What is the “metaverse,” and how lucrative will it be for tech companies? It depends on whom you ask, the corporate equivalent of a Rorschach test.
A generally agreed-upon definition of the concept is a digital experience that blends virtual reality, streaming video, mobile games like Roblox Inc.
and “Fortnite,” cryptocurrencies, social media, 5G, artificial intelligence and email. In short, a Sargasso Sea of tech buzzwords that approximates a digital facsimile of how we live in the physical world.
“It’s like anything in tech: Everyone defines an emerging market that best suits their strengths and needs,” Zeus Kerravala, principal analyst with ZK Research, told MarketWatch. “Whoever wins out invariably turns that experience into their walled garden.”
When Mark Zuckerberg shared his version of Facebook parent Meta Platforms Inc.’s
idea of the metaverse last month, he said he did not want it to be a “walled garden,” but rather part of a larger, open ecosystem. That was a not-so-subtle dig at Apple Inc.
one of many that Zuckerberg delivered when preaching the openness of the metaverse in the Facebook rebrand.
Apple antagonists Epic Games Inc. and Facebook see the metaverse as a way to attack Apple from a financial, strategic and legal standpoint. But Dioselin Gonzalez, a mixed-reality consultant and former principal software architect at Microsoft
Research, believes most corporations are engaged in a desperate land grab for a piece of the metaverse market so they can turn it into their own version of Apple’s App Store or Alphabet Inc.’s
“Facebook warns of the closed Apple Store, but it will have its own walled garden with metaverse, based on its history,” she told MarketWatch.
At a technology conference in South Korea this week, Epic Games Inc. CEO Tim Sweeney compared the metaverse to a universal app store that works across all operating systems and offers developers an alternative to Apple’s and Google’s dominance of the smartphone economy. Epic, one of the leaders in the emerging metaverse space with its popular “Fortnite” game, has sued Apple and Google in federal court for antitrust behavior.
“Over the coming decades, the metaverse has the potential to become a multitrillion-dollar part of the world economy, open to all companies across the world as equals,” Sweeney said. “Apple and Google policies ban other companies from creating the metaverse so they can dominate it themselves and tax it. We must not allow these two companies to dominate our digital lives.”
The “multitrillion-dollar” potential of the metaverse, as outlined by Sweeney, underscores investors’ concern about the varying definitions of the metaverse: Market estimates range widely.
Illustrating its vast properties and sweeping technologies, the metaverse market is expected to be an $800 billion market by 2024, according to Bloomberg Intelligence. Roblox CEO David Baszucki, meanwhile, projects a total addressable market of around $200 billion or more each in the categories of mobile, streaming content and social media.
There are much more audacious estimates — Morgan Stanley analyst Brian Nowak vaguely refers to an $8 trillion total addressable market among U.S. consumers — that come with multiple caveats. Adoption “won’t be rapid or easy,” Nowak says, because of uncertainty over the metaverse experience, consumer distrust toward Facebook with their personal and enterprise data, and Facebook’s lack of enterprise tool expertise.
A multiverse of metaverses
For now, nearly every company defines the metaverse as it hews to its strength, says Jacob Navok, CEO of Genvid Technologies, creator of advanced interactive streaming technology. For Facebook, it is the company’s social media prowess. Microsoft CEO Satya Nadella ties its HoloLens device to the metaverse, while Walt Disney Co.
CEO Bob Chapek considers Disney+ a facsimile. Sweeney describes the “Fortnite” experience as a metaverse because it’s a virtual 3-D space that mixes gaming and nongaming elements.
“People think of Metaverse with a capital M as a grandiose, theoretical thing that is hard to define,” Alex Howland, president of Virbela, which has developed a 3-D virtual platform for remote collaboration, told MarketWatch. Virbela’s holding company is eXp World Holdings Inc.
“It’s probably better to think of it in terms of sub-metaverses that serve specific markets in gaming, enterprise and elsewhere.
“Truthfully, this will take at least 10 years,” he said.
