse is the products and services you purchase within the metaverse are only consumable in the metaverse. Ads can be a key pivot by offering businesses a way to demonstrate their physical goods in a digital way.
Clothing brands can sell goods that you purchase and wear in public but you are also able to equip those clothing items on your digital avatar in your favorite metaverse social game.
It’s a true no-brainer that Meta needs to build out through advertisements that can be available to the general public through dedicated advertising.
Why is Meta Investing in Virtual Reality?
Meta is investing an eye-watering amount every year into the Metaverse in order to make VR and AR the next major computing platform, while they take the lead on it. Mark Zuckerberg believes that this will liberate them from Apple and Google’s dominating presence and their ecosystems.
Meta has primarily been a software company with a history in social media and advertising. A common thread we are seeing in the tech space is software companies investing in their own hardware and hardware companies investing in more elaborate software to use in their hardware products.
Meta is no exception and its investment in VR is a reflection of the industry. Meta wants to be able to compete with Google and Apple on a bigger scale and they see the oculus VR headset as their entrance to the broader consumer who may not want to give them their data through Facebook.
Is Meta Firing People in Virtual Reality Development?
As far as we know, Meta is not firing people in Virtual Reality and instead is actually using the layoffs to continue building their investment in the metaverse. Zuckerbergs’ layoffs are said to target recruitment meaning that hiring managers and recruiters are not bringing new talent into the company.
We can reasonably assume that meta is not firing people in virtual reality as their entire rebrand back in 2020 revolved around virtual reality and the metaverse. The introduction of virtual reality and the metaverse has revolutionized how businesses are being rebranded. Not only does it provide a platform for companies to showcase their products and services in an immersive environment, but it also has the potential to revolutionize how people interact with one another. As such, we can reasonably assume that meta is not firing people in virtual reality, as their entire rebrand back in 2020 revolved around virtual reality and the metaverse.
That being said, the latest reports indicate that Meta is intentionally reducing their emphasis on the Metaverse which could mean reduced VR development and less investment in the future of VR technology.
Analyzing the Potential Reasons Behind Meta’s Decision to Reduce its Staff
In April 2021, Meta announced that it would be letting go of a significant portion of its staff. This announcement came as a shock to many people in the virtual reality (VR) industry, given that Meta had been one of the biggest household names in the VR industry for years.
Some potential reasons Meta is deciding to reduce its staff are:
- Reducing staff as a method to improve efficiency
- Reducing staff as a temporary way to boost stock numbers
- Reducing Bloat as a method of cost saving
Meta could be reducing staff to improve efficiency
Meta may be reducing staff primarily to improve their company efficiency. Companies generally become less efficient the bigger they become. That’s because as more people need to deliver reports to others, the amount of time spent on the actual task gets deprioritized to make time for report and number analysis. Though it may seem like a bad sign, from a business perspective, reducing staff is often a way of realigning company values and prioritizing targets.
Meta layoffs may be a temporary way to boost their stock
Unfortunately, Meta may be laying off staff members strategically to create an illusion of growth during a period of lower profitability. Laying off staff often leads to prospective buyers buying more stock because they believe the company was bloated and now has more room for profits to pay off in dividends.
Although this is not a recommended practice, it is not uncommon for CEOs to lay off staff members to claim they “reduced the fat” while keeping profits high. But unfortunately, these stock bumps are usually followed in the future by additional hiring frenzies. We are already seeing that cycle begin again.
Meta Layoffs Are likely a Cost-Saving Measure
In a recession, companies look for ways to increase profits quickly and reduce their costs quickly. Lower costs and more revenue generated are the basic foundations for a successful company. Increased profit measures may come from charging for previously free features like Twitter suddenly charging for verification. Unfortunately, the quickest way to reduce the costs of your business comes from letting people at the company go that you perceive can have their job reduced or their work can be taken on by remaining members of the company.
What Do the Meta Layoffs Mean for the Future of VR?
The recent news of Meta laying off 13% staff has sent shockwaves throughout the VR industry. This move is likely to have a significant impact on other companies in the VR space, as it could lead to consolidation and a shift in market share.
Meta’s layoffs could mean that some of their competitors will benefit from their absence, as they may be able to gain more market share. It could also lead to consolidation in the industry, as some of Meta’s rivals may decide to acquire or merge with other companies in order to remain competitive.
Overall, Meta’s layoffs will certainly have a major effect on the VR industry and how it operates going forward. It remains to be seen what kind of impact it will have on other companies in the space and how they adapt accordingly.
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