Why the Metaverse Failed

The Dawn of Smartphones

Let’s go back to 2005. The height of mobile technology is RIM’s Blackberry and Palm’s Treo smartphones. Cell networks are getting better and Microsoft is threatening to turn Windows CE into something people would use without being forced to by their employer. And all the while rumors are swirling about the iPod of phones that Apple is cooking up. In walks Google.

Google’s dominance in search is becoming a certainty but their senior management has found an existential risk: fundamentally Google is a website. Someone could eventually make a better search engine. Even worse, the owners of the operating systems control who the default search engine is. Google can pay for that privilege (which they do), but they know it could be taken away at any moment. They could always be intermediated by the platform owner.

If you are Google in 2005 you know the only way to never be cut out is to own the platform the end customers use to get to you. So they formulate plans to replace every platform that could hold them back. The web browser is a platform, so they start planning their own web browser (Chrome). The desktop operating system is a platform, so they start planning ChromeOS. Then they look further afield.

The future is clearly mobile, and if Windows Mobile owns most of the market like MS Windows does on the desktop, they could be cut out as well. The solution: buy your own mobile operating system and get it everywhere before the competition reacts. And it worked. Android is eventually on more than 2/3rds of the worlds phones and Google is on almost all of those. Paying off Apple takes care of the rest. World Domination Accomplished. Well done, let’s knock off early.

Cut to a few years later. You are Mark Zuckerberg. You want an empire like the big guys. Your little social website is doing pretty well so you burn cash trying to build or buy any possible threat. You retool your website to become mobile first. You buy What’s App to dominate messaging. You buy Instagram to dominate photo sharing. The problem is: you still don’t have your own hardware platform. You could be banned from the App Store at any minute. That’s an existential threat. What can you do?

Facebook Makes Hardware

Facebook made a phone. Sure it was just reskinned Android and manufactured by HTC, but everyone called it "The Facebook Phone". It came with Facebook Home, a UI layer that let you Facebook your Facebook without even starting Facebook. Sadly for Mark, it was a flop. It turns out smartphones are a rich man’s game and even Facebook wasn’t rich enough to win it.

Mark is a pretty determined guy, so he invests in the Portal, their attempt to put video calling on tablets and TVs. (I forget if they changed their name to Meta by the time this shipped). I actually liked the Portal TV device; with some UI work and an open platform I think it would have been successful, but it simply didn’t do enough to earn its keep on HDMI 1.

Clearly hardware is hard so you need to buy your way in. Facebook bought Oculus, makers of the wildly successful Kickstarter backed VR headset, focused on making VR cheaper and more immersive thanks to the advent of cheap smartphone sensors. For a while they let Oculus run as a separate (but very well funded) group, but eventually it was sucked into the mothership. I actually interviewed to join the Oculus group a few weeks before the great sucking. Dodged a bullet.

Facebook now has a successful hardware platform where they control the entire stack. While it was built on top of Android instead of building from scratch. (Thank you, John Carmack), the Quest had its own shell and its own browser (no Chrome here!). They were in charge of their own destiny. Smooth sailing, right? Time to unify the disparate parts into a 100% Facebook virtual experience that you can’t get out of: Facebook Horizon

VR was dying before COVID

Let’s get to one of the big points of the article I started this rant with, that if VR couldn’t be popular during a global lockdown when everyone had lots of free time and was trapped inside, then it would never be popular. While that might be true for Horizon, it is not true about VR in general. Truthfully VR was dying before COVID. I know because I was there.

I worked in Mozilla’s Mixed Reality group from 2017 to 2020. I saw all of this first hand. Most investments were turning sour before COVID.

• Google launched Cardboard and later Daydream, platforms that turn your phone into a VR headset. They did a full marketing launch (read expensive) with hardware partners like Lenovo in 2016. It was discontinued in the fall of 2019.
• Microsoft launched Windows MR in the fall of 2016 with partners like HP, Dell, and Samsung. They didn’t sell well (and were very slow, as I recall), and they started dialing back the marketing before COVID hit. Microsoft formally laid off the teams in 2023.
• HTC, an early VR pioneer with the HTC Vive, pivoted to enterprise use in 2020, as did Microsoft with the Hololens 2.
• Sony announced a VR headset for the PlayStation 4 in 2014, and released in 2016. Few games were released for it and I’m honestly surprised they shipped a second version of the hardware. The PlayStation 5 does not support it other than with older games using special adapters.
• Pico Interactive shipped an early smartphone based headset in 2016 and its own standalone headset, the Pico 2, in 2020. I quite liked this one (it ran Firefox XR as the browser), but it was the beginning of their pivot to enterprise development.

While some of the shutdown announcements happened after COVID began, the writing was on the wall before the virus hit. People just didn’t like VR that much. There wasn’t much to do. A few games. Some 3D videos. Some chat rooms. To the average person this was just the mobile experience with extra friction.

The Bubble Popped

The big investment in VR started around 2015 and began to peter out just as the pandemic hit. If anything COVID stretched VR's life, not cut it short.

