This morning’s Porridge is dedicated to my new colleague Diaa, who was foolish enough to ask what I thought about Facebook.. he will learn..
As a distraction from worrying about What Biden and Xi actually said to each other, the state of wage inflation across economies, UK vs Yoorp unpleasantness, and wondering what 100,000 armed-to-the-teeth Russians are doing on the Ukraine border (aside from being a classic maskirovka to distract us from what Putin is really doing..), I thought today I might continue my grand tradition of writing about stuff I know I know very little about…
So, just what is the Metaverse? What kind of opportunity does it represent? Is it, as so many fantabulous things in this wonderful world are, yet another digital solution in search of a problem? Is it hype or a genuine new trend?
Of course, my interest in the Metaverse was pricked 2 weeks ago when Facebook Inc changed its name to Meta. Since then the stock is up 7%, only down 8% from its September high before the recent whistleblower news. A few cynics have suggested the renaming was all about trying to distance and shut-off the recent sordid whistleblower accusations about Facebook.
Zuckerberg has previous form as something of a congenital acquisitive hoarder of the future – and he clearly wants to own “the metaverse” with the intention of monetising it. The question, and future value of the firm, ultimately lies in how well he achieves that.
The Metaverse concept was first described and named by Science Fiction writer Neal Stephenson – whom I’ve actually read! – right in the very early days of the internet revolution. Way back in 1992 he presented a vision of human avatars inter-reacting in a 3D digital space in the novel “Snow Crash”. He pretty much nailed it – establishing digital life alongside concepts like “proof of work” leading inevitably to the concept of digital currencies, the genesis of Bitcoin, the Blockchain and now Non-Fungible Tokens.
Today, the Metaverse is being “imagined” as some kind of Internet version 2.1 – but it’s really describes how we will all integrate digitally. It will offer a more immersive world of deeper engagement into virtual and augmented reality – once the technology catches up with the promises. “Digital Visionaries” are talking about how natural it will become to do everything from shopping, business and living a social life online in the form of single or multiple digital avatars… It informs the world of “Ready Player One” and raises fears about a “Matrix” like future.
The thing is – whatever Facebook would have us believe – it’s already happening and has been for some time. The global gaming sector is now infinitely larger than the film industry at over $100 bln per annum. Fortnite, the game, has become a global sensation, and now includes virtual concerts given by smart artists who see the future potential. The amount of cash spent in-game purchases is over $50 bln, just in the US!
Zuckerberg has a problem. His existing brands; Facebook, Instagram and WhatsApp will remain essentially unchanged (for now) and are, essentially, advertising companies under competitive and evolutionary threat. They remain the dominant brands in social media advertising, but their user bases are not as sticky as once assumed, and they no longer have a monopoly as social media breaks and fragments into multiple players and themes.
Let’s give Zuckerberg some credit for trying to derisk Facebook Meta by diversifying its earnings. The regulatory risks from privacy concerns and the charge its maximised advertising revenues to the detriment of users by targeting them with dangerous social media tosh are huge. How long before an American class action suite emerges for trillions alleging American youth have been mentally damaged by social media?
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