Insider Intelligence’s Era of Uncertainty report dissects the effects of 2022’s various issues, including fallout for Big Tech companies, broken supply chains, war, and inflation. We look at the ramifications for the technology sector.
A challenging business climate: Big Tech took a beating when stock prices for giants Amazon, Meta, and Netflix fell after a round of disappointing earnings. There are challenges ahead—and opportunities. Here’s a rundown of what we can expect.
It’s back to basics at Meta.
- The parent of Facebook and Instagram is focusing on its core products and toning down investments in the metaverse. This should result in a near-term benefit for advertising revenues.
- Meta’s stock price has declined by 40% since the start of 2022, and employees say that Facebook’s business is plateauing and that it could be the next Yahoo.
TikTok will gain in both ad revenues and usage.
TikTok’s global ad revenues ($11.64 billion this year) will be bigger than Snap’s and Twitter’s combined.
- The app is now the third-largest social network in the US (and worldwide), with 94.1 million US monthly users in 2022 and 813.7 million worldwide.
- We expect US adult TikTok users to spend close to 46 minutes on the platform per day this year, on par with YouTube and well ahead of Facebook, Instagram, Snapchat, and Twitter.
The metaverse development timeline will get longer.
- Meta is pulling back on metaverse expenditures and virtual goods fan-favorite Roblox is facing waning usage and revenues after a pandemic spike.
- We expect the race to build virtual environments for business and commerce to look more like a marathon than a sprint, but there’s an opportunity to take the lead as Meta idles.
Netflix will explore new business opportunities beyond streaming subscriptions.
- The company will continue to build a video game business through development and acquisitions.
- It has tried syndicating shows and theatrical releases for some of its content, and it will explore alternative revenue streams as a way to supplement subscription revenues.
- Netflix is also mulling an ad-supported model to make up for subscriber loss.
Wrap-up: While there are challenges ahead, Big Tech companies are finding ways to weather the era of uncertainty. Many are encouraging employees to come back to offices, and Apple, Amazon, Google, and Microsoft have all resolved to increase worker’s salaries to retain talent.
- Despite the economic downturn, a consolidation trend continues in various technology segments: Microsoft’s $68.7 billion takeover of Activision Blizzard is its largest acquisition to date. Broadcom’s $61 billion acquisition of VMware points to expansion into emerging cloud and IoT segments.
- Similarly, Sony’s purchase of gaming studio Bungie for a more modest $3.6 billion indicates a continuing trend in gaming IP acquisition.
- And let’s not forget Elon Musk’s contentious Twitter acquisition for $43 billion, which remains in limbo.