Meta is the new name that Facebook, the social media giant, adopted in October 2021. The rebranding from Facebook to Meta signifies the company’s shift in focus from social media to developing the metaverse, a virtual reality space accessed via the internet. Meta still encompasses Facebook, Instagram, Messenger, and other apps under its umbrella.
Why did Facebook change its name to Meta?
There are a few key reasons why Facebook changed its name to Meta:
- To reflect the company’s focus on building the metaverse – Facebook founder and CEO Mark Zuckerberg has touted the metaverse as the next frontier of technology and social connection.
- To distance the Meta brand from increasingly negative publicity surrounding Facebook – Issues like data privacy, election interference, and the impact of social media on teens put Facebook’s reputation under scrutiny.
- Rebranding to move beyond social media – As Meta, the company has the flexibility to expand into hardware, software, payments and other areas beyond social platforms.
The name “Meta” comes from the term “metaverse,” which refers to envisioned shared virtual spaces accessed via virtual and augmented reality headsets that will blend digital and physical worlds. This reflects the company’s long-term vision for the future.
What products and technologies does Meta offer?
As Meta, the company still owns and operates the same core products:
- Facebook – The social media platform with over 2.9 billion monthly active users as of Q4 2021.
- Instagram – The photo and video sharing app with over 1 billion monthly active users.
- Messenger – Messaging app with over 1 billion monthly active users.
- WhatsApp – A private messaging app with over 2 billion monthly active users.
In addition, Meta is investing heavily in developing metaverse-related products and technologies like:
- Oculus VR headsets – Virtual reality headsets acquired by Facebook that will enable access to metaverse experiences.
- Horizon Worlds – A social VR platform where Meta users can interact as avatars.
- Augmented reality research – AR overlays digital interfaces onto the physical world.
- Brain-computer interface tech – Wearables that detect neurological signals from the brain and face.
Meta also operates a division called Reality Labs focusing on AR and VR hardware, software and content.
How does the Meta rebrand impact Facebook’s business?
The rebranding from Facebook to Meta does not fundamentally change Facebook’s underlying business model, which generates revenue primarily through digital advertising across its family of apps. However, the rebrand does have some business impacts:
- Reflects massive investment into metaverse – Meta plans to spend $10 billion on metaverse development in 2021 alone, with costs likely expanding further as the technology matures.
- Possibility to expand revenue sources – The metaverse could open up new revenue streams beyond just advertising, like virtual goods/services and platform fees.
- Renews focus on high-growth areas – Meta’s stock rose on rebrand news as investors were excited by refocusing on VR/AR opportunities.
- Distances from negative publicity – The rebrand provides a fresh start away from scandals plaguing Facebook’s reputation.
In the near term, advertising still comprises over 97% of Meta’s revenue. But if the company’s bets on VR and the metaverse pay off, it could open the door to new business models and revenue sources down the road.
Meta’s Revenue Breakdown
| Revenue Source | Percentage of Total Revenue |
| Advertising | 97.5% |
| Other revenue | 2.5% |
How does Meta plan to monetize the metaverse?
As a long-term play, Meta will need to find ways to monetize their metaverse investments to justify spending billions on an emerging concept. Some potential metaverse monetization models include:
- Virtual advertising – Brand sponsorships and ad placements within virtual spaces and experiences.
- Digital goods purchases – Users buying virtual clothing, accessories, real estate, decor and more for avatar customization.
- Paid access fees – Charging for premium metaverse spaces, features, or experiences.
- Creator economy – Taking a cut of transactions when creators sell virtual goods and services.
- Commerce platform fees – Facilitating transactions for virtual shopping, events, or other commerce and taking a platform cut.
Meta is still in the very early stages of metaverse development, so its monetization strategy will evolve over time. But creating a vibrant digital economy will be key to making the metaverse financially viable in the long run.
Potential Metaverse Revenue Sources
| Revenue Model | Description |
| Virtual advertising | Ad placements in virtual spaces |
| Digital goods sales | Users purchase virtual items |
| Paid access fees | Premium VR experiences |
How will the metaverse impact Meta’s future growth?
The metaverse represents a major bet by Meta to fuel its future growth for several key reasons:
- New revenue streams – Metaverse commerce could become a multi-billion dollar revenue line if adoption reaches scale.
- Next computing platform – Widespread metaverse adoption positions Meta as a leader in a new computing paradigm beyond mobile.
- Competitive edge – A successful metaverse could help Meta pull ahead of other tech giants.
- New user acquisition – The metaverse may draw more users into Meta’s ecosystem with enticing new experiences.
- Brings AR/VR mainstream – Mainstream adoption of AR and VR could expand Meta’s total addressable market.
But Meta succeeding in the metaverse is not guaranteed. Challenges include high development costs, unclear user demand, and competition from other tech companies. If the bets pay off, however, Meta could see substantial rewards in the form of new revenue, platform dominance, and dramatically expanded reach.
Meta’s Metaverse Growth Factors
| Growth Driver | Description |
| New revenue streams | Digital goods, paid experiences, etc. |
| New computing paradigm | Leadership in post-mobile era |
| Competitive edge | Distinct offering from rivals |
What challenges does Meta face in the metaverse?
While the metaverse holds promise, Meta faces substantial challenges in making it a reality and achieving its goals:
- Very high costs – Meta expects to spend over $10 billion on metaverse development in 2021. Continued investment needed over many years.
- Unproven user demand – Mainstream interest and adoption remain uncertain.
- Technological limitations – VR/AR hardware still needs improvement for immersive, comfortable extended use.
- Platform fragmentation – Competitors are also developing their own metaverse versions, which could limit interoperability.
- Unclear monetization – Meta still needs to figure out how to effectively make money in the metaverse.
- Regulatory scrutiny – Meta may face restrictions on how it can operate and monetize the metaverse.
Overcoming these obstacles will require massive continued investment, substantive technological progress, generating widespread user buy-in, and strong execution by Meta to bring pieces together into a cohesive future. The challenges are substantial but Meta is betting long-term on the metaverse.
Meta’s Metaverse Challenges
| Challenge | Description |
| High costs | Over $10B invested in 2021 alone |
| Unproven demand | Mainstream interest still uncertain |
| Technological limitations | VR/AR hardware limitations |
Conclusion
Meta’s rebranding from Facebook represents the company’s strategic shift to focus on building the metaverse, a hypothesized virtual reality construct seen as the next frontier of social connection and computing. This will involve massive investment into unproven technologies like VR/AR and working to generate widespread user adoption. While risky and facing challenges like high costs and unclear demand, successfully building the metaverse could open new revenue streams for Meta beyond just advertising and cement its leadership into a new computing paradigm. But it remains very uncertain whether Meta’s metaverse bet will pay off in the long run. One thing is clear though – Meta is staking its future on dominating the metaverse.