Wall Street Journal: After reading this article, you will know what is wrong with Meta's metaverse

As Mark Zuckerberg renames Facebook Meta Platforms Inc. and bets the company on the metaverse, internal documents show the transformation is struggling with technical glitches, disinterested users and a lack of clarity about what it will take to succeed.

While Zuckerberg said the transition to more immersive online experiences would take years, the company's flagship consumer-facing metaverse product, Horizon Worlds, has fallen short of internal performance expectations.

Meta originally set a goal of 500,000 monthly active users for Horizon World by the end of the year, but revised that number to 280,000 in recent weeks. The current tally is less than 200,000, according to the filing.

According to the documents, which include internal memos to employees, most people who visit Horizon typically don’t return to the app after the first month, and the user base has been declining steadily since the spring.

By comparison, Meta’s social media products, including Facebook, Instagram and WhatsApp, collectively attract more than 3.5 billion average monthly users, a figure that’s nearly half the world’s population. Horizon currently covers fewer people than the population of Sioux Falls, South Carolina.

Horizon is designed to be a vast collection of interactive virtual spaces, or worlds, in which users appear as avatars and can shop, party, and work. Yet there are few girls in "Hot Girls Summer Rooftop Pool Party," and often no one to kill in "Murder Village." Even the company's showcase worlds, like Questy's virtual arcade that appeared in a Super Bowl ad earlier this year, are mostly empty of users.

According to internal statistics, only 9% of the worlds built by creators have been visited by at least 50 people. Most have not been visited at all.

“An empty world is a sad world,” one document said, summarizing the company’s efforts to direct users to venues where they’ll encounter other people.

Questy's, a virtual arcade featured in a Super Bowl commercial, didn't attract many users.

A Meta spokesperson said the company’s metaverse work was always intended to be a multi-year project, and that it’s making improvements, including many aimed at keeping users safe. He said it’s easy to be skeptical of the metaverse, but the company still believes it’s the future of computing.

Horizon is accessible through Meta’s Quest virtual reality headset, which offers a range of games and activities. Retention, or continued usage by owners, has fallen in each of the past three years, the filings show. More than half of Quest headsets, which cost about $400 for an entry-level model, are no longer used six months after purchase, according to people familiar with the data.

In a survey of Horizon users, Meta researchers said users reported that they couldn't find metaverse worlds they liked or other people to play with. Other complaints included "people didn't look real" and avatars having no legs.

The researchers noted that the survey included only 514 people because the user pool available for the survey was "small and precious."

The number of Horizon users online at the same time, known as concurrency, lags far behind social-focused upstart VR Chat and the pioneering online world Second Life, which launched in 2003, people familiar with the matter said.

To deal with persistent bugs and user complaints, Meta quietly put Horizon into “lockdown” last month, meaning it would pause the rollout of new features until it improves the current user experience, the documents show.

The company's Meta challenges dovetail with other business issues, including growing pressure on its digital advertising business and competition from social media app TikTok. Meta shares have fallen more than 60% over the past year. The company has lost more than $700 billion in market value since its September 2021 peak.

At a Metaverse-themed event on Tuesday, Zuckerberg unveiled a new virtual reality headset called Quest Pro, which is designed to make it easier for developers, engineers, and designers to work in the Metaverse. It costs $1,500 and isn't aimed at regular consumers, but Zuckerberg said it will set a new standard for Metaverse technology. He also promised that avatars will soon appear in Horizon.

On Tuesday, Zuckerberg unveiled the Quest Pro, a virtual reality headset designed for workers.

Meta said it plans to expand the experience to more people by offering a web version of Horizon for mobile devices and computers. The company had said it planned to launch that version this year, but when asked on Tuesday if that was still the case, a spokesperson said Meta didn't have any launch date to disclose.

Other tech giants, including Microsoft Corp. and Apple Inc., are also developing products that see the metaverse as the next digital frontier.

Rolf Illenberger, CEO of virtual reality software company VRdirect, said in an interview that Horizon has some kinks to work out, but he asked critics to be patient and acknowledged that the industry is still evolving. "We're trying to go to the moon, and people are complaining that the coffee machine doesn't work," he said.

The Metaverse was supposed to provide a fresh start for Meta at a time when the company was facing other business pressures and negative publicity. The new strategy was announced after a Wall Street Journal series called "The Facebook Files" leaked thousands of pages of internal records documenting the company's social media product's business struggles and social ills.

The company announced it was shifting to focus on the Metaverse, sparking a corporate scramble for new forms of digital currency. Companies hired “Chief Metaverse Officers.” Scammers sold Metaverse real estate. Luxury brands Balenciaga and Prada partnered with Meta to promote digital clothing, and even alcohol makers like Absolut Vodka opened bars and breweries in the Metaverse.

