What to Watch for from Meta in 2022

Jan 08, 2022

Facebook, or Meta, as it is now known, doesn’t have the best of reputations in general.

2021 was particularly tough for the company’s image, especially following whistleblower Frances Haugen’s allegations.

At the time of this writing, its share price is down more than 10% since its September highs.

Regardless, its Oculus VR headset product hasn’t felt the impact of Meta’s continuously deteriorating reputation.

Talk of the headset is coming in at an all-time high as more and more Oculus systems found their way under the Christmas tree this year… up 23% year over year.

I found this tweet from independent analyst Benedict Evans useful, as it shows that the Oculus app was No. 1 on the App Store on Christmas Day.

So what does this mean?

Well, the product certainly had a fantastic Christmas period in terms of sales… but that’s not enough.

John Carmack, Chief Technology Officer of Oculus VR, explained in his Facebook Connect 2021 keynote that the company sells the headsets at a loss or breakeven and there are no profits in the product itself.

What is most important to Meta and Oculus is user retention.

As of September 2021, the company had sold around 1.87 million Oculus Quest 2 units, and though the product has a high retention rate when it comes to virtual reality headsets as a whole, retention is still something that concerns Carmack and his team.

He stated that there are currently plenty of headsets in closets or ones that are not regularly being used, describing the buyers as “lapsed VR users.”

As a result, the company is running tests to see if they can lure lapsed users back to the platform.

One such test is the launch of the virtual reality version of the game “Resident Evil 4.”

However, while there was a slight spike in mentions, as the game launched just slightly ahead of the holiday period, we shouldn’t draw any solid conclusions from that period.

Looking at the data, you can see from previous holiday periods that consumer happiness levels tend to rise before falling throughout the rest of the year.

With consumer happiness currently coming in at 75%, it will be important to watch how things hold up, or deteriorate, as the year moves on.

While you have probably come across ads, videos, and social media mentions of the headsets in the last month or two, visiting the Oculus story as we move through 2022 will be vital so we can consider whether consumer trends and habits are changing.

Meta (as demonstrated by its name) is firmly focused on the metaverse…

As a result, the Oculus headsets and their user retention rates are going to remain a very important metric to watch.

As always, LikeFolio members will be the first to know when we spot a big opportunity in Meta, or any of the metaverse companies.

Andy Swan,
Founder, LikeFolio