Two games in a row at the beginning of the year, what pits has Meta stepped on recently?

Meta has been doing a little better lately, but when it comes to the metaverse, it's a different story.

At the beginning of the year, 2 games were shut down in succession

On February 2, after Meta released its Q4 2022 earnings, Meta's stock price recovered somewhat because of Facebook's strong performance and a $40 billion buyback program. The logic is that advertising revenue, which accounts for 95%+, is expected to return to the growth path under the growth of data such as Facebook DAU.

But the next stick in income, the meta-universe that Meta hopes for, that is, Reality Labs, is still all kinds of burning money and crotch-pulling. Although Reality Labs' Q4 revenue reached $727 million, a year-over-year decline (17%) lower than market expectations (25.7%), its operating loss of $4.36 billion in the same period is still difficult to hope.

In addition to financial data, at the business level, games, VR and other products that are inextricably linked to the metaverse in Meta's eyes are not progressing smoothly. Just entered February, terminated 2 game projects.

The day before the earnings report, Meta announced the shutdown of UGC game platform "Crayta" and VR action game "Echo VR". In terms of positioning, "Crayta" and "Roblox" are similar, and "Echo VR" was previously one of Meta's most popular VR games, both of which are closely related to Meta's meta-universe strategy in positioning and design, and were also recognized by Xiaoza when they were originally bought by Meta.

So, what exactly did Meta decide to end the operation of both games? What pitfalls did Meta step on on these two products? After the adjustment, what does Meta's game lineup look like?

The "Roblox" competition bought from Google could not support the meta-universe dream, and bytes also stepped on the pit

"Crayta" was first launched on the Google cloud gaming platform Stadia, and was later acquired by Meta Image source: Unit 2

Like Roblox, Crayta is a multiplayer online game creation platform. Players can create and play games on the platform with friends, and the more games they play, the more experience points and accessory equipment they can unlock and use to dress up their in-game Avatar. In order to drive the enthusiasm of game creators, "Crayta" holds the best game selection event every month, and also signs cooperation agreements with leading creators.

"Crayta" was first launched on July 1, 2020. At the time, it was an exclusive game for Google's cloud gaming platform Stadia, and it was tasked with attracting players for Stadia. It was said before the launch that "Crayta" developer Unit 2 said that the reason for choosing to be the first to launch Stadia was "to be able to use the cloud platform to better eliminate the technical barriers of game development."

However, choosing to monopolize Stadia has dragged down the development of "Crayta". Unlike Roblox's launch on PC, Google Play, and App Store, the Stadia platform itself has a low user base and slow user growth, resulting in the number of "Crayta" players remaining low.

To this end, "Crayta" announced "cross-platform" in March 2021 and launched on the Epic Store on the PC side, which was only seen by Meta. Roblox is known as a metaverse concept stock, and the similarly positioned "Crayta" has naturally been recognized by Meta, and the developer Unit 2 was acquired by Meta in June 2021.

In June 2022, "Crayta" was officially launched on the Facebook Gaming cloud gaming platform. Zuckerberg praised "Crayta" at the time, saying: "So far, everyone still thinks that the metaverse is mainly related to 3D experiences such as VR and AR. But "Crayta" proves that the metaverse can also be directly experienced through the "Facebook" app on a 2D platform such as a mobile phone. Although the transaction price has never been officially disclosed, buying Unit 2 is obviously an attempt to "save money" in Meta's money-burning metaverse strategy.

However, less than 8 months later, Unit 2 announced that it would shut down "Crayta" servers on March 3, 2023. In Unit 2's official statement, the main reason for shutting down "Crayta" was that "the growth of the game can no longer support further development and maintenance costs". Nearly 3 years after its launch, "Crayta" finally failed to cross the "growth barrier".

Unit 2 said in a blog post that lackluster growth was the main reason for shutting down "Crayta" Image source: Unit 2

From a design point of view, the idea of "Crayta" is basically the mechanics of "Roblox" + the art of "Fortnite". The biggest feature of "Crayta" compared to other competitors should be that it allows players to quickly share the game they are playing directly with a link. In contrast, Roblox players need to click on the list on the right side of the game interface to manually add friends to the player list before they can send an invitation. The other party needs to accept the invitation before they can open the game. However, it is only convenient to share, which does not allow "Crayta" to achieve differentiated positioning, let alone provide core competitiveness.