Certainly Facebook sucked all of the air out of the room by selling their hardware at a loss, making it impossible for other startups to compete in the VR hardware race. When the other big companies pulled out — mostly before COVID -- Facebook had the playing field all to itself and a pandemic to make everyone stay home. So what happened?

Fundamentally there was a VR bubble and it popped. The companies pouring billions of dollars into the industry realized that it was a useful technology and would sell some hardware, but VR would never become “the next smartphone”. It would never be as big as the hype claimed and the revenue projections demanded. It would never be a big enough consumer market to be interesting to what are some of the biggest companies in the world. So the bubble popped, which I also expect to happen with the AI bubble in the next 12 months.

At the end of the day the VR ecosystem died because it wasn’t providing compelling experiences that people cared about. This wasn’t Facebook’s fault, but they didn’t fix it either. They did the opposite, in fact. They built Horizon OS, a closed platform. Let’s come back to why Facebook wanted VR in the first place: to solve a problem.

A solution to a problem only Facebook has

Successful products solve a problem. The Metaverse, as conceived by Zuckerberg, was not a solution to a problem that regular people have. It was pitched as a way to immersively bring people together. That’s not a problem most people need to solve. And it wasn’t even the real problem the metaverse set out to solve. The metaverse is a solution to a problem that only Facebook has, and that problem is the fact that Facebook doesn’t own a platform.

Mark Zuckerberg has long wanted a hardware platform to call his own. A place where he can call the shots and not be intermediated by anyone else. Even better if it has eye trackers built in. ( He really, really wants this). I agree it’s an interesting problem, but it’s not a problem that regular people have. It’s a problem that only Facebook has. That’s why Quest has been a failure for Facebook. That’s why no one bought the Facebook phone. That’s why the Portal was wasted potential. If you want people to join your platform then you have to make it be a solution to a problem that people actually have. Facebook didn’t do that. They should have looked towards the web.

The Open Web

The Metaverse failed where the Web succeeded for a simple reason: the Web has always had permissionless innovation. It has never been owned by anyone. Anybody can set up a website. Anybody can make a webbrowser. A thousand flowers bloomed a thousand times over. There were plenty of big companies trying to make something like the Web “happen” in the days of dial-up. And they all lost, because the Web was open.

The Metaverse was never open. It was conceived by Facebook as something that Facebook controlled. It could have been like the web, with people jumping through portals as we follow links today; but that wouldn’t have given Facebook control. Permissionless innovation was a threat to them. The irony is that the permissionless innovation of the web is what let Facebook become the social media giant it is today.

Facebook actively fought against there being a VR ecosystem. They sold the Quest at a loss so no other hardware maker could afford to be in the consumer market and iterate on their hardware. Once they had the market all to themselves it didn’t grow any faster than Facebook’s own software ecosystem; which they immediately slowed down. When an indie game became popular Facebook bought them. That’s great for the particular game, but showed to the rest of the game market that Facebook would Sherlock you in an instant. So no one else would invest.

Next Facebook spent untold billions making a VR social network that no one wanted because there was nothing to do there. They built instead of growing. The Web has graceful degradation so that older hardware is included. Facebook made their VR OS slower over time, to the point that first generation Oculus devices are unusable now. Thank you, Carmack for letting us root our Oculus Go’s.

Facebook could have made it easy to launch a VR experience in your Quest with simple app integration. When you find a cool webpage, try it out briefly in the desktop browser, then click "Share to my Quest" and pop on your headset to try it out in full fidelity. But they didn’t do that (not well, anyway).

The good stuff that builds a new platform doesn’t come from big brands and partnerships. It comes from the little guys experimenting. YouTube didn’t start with Hollywood content. The early success stories were people making silly stuf fin their spare time. New platforms have to grow organically. You can’t just throw a bunch of big brands and marketing dollars into a blender and spit it out. That’s how you get Quibi.

Facebook could have made it super easy for people to create WebXR experiences with great dev tools, public domain models, and open source toolkits; but they didn’t. The permissionless web was a threat to them. Building a successful platforms implies that people on the platform might make money that could have been yours, and Facebook can’t give up that control; so they got to have their own little clubhouse and threw a big party... and no one came.

Now they are trying again with AI and XR glasses. Good luck with that.

Coda

I don’t want to blame the death of VR on Mark Zuckerberg. Some of this is just typical big company behavior. Big companies get bored and can’t have long term visions. If something seems like it will be profitable but not wildly profitable, then they abandon it. Occasionally big tech will keep it on life support to meet the terms of contracts they signed, but their heart isn’t in it anymore. How on earth did the Kin launch when everyone involved knew it would be killed immediately?

Throughout this piece I haven’t mentioned Apple. While Apple did release a headset in 2024, I was never meant as a consumer product. The Apple Vision Pro was meant to test the waters, collect data, and built up their developer platform before the real AR product (probably some glasses), ships in the next few years.

I will say this about Apple; for how much I complain about their aggressiveness in shipping new features at the expense of software quality, Apple can sustain long term vision. They can plan and execute and iterate until the third one is good. Google can’t do that. Microsoft can’t do that (anymore). And Fadebook can’t either.