Instagram, which is owned by Meta Platforms Inc. and currently has 2 billion monthly active users throughout the world, is quickly approaching the 2.96 billion people who use Facebook. This is a symptom of the changing composition of the social media behemoth.
The figure was divulged by the company in the midst of an otherwise grim results release on Wednesday. At the time, a volatile ad market obscured Meta’s outlook and caused the company’s shares to tumble. Additionally, it was stated that more than 2 billion people now use its WhatsApp messaging programme on a daily basis. There are 3.71 billion people around the world who use Meta’s family of apps on a monthly basis together.
The firm announced in June 2018 that the number of monthly active Instagram users has topped 1 billion. Since then, the application has gone through one of the most significant changes ever made to it since Facebook — which is now known as Meta — purchased it a decade ago.
Instagram has moved away from displaying just posts made by persons that users were following exclusively. Instead, it supplied content that had been algorithmically selected based on what it believes the user is interested in reading about. Reels, which are short-form videos similar to those found on TikTok and have been given priority over the other video formats available on the platform, were also added to the service.
These modifications were made by Meta in an effort to maintain Instagram’s relevance in the social media market, which is becoming an increasingly competitive space. TikTok, which is owned and operated by ByteDance Ltd., has exploded into the scene in the past few years with its video stream that is centred on trending subjects. Videos shared on TikTok are distributed via an algorithm to users who have expressed interest in a particular topic, as opposed to only being visible to users who follow the account of the post’s creator.
It is essential for Meta that its social media platforms continue to encourage consumers to return to Facebook and Instagram in order for them to continue spending time on those platforms. The vast majority of the business’ profits come from the adverts that are hosted on the aforementioned sites. Because of the uncertain state of the economy, recent trends have shown that marketers are spending less money on digital advertisements; as a result, Meta and its competitors are competing for smaller amounts of money.
Following its acquisition in 2012, Instagram established an advertising business that has been a significant contributor to Meta’s earnings. When Facebook acquired WhatsApp in 2014, the company’s economic model was still in its infancy.
Zuckerberg’s expensive Pitch for Meta, investors punished him because of its failure.
Wall Street is losing patience with Meta CEO Mark Zuckerberg’s large and risky bets on his metaverse project, which helped drive up the company’s overall expenditures by a fifth in the third quarter. These risks helped push up the company’s total costs in the third quarter.
After the market had closed for the day, investors were quick to sell their shares of Meta Platforms Inc., which resulted in the stock dropping by twenty percent and erasing sixty-seven billion dollars off the company’s market worth.
The company that owns Facebook has stated that its overall expenses could increase by as much as 16% in the coming year. Additionally, the parent company anticipates that operating losses at Reality Labs, the division that is responsible for bringing the metaverse to life, “will grow significantly” in the coming year.
Recently, a stakeholder in Meta expressed their concerns by saying that the company’s investments were “super-sized and alarming.” On Wednesday, analysts described them as “confusing and bewildering,” and they described Meta’s inability to lower expenses as “very troubling.”
During a conference call following the release of the company’s earnings, an analyst from Jefferies named Brent Thill posed the following question to company executives: “I think kind of summing up how investors are feeling right now is that there are just too many experimental bets as opposed to proven bets on the core… I believe that everyone here would be very interested in hearing your reasoning behind why you believe that this is worthwhile.
Losses incurred by Reality Labs during the July-September quarter increased to a staggering $3.67 billion, up from $2.63 billion during the same period a year earlier. The revenue was almost cut in half.
On the call, Zuckerberg stated that it would be a mistake for the company to not focus on any of these areas that will be fundamentally important to the company in the future.
“I am aware that there are times when we ship a product, and people will say things like, ‘Hey, you’re spending all this money, and you’ve produced this thing,’ and I do not believe that this is the most appropriate way to look about it.”
“…we are performing leading work that will eventually become… eventually mature products at different cadences in different periods of time over the next five to ten years,” the statement reads.
He spoke about the numerous endeavours that the firm is working on, such as the recently introduced virtual and mixed reality headset known as Quest Pro, which has a price tag of $1,500, and a social metaverse platform where users may express themselves through the use of avatars.
