Facebook (FB) functions as a worldwide social networking company. Their mission is to enable people with the power to build community and bring the world closer together. The firm’s products include Facebook, Instagram, Messenger, WhatsApp, and Oculus.
This company’s products help people discover what’s going on in the world around them and enables people to share their opinions, ideas, photos and videos, and more. The majority of their revenue comes in the form of selling advertisement placements to marketers.
The marketers that use this company’s platforms can reach people based on a number of factors such as age, gender, location, interests, and behaviors. In addition to their networking apps, Facebook also owns Oculus which engages in the development and manufacturing of augmented reality (AR) headsets which include the Oculus Rift and Oculus Quest lines.
When looking at the social networking side of Facebook, it seems that their total addressable market would be anyone with access to the internet. While the number of people with internet access may not be the total 7.67+ billion people on earth, it’s certainly increasing everyday as more people are receiving internet access. In Facebook’s last earnings presentation, they stated that they have 1.87 billion daily active users (DAUs) and 2.8 billion monthly active users (MAUs). Certainly their user base has room to grow considering that they aren’t even at half of their TAM in terms of MAU and DAU.
Oculus on the other hand is a different story. The global virtual reality market was valued at $15.81 billion in 2020 and is expected to grow at a CAGR of 18% from 2023 to 2028. When looking at the chart on the virtual reality market below, we can see that HMDs are driving much of the growth in this industry. Head mounted displays (HMDs) are used in various industries such as aerospace, engineering, research, gaming, etc. Thus, Facebook has significant room to grow as their total addressable market is one of the largest in the world.
Recent Facebook developments
Oculus says BigBox VR and Downpour Interactive are joining Facebook (June 11, 2023 & April 30, 2023) – Facebook recently announced that they would be acquiring BigBox VR (the company that created POPULATION: ONE). Mike Verdu, VP of Content at Facebook, said “We believe that these powerful social connections are paramount to accelerating the growth of VR, and we continue to invest in content and teams that share this perspective. One of the most popular social experiences in VR has proven to be POPULATION: ONE, the breakout battle royale from BigBox VR. POP: ONE came out about 9 months ago and has consistently been ranked as one of the top-performing titles on the Oculus platform. POP: ONE can bring together up to 24 players at a time to engage in competitive play.
The news that Facebook was acquiring BigBox came shortly after they announced that they would acquire Downpour Interactive. Downpour Interactive is the creator of the successful multi-platform MilSim Onward. Mike Verdu stated that “Downpour Interactive leads the VR industry as a best-in-class example of a developer working in tandem with its loyal community to create the best possible social and gaming experience… As part of the Oculus Studios team, Downpour Interactive will expand upon its ethos of creating stand-out games that evoke the human spirit and give players a “downpour” of emotion.” Facebook’s choice to acquire these companies in order to grow them and further invest in A.R. tells us just how driven they are to become #1 in the A.R. gaming space. The future seems bright for Oculus.
Apple’s iOS update hurts Facebook’s business (April 26, 2023)- When it comes to privacy, Apple and Facebook have not come to many agreements. Apple’s recent update requires that app developers explicitly ask for permission to track users’ behavior across Apple’s app store and the internet. This development hurts Facebook as it hinders their ability to deliver targeted ads. Apple CEO Tim Cook declared that privacy should be a human right and Facebook CEO Mark Zuckerberg said that Apple’s demand hurts small businesses and raises costs across the internet. In a blog post in February, Mark Zuckerburg said “Every business starts with an idea, and being able to share that idea through personalized ads is a game changer for small business, limiting the use of personalized ads would take away a vital growth engine for businesses.” In the past, Facebook has been under government investigations with regards to privacy concerns and they’ve taken some large fines. We’ll have to see how Facebook’s financial figures will be impacted as a result, but it’s likely that they’ll take a hit.