In a Meta report titled “AR, VR or Metaverse, which is the next billion-user platform?” Dare Obasanjo, lead product manager for Horizon and Metaverse Platform, wrote: “You will have the freedom of identity and expression to hang out, work, play, learn, shop, create, and more in endless virtual worlds that cannot exist in real life.”

While Obasanjo says the Metaverse, which is accessible not only through VR headsets but also through augmented reality products like PCs, phones and smart glasses, has a better chance of mass adoption than either AR or VR products, Meta hasn’t yet pulled out an investment strategy.

“It is unclear where the Metaverse fits into the investment framework,” he wrote in the memo. “We are long overdue to reevaluate how we invest and allocate resources.”

Meta has canceled or delayed early metaverse-related products, and current and former employees say there is disagreement within the company over whether Horizon should focus on gaming or the social connections that Zuckerberg prefers.

In a memo announcing the Horizon lock last month, Meta’s vice president of metaverse, Vishal Shah, wrote that the core theory of the metaverse has proven to be strong. But he said stability issues and complaints from creators “have made it difficult for our community to enjoy the magic of Horizon.”

Part of the problem, he said, was that Meta employees themselves weren’t using the product enough. “The simple fact is, if we don’t love it, how can we expect our users to love it?” he wrote.

Meta employees prepare to demonstrate a video game using a virtual reality headset.

According to the documents, early adopters and testers have consistently complained that users have difficulty adapting to the technology and that other users behave badly.

On a recent evening, a female reporter for The New York Times visited Soapstone Comedy Club, one of Horizon’s most popular virtual worlds. Inside were about 20 users, all appearing as avatars. When the reporter introduced herself and tried to conduct an interview with a small group, one user responded, “You can cover me, baby.” The same user then asked her to reveal her identity.

One user, who was flirting with a woman in the crowd, was interrupted by what appeared to be his real-life girlfriend shouting obscenities at him in the background.

At Horizon, men outnumber women by a factor of two, according to the documents. One of the safety features Horizon is rolling out is that users can create a personal boundary of the equivalent of four feet for their avatars to discourage unwanted physical contact.

The next day, a male reporter from the New York Times visited a "house party" and was one of two people in attendance. He and another avatar jumped into a boxing ring, fought a round wearing jack helmets, and then played beer mugs. The other avatar didn't say a word the entire time, and the game ended after about 10 minutes. The reporter's avatar later fell into the pool and didn't know how to get out. There was no one around to help.

Some Horizon users said in interviews that they already spend hours a day in the Metaverse, fascinated by the serendipitous interactions it can generate. One user said it was her main source of entertainment while she was stuck at home after having a kidney transplant.

Beginners can run into trouble, however. Carlos Silva, a 41-year-old IT project manager in Maryland, bought a Quest 2 and joined Horizon early last year, hoping to find more social interaction during the COVID-19 pandemic. On his first day, when he went to the main meeting space, no one was there.

“I was like, you know, this is the whole reason I bought this thing,” he said. “So I’m going to figure this out, how do I find places to go, how do I meet people.”

These days, he runs tours every Wednesday at Horizon to help new players find their way. He said interest in the tours peaked around Christmas last year. Back then, he said, he saw as many as 400 unique visitors per tour, but in recent months that number has shrunk to 150 or fewer. The Metaverse, he said, is about "the future 10 years from now, not the future next year."

Meta wants users like Silva to create their own worlds using Horizon's tools, which allow them to take three-dimensional objects like cubes and spheres and shape them into things like trees and chairs. But less than 1% of users are creating their own worlds, according to the filing.

Meta researchers found that while many of Horizon’s early creators became disengaged, they could be won back in. “Many said they would return if pain points were addressed,” reads a memo about creator churn.

Many of them are frustrated by another problem Meta is grappling with: how users can make money in the Metaverse.

On other social media platforms, including TikTok and Meta’s Instagram, influencers and other creators can make money through things like brand endorsements. In the Metaverse, there’s nothing like that yet.

“Some creators are willing to work full-time in the Metaverse,” Meta’s memo said. “If there are full-time roles and appropriate compensation, some creators will make building the Metaverse their full-time job.”

While Meta already supports some worlds by paying bounties to the people responsible for those worlds, efforts to promote other forms of commerce are still in their infancy. In Horizon’s worlds, the most profitable worlds have cumulatively brought in $10,000 in “in-world payments,” while a feature that allows creators to tip has generated a total of $470 in payments, according to the filing.

Sheharzad Arshad, a 39-year-old graphic designer in Toronto, has built 18 worlds since January, some inspired by his favorite movies. His most popular, Spider-Verse, has attracted about 20,000 visitors since it was released in May.

He said the $399.99 price tag for the Quest 2 headset is also too high for many of his friends and family, limiting its impact.

Still, he said he plans to buy the next version of the headset and dig deeper into the Metaverse. “The direction Meta is going in is really good,” he said.