Metas Ditching NFTs. It sends a strong message about the company and Crypto.
Meta Platforms is scrapping plans to send non-fungible tokens, or NFTs, to users from content creators — a symptom of both the limits to growth at the beleaguered tech company and waning interest in digital assets more broadly.
Meta (ticker: META) ends NFT integration on Facebook and Instagram, the head of the company’s trading and fintech business, Stephane Kasriel, said on Twitter Monday.
NFTs are data that can be stored and traded on the blockchain (the decentralized ledger technology that underpins Bitcoin, Ether and other cryptocurrencies). Many NFTs are digital media files as works of art, and are at the heart of the visions of the metaverse – a future internet defined by virtual worlds, which Meta bet big on with a late 2021 business shift that came with changing its name from Facebook.
Meta planned for NFTs to be a very profitable business, selling digital goods in the metaverse with as much as a 47.5% fee. The group doubled down on its NFT plans for apps as recently as last summer, outlining ambitions for billions of Facebook and Instagram users to buy digital collectibles.
These dreams are now largely out of sight as a result of NFTs being abandoned on the group’s flagship platforms. The timing could not be more symbolic of Meta hitting the brakes on growth into a high-risk but high-margin business, with the group announcing its latest large-scale layoffs on Tuesday. Meta announced it would cut another 10,000 jobs, building on the 11,000 layoffs announced late last year, which reduced its workforce by 13% at the time.
CEO Mark Zuckerberg’s “year of efficiency” continues, and NFTs are on the chopping block. That’s in line with Wall Street’s estimates for Meta to spend and lose less on the metaverse. Analysts surveyed by FactSet now see the company’s Reality Labs segment (which builds technologies needed for the metaverse) losing upwards of $16 billion this year and next, down from previous estimates that put annual losses above $17 billion and $18.5 billion in 2023 and 2024 respectively. .
It’s not as if greater attention to NFTs has come close to what Meta had hoped for, or what might have saved its ambitions. Interest in the crypto world’s answer to collectibles fell off a cliff since late 2021, both in NFT trading volume and
Bitcoin
prices – the latter being a bellwether for broader sentiment for digital assets.
About 220,000 NFTs were sold in the past month, according to data from market tracker NonFungible – a sharp drop from 1.6 million a year ago and the 5 million sold in a monthly window near the market peak around December 2021.
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Who can blame the Meta for ditching NFTs? Most others have too. But it still says something about both the tech giant trimming the fat on its metaverse efforts and the crypto world’s woes.
Write to Jack Denton at [email protected]