In addition to the lack of differentiation, "Crayta" was abandoned by Meta more than a year after it was acquired, but also because the Facebook Gaming user base is small, and the age group positioning is different from Facebook.

The game services in Facebook Gaming are generally divided into HTML5 instant games and cloud games, and "Crayta" belongs to the latter. Meta previously announced in July 2021 that Facebook Gaming had 1.5 million active players for cloud gaming. Some Reddit users have also calculated Stadia's MAU in February 2023 to be about 2 million based on the size of active users in Stadia's Reddit discussion board.

Although "Crayta" definitely has the idea of avoiding the start of "Roblox", it is obvious that compared to mobile and PC, the user base of these two cloud gaming platforms is too small, making it difficult for "Crayta" to have the same growth space as "Roblox" from the beginning, not to mention that "Roblox", which was launched as early as 2006, has enough time to accumulate a large number of loyal players.

In terms of player age, the absolute majority of "Roblox" players are children aged 12 and under. According to data platform Statista, 54% of Roblox's global users in 2020 were younger than 12 years old. Data from parental management software vendor Qustodio also shows that in 2022, users aged 4-18 around the world spent an average of 180 minutes playing Roblox per day, which is higher than TikTok (107 minutes).

"Crayta" mainly learns "Fortnite" in terms of art style, and its players are mainly young users aged 18-24, accounting for 62.75% (Verto Analytics survey data). Obviously, "Crayta" wants to attract older players by borrowing the art style of "Fortnite" and differentiating itself from "Roblox". But the number of young users on Facebook has declined rapidly in recent years, with Pew surveying that Facebook's penetration rate among the 13-17 age group in the United States has plummeted from 71% in 2014-2015 to 32% in 2022, a drop of more than 50%. With a small user base on the platform itself and a rapid decline in the number of target players, Meta's original low-priced entry into the "2D meta-universe" strategy could only end in failure.

In terms of creating similar competitors of "Roblox", Meta is not the only head technology company that has suffered losses. In April 2021, ByteDance invested in the developer code of the game UGC platform "Restart the World". Subsequently, the code Qiankun launched the mobile version of "Restart the World" in China on August 27 of the same year. The DAU reached 150,000 people three days after the game went live, but it was finally shut down on September 30, 2022.

Some people familiar with the matter said that it is related to the introduction of domestic anti-addiction policies. But on the other hand, "Roblox" has been operating for many years, connecting developers at one end and users on the other, which is a platform-based business, and its scale advantage is difficult to be shaken.

The failure of Meta and Byte on the UGC platform also basically declares that it is difficult to have another Roblox on the same technical level.

The offline of VR "installation essential" games allows us to see that Meta "meta-universe" is also trying to avoid burning money

"Echo VR" was once one of the most popular VR games Image credit: Ready At Dawn

"Echo VR" consists of two games, one is "Echo Arena" and the other is "Echo Combat". Both put players in the role of robots, in a zero-gravity field, using "flight" to control their movements. At the same time, both games also adopt PvP gameplay.

The main gameplay of "Echo Arena" is "playing", and the participating players are divided into two teams. Behind each team of players there are their own "goals" that need to be defended. After kicking off, players need to catch the Frisbee-like ball with their hands and pass it to their teammates or throw it directly at the opposing goal.

"Echo Combat" is a typical shooter where players are still divided into two teams, dodging each other in the field, looking for opportunities to kill the opponents of the opposing team.

Both games have the option to fight against AI or in real time. It can be seen that "Echo VR" focuses on the immersive dynamic experience brought by VR, allowing players to experience the thrill of moving in all directions.

"Echo VR" was launched in 2017 as a separate expansion for the two-player interactive adventure game "Lone Echo", and the two have been exclusive games for Meta's VR headset, Oculus Quest, from the beginning. "Echo VR" has also won praise from many players and media since its launch with its simple and effective gameplay mechanism and high-quality operation experience. VR industry media "UploadVR" called it "the first high-quality esports product of the VR platform", and "Echo VR" also developed its own esports league.

The praise received by "Echo VR" also led Meta to finally acquire the development team Ready At Dawn in 2020 and join Oculus Studios, a VR game development division. However, after being officially acquired by Meta, the main updates of Echo VR are related to monetization.

