Mark Zuckerberg is still waiting for his metaverse bet to pay off

A decade ago, Mark Zuckerberg offered a bold prediction for the future of human communication: Scores of people would turn to virtual and augmented-reality glasses and headsets to transport themselves into immersive digital worlds where they could work, socialise and be entertained. The Meta CEO was so committed to this vision that ever since, his company has invested billions of dollars to try to make it happen.

Fast-forward to 2025, and Zuckerberg is still waiting for a return on that investment. Meta has released several iterations of its virtual-reality headsets, but none have become blockbuster sellers; its latest line of artificial intelligence smart glasses, dubbed the Ray-Ban Meta glasses, while growing in popularity, have yet to replace mobile phones as the next popular computing platform.

Still, Zuckerberg is pushing forward, hoping the AI boom and the company’s efforts to add technical capabilities to its devices will catapult it to success. The Meta CEO is likely to trumpet his vision for virtual and augmented-reality devices on Wednesday during the company’s annual developer conference in Menlo Park, California, where it is set to announce the latest in wearable devices. Among them, reports say, Meta is likely to showcase a new version of smart glasses code-named Hypernova, which include a visual display and an accompanying wristband. Meta did not respond to a request for comment ahead of its conference.

“What it boils down to is, do these things make our lives better?” said Anshel Sag, an analyst for Moor Insights & Strategy. “And if they don’t, how can” they?

Still, Meta’s ambitions face steep challenges. While the VR devices have attracted a niche cohort of early adopters and gaming enthusiasts, they have yet to offer a diverse array of programs or use cases that have mainstream appeal. The company, by its own admission, is still developing some of the technical capabilities of its glasses and headsets to make them more compelling to users. Meanwhile, some of Meta’s hardware products are raising concerns about privacy and safety among regulators, activists and everyday consumers.

“You have to create an aura of inevitability around something in order for a lot of consumers to start to gravitate toward the experience, and they don’t really have that with a lot of these offerings,” said Jeremy Goldman, the senior director of content at the analytics firm eMarketer. “Right now, it doesn’t have enough of the cool factor, and it doesn’t have enough of the solving the problem for the consumer in a way that is clearly communicated to them.”

Meta — then called Facebook — entered the virtual-reality market in 2014 with its $US2 billion acquisition of VR headset maker Oculus VR. Zuckerberg argued then that it was time for the company to start building for the computing platform to come after mobile, “to enable even more useful, entertaining and personal experiences.”

“Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face — just by putting on goggles in your home,” Zuckerberg said at the time on Facebook.

In 2021, the company changed its corporate name from Facebook to Meta, an attempt to shift its brand from a social media business plagued by a political crisis to the chief champion of immersive digital realms known as the metaverse. The term “metaverse” originated in the 1992 science fiction novel “Snow Crash” but has come to signify 3D digital worlds where users interact with one another through avatars.

“I think we’re moving towards a world where we’re going to have something that looks like normal glasses, where you can see the physical world, but you’ll also see holograms,” Zuckerberg told podcaster Lex Fridman earlier this year. “Maybe by the end of this decade, we’ll be living in a world where there are as many holograms when you walk into a room as there are physical objects.”

Over the years, Meta has focused on two main strategies to bring the metaverse vision to life. First, the company has invested in a line of VR headsets, Quest, that enable users to block out their real environment and fully immerse themselves in a digital world where they can interact with other users in social spaces, play games or take in entertaining content.

But the programs available on Quest headsets, which can be made by Meta or third-party developers, have mostly focused on gaming and — more recently — health and fitness, said Jitesh Ubrani, research manager at the analytics firm International Data Corporation. “It has been a bit of a chicken and egg problem, where unless someone invests in content they’re not going to get more users. And you’re not going to get more users until we see more content,” he said.

Meta has also been working toward building consumer-ready augmented-reality-powered glasses, which would put computer-generated images on top of the real world, almost like holograms. Last year, the company debuted Orion, which it billed as the industry’s most advanced AR glasses, but made the prototype available only to select audiences.

“Orion obviously isn’t yet ready for consumer consumption,” said Sag of Moor Insights. “I think their biggest mistake was how much they promoted it. They kind of, I think, confused the market as to … how ready they are to deploy something like Orion.”

In the meantime, Meta, along with the luxury eyewear company EssilorLuxottica, has achieved better success with a series of smart glasses that allow users to take photos, talk on the phone, listen to music or chat with the company’s AI assistant. The company has sold 1.4 million smart glasses so far this year, according to estimates from IDC. Meta doesn’t separately break out figures.

Meta smart glasses have also elicited complaints about privacy. Gen Z social media creators have increasingly aired their concerns publicly, arguing that the glasses make it too easy to record people without their knowledge or consent, and intrude into everyday life. Meta has said the glasses display a light when someone is recording.

And the company’s virtual-reality devices have posed their own policy risks. Last week, two former Meta employees testified in Congress that Meta had suppressed critical research about the risks children face while using the company’s virtual-reality devices, an effort to avoid bad publicity and regulatory scrutiny. Meta has challenged the employees’ allegations, arguing the company continues to research youth safety and has long offered VR safety tools.

The hearing followed an exclusive Washington Post report that analysed a trove of internal documents turned over to Congress by current and former employees, showing warnings from Meta workers that children were bypassing age restrictions to use the company’s virtual-reality services.

Meta said in July that Reality Labs, its hardware division, lost $US8.7 billion during the first six months of this year, and expenses will continue to grow. “Those kinds of losses have never much appealed to Wall Street investors looking for quicker, more lucrative returns,” said Dan Ives, a Wedbush Securities analyst.

“It’s still a long-term bet, but investors don’t want to hear the word ‘metaverse,’” Ives said. “I think it’s been very, very slow to develop. They’re losing money like 1980s rock stars.”