Will expanding into the metaverse break the company’s dependency on advertising as the core revenue stream amid several policies around data and privacy coming in place?
There’s a lot of belief that the products that we build have to be relevant for everyone in the world — that is the core conviction we have. How advertising became the primary source of our revenue came from the belief that everyone had access to the platform because of our mission of connecting people and helping communities.
We wanted to build products that are accessible to everyone in the world and we are not excluding people because they can’t afford it. That conviction has never changed. Once advertising became the dominant source of revenue, there was a lot of investment and thoughtful building of the ad platform that delivers value to marketeers and businesses by delivering personalised advertising; and also, to create advertising that consumers value.
There are new ideas and ventures that have seeded on the back of ads on Instagram and Facebook. Consumers like these ads and discover new companies. The core flywheel of inherent conviction and building for everyone still continues. We still believe advertising will be a key revenue for us in the medium and long-term.
At the same time, when we are building hardware and devices, we are charging for it. Quest does cost money, we have already started reporting revenue from this quarter, between our social apps and reality apps.
Augmented Reality (AR) was the buzz word a few years ago and we didn’t see it percolate much into the mainstream. Have brands started using AR to enhance experience? What are you building on top of that through metaverse to change that experience?
Our idea of metaverse is the immersive embodied version on the internet where you feel the presence a lot more than you felt on the desktop web or mobile internet. Vishal, one of the main leaders driving the product work in the metaverse, said, “You are not looking at it (the screen), you are in it.” The distance between people communicating over the internet crunches and you feel like you are in it a lot more.
We have clearly articulated that we don’t expect this to emerge overnight. We are seeing this as a decade-long work, not just by us but other companies, too. This will take time before it reaches six billion people and we are able to achieve affordability.
The question we are also answering is how do we connect the dots from where we are in terms of family of apps today to this rendition of metaverse. That’s where a lot of effort is happening and how it will come alive on Facebook and Instagram. AR is going to be a big part of it in terms of use cases. Renditions of AR and the experiences that connect existing mobile surfaces to the metaverse will start happening.
Meta has been speaking about building collaborative and open-source approach across companies to build use cases? What are your thoughts on that and how will the business models across companies look?
Firstly, there is a clear bet or choice we are making. This is an opportunity for the world and with the scale of our platform and the fundamental research and science we have done since the acquisition of Oculus, we can help build many of the foundational blocks on which developers, creators and companies can build their virtual spaces. We want to do this in a way that collaborates with other companies looking to invest in and build the metaverse.
How we design these blocks is by actively looking for mechanisms where different systems and platforms can connect with each other. For instance, if you are buying a suit for your avatar, just like in real world, you should be able to carry it in another world which is outside where you bought that piece of clothing.
Secondly, a lot of the work we are going to do over the next few years will be around how do we help companies on conceiving ways to leverage the metaverse. We have already announced a $150-million global fund to help people, creators and developers figure out and connect with the way we are thinking and benefit from all the learning that we have. Collaborations through active participation with companies and even more important is collaboration as a design principle.
Instagram reels and peers like YouTube Shorts have seen higher adoption being restricted to tier-I and developed cities, while others like ShareChat’s Moj have captured tier-II and III markets. What is your game plan to capture more content creators and users in the hinterlands?
It’s a myth that Instagram isn’t as popular in tier 2 & 3 cities. For a while now, Instagram is at the scale where it is used by people across India, in the language of their interest. A number of things made this possible over the years — improving our Android app, launching music with a huge library of regional music, enabling anyone to create an effect with Spark AR, creator programs like ‘Born on Instagram’ and most significantly, the launch of Reels.
We’re working on scaling programs like ‘Born on Instagram’. While we launched it in 2019, we evolved it to an e-learning course in 2021, to democratise learning for aspiring creators across India, for free. The majority of registrations are from tier 2 & 3 cities. The program itself is in English, Hindi and Tamil, and shortly being translated to more languages too.
Reels has transformed the way content is created and consumed on Instagram and given rise to a whole new wave of young creators. We’ve seen numerous examples of people growing by over 100 to 1,000 per cent.
Rising data tariffs have been cited as one of the reasons for the decline in growth in India’s user base. Telcos are gearing up to increase data tariffs further this year. Will this hurt Meta’s growth?
As David (Wehner, CFO of Meta) said during the earnings call, the pandemic has pulled forward user growth in many parts of the world, including India. Like most of the technology platforms, we saw a significant increase during the two distinct phases of lockdown in India. Now that the situation has eased, we are seeing user growth across the tech sectors stabilising.
More significantly, the pandemic has caused tectonic shifts in user behaviour. People are now more used to than ever to conduct their daily lives on digital. We are now discovering that many of the changes in consumer behaviour triggered by the pandemic are here to stay and will continue to drive growth for digital platforms like ours.
Lastly, even with the marginal correction of the data prices in India, they continue to be among the lowest in the world. As the economy stabilises in a post-Covid world, we will see more Indians continue to reap the benefits of digital and grow.