The first is the launch of the Season Pass "Echo Pass" on March 10, 2021, players can accumulate experience points after purchase, and as experience points increase, players can also follow the unlock route of the pass to earn more rewards, including different robot liveries, costumes, and acceleration boosters. Later, on December 15 of the same year, the store "Echo Shop" was launched, where players can freely purchase various skins with experience points without having to unlock them one by one according to the pass route.

"Echo VR" launched the paid pass Echo Pass | in March 2021 Image source: Meta

However, until the official announcement of the closure of operations, Meta has not released active user data for "Echo VR". Even the post on the day Ready At Dawn announced the closure did not mention the real reason for stopping the game.

It wasn't until February 3, on a radio show hosted with game producer John Carmack, that Andrew Bosworth, Meta's chief technology officer (CTO), said that although the player base of "Echo VR" has been "very loyal", the total number of players is only "about 10,000" at present, and the cost can no longer maintain the normal operation of the game. The once glorious Quest head exclusive game finally failed to escape the fate of user loss after 6 years of operation.

Meta CTO Andrew Bosworth said that the number of Echo VR players is currently only around 10,000, and it is impossible to maintain server operations Image source: UploadVR

Boswoth said he was saddened to have to shut down Echo VR, but he had to think about the return of money, and by "return" he meant to make people have the conditions to develop new products that can attract and influence more users.

Although Bosworth has always said that the shutdown of "Echo VR" is not directly related to profitability, whether it is the update direction of "Echo VR" only related to commercialization after the acquisition, or the "leadership speech", it shows that the pressure received at the Meta Group level has been transmitted to Reality Labs, which has been responsible for "burning money" and has to have a head. Even if you don't make money, at least you have to pay for the money to develop new games that "suck more", which is a current operating standard of Reality Labs.

From the perspective of the content itself, although the game experience of "Echo VR" was initially oversupplied, its gameplay is very conventional, and it is difficult to further extend and develop after using the freshness of VR to attract the first batch of users. Since the launch of Valve's FPS single-player game "Half Life Alyx" in 2020, VR games have actually gradually begun to dig deeper from simple "experience" gameplay, looking for more development space in narrative elements and mechanisms. In October 2022, Meta announced at the Connect conference that it had acquired Armature Studio, the developer of the VR version of "Resident Evil 4", which also shows that Meta has considered starting to do more serious gameplay and experience on the VR platform.

Among domestic manufacturers, ByteDance is one of the fastest VR/AR strategic layouts, and acquired VR equipment manufacturer Pico on August 29, 2021. Data shows that in the first half of 2022, Pico's products accounted for more than 60% of the domestic VR hardware market. However, Byte is also facing the problem of software ecology in the VR business.

According to Guosen Securities' statistics, the total number of apps in Pico VR is about 200, only 1/25 of Quest. There is also a lack of heavy games in the supply of games, with casual games accounting for 42%, which is significantly lower than Quest in terms of quality.

On the other hand, shutting down "Echo VR" actually means that Meta has begun to accelerate iteration on VR heavy games, and Pico is still obviously lacking in this type of content.

In recent years, Meta's acquisition of VR game manufacturers has further accelerated, and the gap between the two in game content may further widen. Since November 2019, Meta has acquired a total of 16 companies, 8 of which are VR game manufacturers. After acquiring Ready At Dawn in 2020, Meta acquired 5 more manufacturers, of which Twisted Pixel Games, Armature Studio and Camouflaj were all officially announced at the Connect conference in October 2022.

On the day of writing, Meta acquired Within, the developer behind the subscription-based VR fitness product Supernatural. Regarding VR content, Meta's layout continues steadily, preparing for the VR vendor scuffle in 2023.

Because in 2023, PlayStation VR 2, HTC Vive XR Elite, and Apple's mixed reality terminal may all be launched. The latest generation of Pico 4, Byte's PICO, has also been officially launched overseas from October 1, 2022, and is priced lower than Quest. When there are more and more entrants, it will continue to improve the level of device experience and promote more developers to enter the game. Perhaps, VR will really usher in a wave of rise in 2023, and the Reality Labs division, which has only $700 million in revenue, may be able to rush performance next year.

Pico 4 VR device | Image source: CNET