Why Now?
When a top 10 company by valuation like Facebook, changes its name and focus to the MetaVerse – it is going to generate a lot of attention. A google search of the term now has 141 million results, a more than 100 fold increase on a year ago. The reason that Facebook became Meta, and started its focus on the concept, is that Facebook after being one of the fastest growing companies in history, is now in decline. In terms of both revenue and profit.
Since its launch in 2004, Facebook was the clear winner of social networking. It has 3.6 billion users across its platforms which include Facebook, Instagram and WhatsApp. But now, it is starting to wane as TikTok encroaches and people turn away from its apps. Meta wants to own what it thinks will be the future of social interaction. Meta’s revenue is almost entirely dependent on advertising (97%). Their success in advertising is in no small part due to the information they can gather on their users. Meta knows what you like, do, believe, we’re you’ve been, where you’re going next, who you friends are, what your life history is and of course, and what you spend on. And it’s not just through their sites, rather via the likes and login ecosystem they’ve built on the web which creates such a rich data flow.
BONUS: How observant are you? Have you noticed this?
There is no organisation in the history of the planet who nows more about individuals. They know more about you than your partner or government does. But this information gathering has become far more difficult as the owners of the hardware people access Meta apps on (namely Apple and Google) are starting to restrict Meta’s ability to track users. Likewise, governments the world over are quickly regulating against these privacy incursions, which are the fuel that powers the organisation.
This is a major problem for Meta, as don’t own any significant hardware. The Meta portal device has been discontinued and I don’t know anyone with a pair of their RayBan spy glasses. Because the Metaverse requires the use of goggles like the Meta Quest 2, it could solve this hardware problem and allow Meta to set its own privacy terms. To date they’ve made a massive investment including a $2 billion acquisition of the Oculus company and more than $70 billion in developing Metaverse hardware and applications. Zuckerberg really needs this to work.
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Hype or Reality?
So far, the share market hates it. The Meta Share price has declined more than 60% in the past year, losing investors more than $700 billion since its peak. That’s not a typo. In short, Mark Zuckerberg needs the Metaverse more than we do. But it is hard to see 3.6 billion people going from a ‘free service’ to having to invest $600 plus into a single purpose device (MetaQuest VR goggles) to log into Facebook Horizons.
In my view this is why the Metaverse is getting such attention. The only question is whether the people of the internet themselves will give it as much attention as Zuckerberg wants them to. If the meagre house hold penetration of VR goggles being at 0.03% of Facebook users is any indication – the answer is a clear no. Or at least, not for a long time.
Next Week: MetaVerse – Best use cases.
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Keep Thinking,
Steve.