When Mark Zuckerberg announced that Facebook was changing its brand to Meta, it caused a lot of excitement to techies and virtual game players all around the world. But the most prominent reaction could be summed up in one universally understood word; Huh?
As investors and big money players attempted to decode the Zuckerberg message, the response from the financial world was swift and damaging to one of the 21st century’s most valuable ventures. Shares of the company formerly known as Facebook experienced an historic drop in value after the change was revealed. Facebook’s profits were already slipping due to rising costs of doing business, new competition, and a fleeing fan base, so the anticipated spending of $10 billion to build a new virtual dream universe sent the value of Meta plummeting more than 26 percent, the biggest single-day decline in stock value in history. “Meta is sacrificing its core business model for its fascination with the metaverse,” said Rachel Jones, an analyst with GlobalData. “Betting big on the metaverse isn’t a bad thing — the technology is set to be huge and provide a multitude of opportunities — but it will take at least another decade to really get going.” The Meta journey promises two elements that investors and financial analysts attempt to avoid with unbridled passion; Long-term return on investments (ROIs) and uncertainty. But perhaps the most formidable challenge Meta has to face is convincing a large enough consumer audience that the metaverse is a good thing that they just will not be able to live without.
The new world of personal avatars and three-dimensional everything is promised to be attractive to not only geeky-gamers and the masses of the digitally mesmerized, but at least a billion or so regular folks that still live in the old-fashioned real world. The fact that much of the technology necessary to make the metaverse come alive is still in development may also contribute to the recent plunge in fortune. The communication delivered by Zuckerberg may be as much an historic message-fail as the stock price decline. Still, Meta is not alone in wanting to “go where no one has gone before”. Apple, Sony, and Microsoft are tinkering with developing metaverse products like headsets and goggles. In the future, “AR wearables may be as pervasive as smart phones are today,” said Patrick Cozzi, executive at Cesium. Market prognosticators are forecasting that virtual reality, an emerging $30 billion market in 2021, will more than triple in value to $300 billion by 2024.
Making the metaverse available to the predicted one-billion users will test the existing capabilities of the systems that make internet 2.0 work. Massive investments have already been expended to upgrade current operational systems like 5G. AT&T Executive Vice President David Christopher says, “Massive investment across operators will only improve over this next decade to support many use cases across many industries, including immersive and metaverse-like experiences. However, as the Metaverse develops, it will depend on innovation and interoperability across many sectors, with advanced connectivity from 5G as an essential element.”
While the early response from investors to the next generation of the internet is concerning, the greatest threat may lie with educating and convincing users of the need for a world where augmented reality, virtual reality, 3D holographic avatars, video, and other means of communication becomes the basis for all social interactions. The isolation imposed by the 2020 pandemic is leading the masses to want to return to a physical reality where personal interactions and communications are face-to-face.
For consumers to retreat into an existence where even the most personal elements of social interaction are conducted in isolation may be a bridge too far to predict the kind of success necessary to justify the effort and investment in creating a new virtual world. Walter Price, manager of investment trust Allianz Technology, is one who is not convinced the Metaverse is destined for widespread, consumer acceptance in the near term. “A portion of the population will play and enjoy these games, but to me it is a bridge too far to say that everybody is going to move over to this next wave of technology and meet up for virtual rather than real experiences.”
In commerce, success is never certain but the visionaries that were often called lunatics just two decades ago, only to succeed in bringing the internet and social media to life, have earned a chance to experiment with the future.