He stated that Meta is also investing in augmented reality technology as well as brain interfaces.
BIG GAMBLE
Paolo Pescatore, an analyst at PP Foresight, stated that “the metaverse… feels like a one big gamble given the economic crisis,” and he went on to say that the trip that lay ahead was going to be “long and unpleasant.”
“People are not leaping out of their seats to purchase a virtual reality headgear or even to watch 360-degree films… “The brand new device still has the sensation of a pricey toy,” he remarked.
In a time when other technology businesses like Microsoft and Google-parent Alphabet are eliminating positions or halting hiring, Meta’s workforce increased by 32% from the end of the second quarter to the beginning of the third quarter.
In an open letter that was sent to Zuckerberg on Monday, Altimeter Capital Management, a shareholder in Meta, urged the company to optimise its operations by reducing the number of personnel as well as its capital expenditure.
The fund recommended lowering the annual investments made by Meta cap in the metaverse from the current level of $10 billion to $5 billion.
Meta intends to add more premium functions to social media platforms like Facebook and Instagram :
According to a document that was distributed to Meta workers last week and that was acquired by The Verge, the company is in the process of establishing a product organisation with the goal of determining and developing “potential paid products” for Facebook, Instagram, and WhatsApp.
This new division marks Meta’s first substantial entry into the realm of providing paid products across its three primary social applications, all of which have a combined user base of over one billion people. It is being formed up after Apple’s ad tracking adjustments on iOS and a wider retreat in digital ad spending caused substantial damage to Meta’s advertising company. This is why it is being set up. Pratiti Raychoudhury, who served as the head of research at Meta in the past, is going to be in charge of the team that will be known as New Monetization Experiences.
In an interview with The Verge, Meta’s Vice President of Monetization Oversight Group, John Hegeman, stated that the company is still committed to growing its ads business and that it had no plans to let people pay to turn off ads in its apps. Hegeman made this statement in response to a question about whether or not Meta planned to allow people to pay to turn off ads in its apps.
He said, “I think we do see chances to build new types of products, features, and experiences that people would be ready to pay for and be thrilled to pay for.” “I think we see opportunities to build new types of products, features, and experiences” He did not provide any additional information regarding the paid features that are being examined.
“I believe that there are potential for us to develop new kinds of products, services, and experiences that people would be ready to pay for,” the speaker said.
The vast majority of Meta’s revenue comes from advertisements, and despite the fact that the company’s many apps already include a number of paid services, the social media behemoth hasn’t made charging users a priority up until this point. Hegeman minimised the likelihood of paid features becoming a significant component of the company’s operations in the near future. However, he did say that “on the flip side, I think if there are opportunities to both create new value and meaningful revenue lines and also provide some diversification, that’s obviously going to be something that will be appealing.”
According to him, in the longer run, Meta anticipates that its paid features will become a more substantial component of its company. “I do think it has the potential to really move the needle and make a pretty big change over the course of a five-year time horizon,” the author says.
It is already possible for administrators of Facebook groups to charge users a fee to access restricted content, and users can even buy “virtual stars” to give to content creators. WhatsApp will charge businesses for the opportunity to chat their consumers, and Instagram just just made the announcement that content creators will now be able to charge a monthly fee for access to exclusive material. Mark Zuckerberg, the CEO of Facebook, stated in June that the firm will not take a part of any transactions involving premium services or subscriptions until the year 2024.
“I do think it has the potential to really move the needle and make a pretty big change over the course of a five-year time horizon,” the author says.
When it comes to moving toward additional premium features, Meta is not alone. Over the past few of years, social media apps have increasingly turned to charging in order to monetize their services. Since the beginning of this year, TikTok has been doing experiments with paid memberships for creators, Twitter has paid Super Follows, and Discord generates all of its revenue from its Nitro subscription. Additionally, this year saw the debut of paid tiers on both Telegram and Snapchat, which allow users to unlock additional features. The commercial version of Snapchat has already proven to be very popular.
According to Hegeman, “We are clearly paying attention to what is going on in the industry.” [Citation needed] “And I think there are several companies that have done fascinating things in this sector that I think ideally we can learn from and mimic over time,” the author says. “And I think there are multiple organisations that have done intriguing things in this field.”