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Meta pivots investment from metaverse to AI wearables
Meta is reallocating a portion of its metaverse budget to AI-powered glasses and wearable devices, a company representative confirmed on Friday. The move follows persistent doubts among investors about the commercial potential of virtual reality.
Investment cuts revealed
Bloomberg reported on Thursday that Meta plans to reduce metaverse spending by up to 30%. The announcement triggered a 3.4% rise in Meta's share price, reflecting market approval of the strategic adjustment.
The metaverse initiative, which allows users to interact in immersive digital environments, was the driving force behind Facebook's rebrand to Meta in 2021. Despite billions of dollars in investment, the project has failed to gain traction with investors, who question the demand for virtual reality headsets and the viability of the underlying technology.
Focus shifts to AI-enabled glasses
Meta is now prioritising the development of AI glasses, which have garnered positive feedback since the launch of updated models in September. The latest version includes a compact lens display capable of describing visual scenes and translating text in real time-features widely regarded as a significant advancement in wearable technology.
Competition in the smart glasses sector is intensifying, with multiple companies, including several based in China, racing to develop similar products.
Metaverse struggles persist
Meta's metaverse efforts have centred on its Horizon Worlds platform, where users interact as avatars, and the production of VR headsets. However, investor scepticism has grown as demand for alternative technologies, particularly artificial intelligence, has surged.
In response, Meta has accelerated its AI initiatives, integrating large language models into platforms like WhatsApp and expanding its portfolio of smart devices. A company spokesperson declined to comment on whether the investment shift would lead to job cuts, stating, "We aren't planning any broader changes than that."
Industry context
The strategic realignment reflects broader industry trends, where AI and wearable technology are increasingly seen as more immediate growth opportunities compared to long-term bets on virtual reality.
