Facebook has long overplayed its cards as the global social media leader. Though, it was perceived that over the past five years, Zuckerberg has taken a consistently nonchalant attitude in public towards issues like online privacy misinformation and political manipulation. Even governments have noticed and attempted to hold Facebook accountable and while viral clips of Zuckerberg being roasted at congressional hearings are funny and seem damaging to the company's image the reality is Facebook just doesn't seem to care.
Facebook as an organization, knows that at the very least they'll get a tongue lashing on c-span and at most of slap on the wrist fine from the S.C.C. then they'll go back to doing things as usual. There's no threat from any government not while politicians can barely understand how to use their iPhone or when to remove their credit card from the reader. Facebook knows that no matter how much you might hate them you're stuck with their products. Whether you're scrolling through Instagram ,chatting on messenger, checking WhatsApp, browsing on Marketplace. Facebook plays a core part in people's lives online and if you're a business that's looking to reach consumers online, Facebook is still the holy grail you can put together an image and text and have an effective advertisement running in half a day to your target demographic with just a few bucks from an R & D perspective.
Facebook has tried many things to deepen its moat. The company has introduced new products like Facebook gaming to compete with Twitch groups, to compete with Reddit Marketplace, to compete with Craigslist, Messenger to compete with business landlines, Games to compete with Snapchat and Shops to compete with Shopify. Though, many of these bets just haven't worked. Facebook gaming is basically forgotten and has always been stuck as a distant third place when it comes to streaming and that's even when mixer was still alive. Marketplace has solid traction, but it's also inevitably become this hotbed where thieves sell stolen goods, drop shippers run rampant and escorts lists their services. Shops hasn't proven and games fail to get any traction even after messenger tried to force their relevance onto its users. While theirs’s oculus, VR has made strides the overall ecosystem adoption , but the technology behind virtual reality still remains really young and niche having a two-pound brick strapped to your face is still not exactly how most people would define fun.
Despite the current downfall, we've always personally remained very optimistic on Fakebook’s growth even though its products feel stale and have lost a lot of social significance. Facebook is still an essential part of one's online identity but this year everything seems to be changing. Facebook’s stock dropped by 26% in a single day wiping out 230 billion dollars in its valuation. After its fourth quarter earnings, it seemed like Facebook goes through a new crisis every month. A place where employees are now stepping out as whistle blowers, political pressures are growing but most damning of all in the fourth quarter announcement was that consumers are now spending significantly less time on Facebook. For the first time ever, the company announced weaker ad impressions, fewer daily active users and slowing spending from advertisers and while the world is still very much stuck in cove. There's still enough signals to suggest that it's not just you and me, lots of other people are simply just getting tired of Facebook. The golden era of seemingly endless growth is now over.
Facebook in a single month has gone through a complete rebranding and is now pounding the drum for a flashy new vision about metaverses digital frontiers and innovation. These are all things that companies only really do when they feel like they have no other choice. So, what is Facebook's new strategy to combat the slowing growth and why exactly does Zuckerberg think the future growth lies in the metaverse. Facebook's target audience is young adults between the ages of 18 and 29. Now this audience is the early majority like me who grew up with Facebook and have been its most loyal customer base Zuckerberg recently admitted in the fourth quarter earnings call that, in the past 10 years Facebook has broadened so much in the name of growth that their focus has become diluted the company was so preoccupied with trying to serve everyone that they really stopped optimizing their products for young adults and now those same young adults are now active on TikTok, YouTube, Snapchat, basically everywhere but Facebook.
Facebook believes that the way to win back young adults is through short form video any video that's under 15 seconds or was shot vertically is what they consider a short form video. TikTok is clearly the leader in short form video nowadays and Facebook knows it has to do work to quickly catch up in some ways. This entire situation feels like snapchat and Facebook back in 2017. When snapchat first came onto the scene it was largely dismissed as the sexting app that was too tiny and silly to ever be a threat to Facebook but then teenagers began flocking to snapchat and teenagers were a huge fan of the disappearing short-lived messaging the Geo-Filters the face filters and the video sharing that snapchat had to offer the biggest feature was probably snapchat stories which let you post photos and videos that disappeared after 24 hours and snapchat stories became all the rage advertisers began to notice the popularity of snapchat and began moving their budget from Facebook to snapchat.
Then Facebook reacted really aggressively at the time they copied snapchat stories and added stories everywhere they could in Facebook messenger, WhatsApp, and Instagram. Instagram stories became a massive success just two months after its launch it had 100 million daily active users by June of 2017. Instagram stories had hit 250 million daily active users and in snapchat only had 166 million daily active users. Fast forward to today Instagram stories are irreplaceable it's one of Facebook's most used and successful features of all times and snapchat stories is still around as the first mover, but its usage is really nowhere near the popularity of Instagram’s, so Facebook knows that they have this proven muscle and playbook when it comes to copying the competition but TikTok’s current momentum. their funding, their mainstream appeal along with the content creators are really nothing like snapchat. If you really think about it conceptually snapchat and Instagram stories those are all private mostly private content that you produce for your friends and the people in your personal network but when you go to tick tock or even look at YouTube shorts or other short form videos that are really popular today. What you find is that it's mostly public content that you share and discuss with your friends just like with Instagram stories.
Facebook's plan is to copy TikTok with a new product it's called reels and reels is currently Facebook's fastest growing content and its biggest engagement contributor. For now, Facebook just wants reels to focus on user adoption, so they intentionally show very few ads but once reels picks up momentums and eyeballs Zuckerberg' plan is to monetize reels in the same way as new news feeds and stories where advertisers are now going to be able to slip in their short form commercials and to reels just like they do with Instagram stories. Zuckerberg is so bullish on short form videos that he believes that eventually Facebook will show more ads at a higher rate on reels than on Instagram stories or news feeds and so Facebook believes it needs to get three things right for reals to beat TikTok one it needs tools that help content creators produce quality short-form videos two it needs algorithms that recommend engaging reels to viewers to keep people watching and three it needs programs that can help these content creators monetize their reels with a more mature advertising network. Facebook also believes that they can pay content creators on reels much faster and in higher amounts than they would ever get on TikTok which will naturally pull more creators to reals and away from TikTok.
Over time the format in which people communicate online has really evolved. Over the past 18 years of Facebook's existence when the internet first came about. In the early 90s people mostly communicated through text, In the 2000s smartphones became popular and phone cameras became mainstream then photos then replaced text as the primary format for how people communicate fast forward another two decades. Now that mobile networks are super-fast we've gone from 3g to 4g to 5g, video is now the primary way in which people communicate online so while short form video appears to be the next format for the immediate feature. Facebook has its eyes set on trying to aggressively win the distant future rather than waiting for google or apple to create the next format. Zuckerberg wants Facebook to own it entirely big bet here is that virtual reality is going to be the format after video for which people communicate online Facebook has spared no expense in chasing this bet and they've invested tens of billions of dollars in cash since 2014 on virtual reality dream of a Metaverse.
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