Meta wheels out Deloitte to plug the metaverse. Is anyone actually convinced?
All these analysts know is that their gut says... maybe
Comment Meta Platforms, Inc., which changed its name from Facebook two years ago to signal its commitment to the so-called metaverse, continues to insist that the vaunted digital environment has economic potential.
Of course it has yet to realize that potential, or anything remotely like it. The social ad biz spent $13.72 billion on the tech in 2022 to earn $2.16 billion in sales. And last month revealed it had spent another $3.99 billion in Q1 2023 building its virtualized folly, only to see $339 million in revenue.
It anticipates the cash conflagration will burn bright as the year progresses: "We continue to expect Reality Labs operating losses to increase year-over-year in 2023," Zuckerberg's Curse declared alongside its earnings report.
The company's Year of Efficiency has also brought employee losses of 10,000 this year, on top of 11,000 announced in November, 2022. So far, so good.
Undaunted, Meta insists there's money to be made. "While the metaverse is still in the early stages of development, it's already possible to see its potential in areas like education, gaming, wellness and commerce," declared Rob Sherman, Meta's VP of policy.
Academics are no less dubious. In November, Celia Pearce, a professor of game design at Northeastern University in the US, attributed Meta's failure to make headway in the metaverse to its failure to create spaces that foster creativity – along the lines of Minecraft and Second Life.
"[Meta] really missed the mark in terms of creating something for the right audience," Pearce told the Northeastern news service. "They've also missed the mark in terms of understanding where the industry is, both in terms of what people expect visually from games and what people are actually doing in non-game experiences, which is making stuff. Creativity is the killer app in virtual worlds."
Full steam ahead!
CEO Mark Zuckerberg, high on AI as a source of potential growth during the corporation's recent investor call, did his best to dismiss reports that his passion for avatars and headsets is waning. It's been said that he and his top execs – such as CTO Andrew Bosworth and CPO Chris Cox – are spending most of their time on artificial intelligence in this ChatGPT era.
"A narrative has developed that we're somehow moving away from focusing on the metaverse vision, so I just want to say upfront that that's not accurate," Zuckerberg argued [PDF] last month. "We've been focusing on both AI and the metaverse for years now, and we will continue to focus on both."
Zuck went on to say that AI technology was needed to create and expand the metaverse, hence his interest in it.
To make the case for the economic bounty of the metaverse, Meta cites a study "commissioned by Meta and produced by Deloitte." And guess what? The study Meta paid for finds that the social network is on to something – in as non-committal a way as possible.
There is a disclaimer about the third-party data cited in the report: "Deloitte has neither sought to corroborate this information nor to review its overall reasonableness." But hey, who among us hasn't issued a report we won't stand behind? Just because Deloitte insists "no information in the Final Report should be relied upon in any way by any third party" doesn't mean we can't be blindly enthusiastic about investing in the metaverse.
Where's your sense of adventure?
- Meta virtual reality interrupted by financial reality as thousands lose their jobs
- Ex-politico turned Meta hype man brands Metaverse 'new heart of computing'
- FTC backs down over Meta's acquisition of VR biz Within
- Microsoft's HoloLens 2 surprisingly still a thing, will get Windows 11 treatment
So what does the report indicate? Well, it covers a lot of ground. For the US, it says "based on the level of investment that is currently predicted, we estimate that the metaverse could contribute between US$402bn and US$760bn to US annual GDP by 2035."
That's right after a passage that warns: "The nascent nature of the technology makes the size and timing of the metaverse’s economic impact uncertain."
On the one hand, this just may be Deloitte doing some CYA; on the other, Meta ordered this report so now it has to live with its public conclusions.
Crucially, are you sold on the metaverse yet? Before you pull the Linden dollars from your piggy bank, perhaps it's worth knowing what the metaverse is...
The metaverse is a massively scaled and interoperable network of real‑time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.
– Matthew Ball, Framework for the Metaverse. The Metaverse Primer (2021)
Or it's the internet, but gated and paid for instead of open and free, and with goggles, digital currency, and (surprise!) the very property rights that online services currently deny their customers.
From 2020 until early 2022, the artist formerly known as Facebook wanted to operate the payment layer of the metaverse by overseeing transactions with its Libra cryptocurrency, which became Diem. The history of the affair is too tedious to get into, but suffice to say that the rebranding could not make the project more palatable. Government regulators and the public wanted nothing to do with the scheme.
Without a unifying payment layer, the metaverse at least might be a unified set of technical specifications through which different organizations can connect their virtual worlds so participants can travel to and fro. You know, like the web, but while wearing headsets and costly digital adornments for one's avatar.
Plenty of players in this game
Hints of that sort of thing already exist. As Epic Games CEO Tim Sweeney recently deadpanned, "The metaverse is dead! Let's organize an online wake so that we 600,000,000 monthly active users in Fortnite, Minecraft, Roblox, PUBG Mobile, Sandbox, and VRChat can mourn its passing together in real-time 3D."
There are in fact game players who spend time in virtual worlds, with or without VR headsets. It's been going on for years and it's a lucrative business. It's not, however, evidence that the general public wants to work and doomscroll wearing VR goggles instead of wielding a mouse and keyboard or touchscreen.
One 2022 study quantified the effects of trading a desktop-based work environment for a VR-based setup for a week. "Among other results, we found concerning levels of simulator sickness, below average usability ratings and two participants dropped out on the first day using VR, due to migraine, nausea and anxiety," the report read, citing problems with frustration, anxiety, and eye strain among other issues.
Sweeney knows well that there's some money to be made online gaming. But his suggestion – that game worlds strung together somehow makes a metaverse – overlooks the fact that cooperation among game companies is limited.
Epic has spent the past few years trying to avoid giving Apple a cut of its revenue for distribution through the App Store. Pretty much every game company operating would prefer to own everything itself rather than operate under a shared technical framework that permits customers to move among different entertainment properties without friction. Facebook has done its best to avoid letting users export their own social graphs. Thus goes the metaverse.
The Deloitte report cites three defining characteristics of the metaverse:
- Users can enter and interact with a virtual 3D environment while being connected to the physical world through VR.
- A collective agreement to harmonize digital standards and protocols for platforms and devices would enable users to transition seamlessly between digital spaces.
- Multiple users can access virtual worlds at the same time and have real-time, simultaneous interactions, with virtual worlds continuing to exist (i.e., not reset) even when one or all users leave.
In broad strokes, the propositions have problems.
3D is mostly aesthetic and rarely functional – meaning it's not necessary for most entertainment experiences, which generally work just as well in 2D. 3D TVs did not sell because they didn't add value. There are more use cases for VR and AR headsets, but not enough to change how people prefer to communicate. Wait for holographic projected interfaces and 3D gesture input.
We have digital standards and protocols. Many of them are already harmonized. The current lack of portability of digital goods across service boundaries – along with the lack of ownership rights in digital extended by service providers – suggests businesses don't want the bother of empowering users. They would prefer to be able to unceremoniously boot customers from their services and owe them nothing.
Finally, as to the notion of seamless crossover between virtual worlds, good luck harmonizing content moderation policies and terms of service. The only way it's likely to work is in a non-commercial context, like the Fediverse that undergirds Mastodon and similar services. Even then there's conflict and disagreement.
And that brings us back to Meta's message that there's money to be made – which should not be relied upon as investment advice. ®