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Polygon (MATIC/USD) and Flow (FLOW/USD) prices held quite well on Tuesday morning as the Non-Fungible Tokens (NFT) industry was dealt a big blow. $FLOW was trading at $1, about 22% above the weekend low of $0.815. $MATIC, on the other hand, was trading at $1.178, which was higher than last week’s low of 0.94.
Meta Platforms NFT ambitions fail
Meta Platforms (NASDAQ: META), the parent company of Facebook and Instagram, was one of the earliest big tech companies to embrace NFTs. This ambition seemed logical considering that the company owns the biggest social media platforms in the world.
To achieve this vision, the company partnered with key blockchain platforms like Polygon and Flow. Polygon is a leading layer-2 network while Flow provides one of the most popular blockchains for NFT creators.
In a statement, Meta Platform’s Stephane Kasriel said that Meta was abandoning its NFT ambitions. Instead, the firm was looking for “other ways to support creators, people, and businesses.”
Some product news: across the company, we're looking closely at what we prioritize to increase our focus. We’re winding down digital collectibles (NFTs) for now to focus on other ways to support creators, people, and businesses. 🧵[1/5]
— Stephane Kasriel (@skasriel) March 13, 2023
This is a big blow considering the scale in which Meta operates in. For example, Facebook has over 2.9 billion active users while Instagram is used by over 2 billion users daily. Therefore, these platforms would have formed a great place for people to buy and sell NFTs.
The decision is also a big concern for blockchains like Polygon and Flow that touted their partnerships with Meta.
Other firms are struggling in NFTs
Other large companies have struggled to succeed in the NFT space. For example, GameStop launched its NFT marketplace by collaborating with Loopring and Immutable X. While GameStop is popular among day traders, its NFTs have not had an impact in the company’s business.
Similarly, other blockchain companies like Theta, Coinbase, PancakeSwap, and Binance have had limited success in the NFT industry. This is partly because the overall demand for NFTs has dropped from its peak in early 2022. Data shows that the overall NFT volume sales have plunged by over 90% from its peak.
Meta Platform’s decision to wind down its NFT venture is likely because the company is going through challenges. According to the Wall Street Journal (WSJ), the company is expected to lay off about 13% of its staff. It laid off thousands last year as its stock price collapsed.
Meta shareholders want the company to focus on its core social media and ad business. This also explains why it folded its Diem blockchain product. At the same time, Meta achieved little success in the NFT business, as evidenced by the financial results, which have been weak in the past few quarters.