Meta is attempting to diversify its revenue sources beyond advertising, which has historically accounted for nearly all of its income. CEO Mark Zuckerberg announced the testing of two subscription services for the Meta AI app, priced at $7.99 and $19.99 per month, starting in Singapore, Guatemala, and Bolivia.
This move coincides with the launch of premium subscription plans for Instagram, Facebook, and WhatsApp. Despite a robust online ad market, which generated 98% of Meta's $56.3 billion revenue in the first quarter, the rapid rise of AI raises concerns about user engagement with traditional platforms.
Analysts from Wolfe Research suggest that these new subscription services could contribute up to $3 billion in revenue by 2027, potentially growing to $16 billion by 2030. However, this remains a small fraction of Meta's overall revenue.
The company has faced challenges in past ventures outside of advertising, such as the failed Portal device and the costly Reality Labs unit, which has incurred over $80 billion in losses. Analysts express cautious optimism about the AI subscriptions, viewing them as a means to enhance user engagement rather than a standalone business.
The potential for a cloud computing service is also on the table, but analysts warn that Meta would need significant investment and restructuring to compete with established players like Amazon and Microsoft. Overall, while there are opportunities for growth in AI, Meta's historical struggles in diversifying its business model raise questions about the success of these new initiatives