The purest play in the slowly evolving metaverse is likely Roblox, a maker of immersive videogames where players can accessorize an avatar with virtual gear and use it across different experiences. The company, which went public in March, calls itself a “human co-experience platform.”
Learn about Roblox: 5 things to know about the tween-centric gaming platform
More important, Roblox is considered a building block of the metaverse because its software, popular among tweens, gives users and developers the tools to create 3-D digital worlds.
“The human co-experience, which we call the category, may take a while to build but we think this convergence of technology [mobile gaming, video-streaming, and social media] can be bigger than all three of those markets combined,” Baszucki said during the company’s investor day on Tuesday.
A premium on image-drawing technology in the metaverse also favors chip makers Nvidia Corp.
and Qualcomm Inc.
as well as Unity Software Inc.
At its GTC developer conference in November, Nvidia added more capabilities to its collaborative engineering and modeling metaverse platform. That includes the ability to build “digital twins” of cars, robots and other real-world projects to help speed development.
“Every non-tech companies we are talking to — apparel, entertainment, IP — are working on metaverse strategies,” Mike Rubin, CEO and founder of developer Dreamium Labs, told MarketWatch. “Some are already dabbling through the world of NFTs.”
A fully immersive metaverse experience requires specialized hardware and software technology to mesh a lot of moving parts. Virtual reality and augmented reality are merely an entry point to an exotic mix of applications across NFTs, artificial intelligence, 5G networks, edge computing, and cloud computing. And the entry point starts with smartphones before it graduates to headsets.
Freedom comes from replacing the smartphone, but the likelihood of virtual headsets replacing smartphone in five years is next to none, Navok and others say. (Apple reportedly is working on glasses and/or headsets of its own.) Yet that has done nothing to dissuade scores of companies from pursuing a metaverse strategy despite a squishy timeline on the market’s emergence, its reliance on buzzwords, confusion over what exactly constitutes a metaverse, and some downright crazy estimates on the size of the market.
From inside a virtual private jet
From inside a virtual $47 million private jet, Mytaverse co-founder Kenny Landau offers a tour of the future and a warning shot for would-be corporate participants in the market.
“Facebook is trying to co-opt the metaverse with a version of their own metaverse,” he said during a virtual interview inside the jet. “But a big company like Facebook or Microsoft needs to democratize the experience and make it inclusive.”
Mytaverse, a startup that emerged at the start of the pandemic, is one of hundreds of companies competing in the metaverse constellation. Mytaverse’s platform was recently used by PepsiCo Inc.
to hold a meeting with representatives from Amazon.com Inc.’s
AWS and Microsoft.
Facebook’s high-profile rebranding and recently released Ray-Ban Stories glasses have gone a long way toward establishing its bona fides in the fledgling market. (The company’s first “fully-fledged augmented reality glasses,” announced last month, are code-named “Project Nazare.”) But company officials, from Zuckerberg down to the rank-and-file, are positioning Meta as part of an interconnected platform.
The newly-rebranded Meta enters its next phase trying to put a new name on the latest iteration of technology. But in taking its latest stab at virtual reality, Silicon Valley and Facebook face a yearslong effort in which Apple and Google will largely remain in power several more years because smartphones remain the primary point of entry to the metaverse, Navok and others contend.
“The perception is that Facebook is the metaverse, or the metaverse equals Facebook. But in its current state, Meta as a company cannot own or create the metaverse,” tech futurist Cathy Hackl told MarketWatch. “Not one company will own or define the metaverse.”
Consequently, she added, Fortune 200 companies are likely to scoop up gaming companies via acquisitions next year to jump-start their metaverse aspirations.
Meta has quietly partnered with or scooped up a handful of gaming and virtual-reality companies in recent months to build out its metaverse dreams. A day after then-Facebook announced its name change last month, the company reportedly spent more than $500 million to buy Within, a startup co-founded by VR pioneer Chris Milk known for its Supernatural workout app.
Before that, Meta had inked accords with Unit 2 Games, which makes the Crayta collaborative-game creation platform; Bigbox VR, developer of a popular game for Facebook’s Oculus VR goggles; and VR game-maker Downpour Interactive.