The metaverse as a future virtual reality has been explored for a long time, with projects like Decentraland launching its first beta in 2017; however, 2021 changed everything.
The concept of the metaverse, a collective virtual shared space created by the convergence of virtually enhanced physical reality and physically persistent virtual reality, has been around for quite some time. However, it was in 2021 when interest in this futuristic realm skyrocketed, thanks largely to Facebook’s rebranding to Meta and its ambitious pledge to “bring the metaverse to life.” This article delves into various companies’ ventures into the metaverse, with a particular focus on Meta’s extensive efforts and investments, despite significant financial challenges.
Facebook announced its rebranding to Meta in October 2021. The company announced a complete company pivot and a new focus of the entire company to “bring the metaverse to life and help people connect, find communities and grow businesses.” After that, the amount of interest for “the metaverse” reached all-time highs: Companies around the world had started making announcements about their entries to the metaverse as they started working and building. According to market research company Newzoo, this number grew from 200 back in July 2021 to more than 500.
Are these moves and announcements part of a long-term strategic shift or only marketing buzz?
In this part of the report, we will focus on discovering those companies, exploring what and where they are trying to build their metaverse presence.
The company Facebook has extremely lofty ambitions for the future of the internet and the metaverse, making the metaverse its biggest priority. Apart from the name change, the company is building its own metaverse platform, investing billions in the industry, and acquiring or developing different parts of the infrastructure.
Oculus/Meta Quest: The ex-startup was acquired by Facebook for $2 billion in mid-2014. It’s currently the most popular VR headset, with the second version (Meta Quest 2) selling over 14.8 million units since its launch in 2020, according to International Data Corporation.
Horizon Worlds: Meta’s first virtual world, it launched in December 2021 and is currently live for users in the United State and Canada. This virtual world serves as a free app, where users can hang out with friends, meet new people, play games and attend different virtual events. According to the platform, there are +10,000 worlds available right now.
Research and development: Meta has committed millions of dollars to research new technologies that could unlock the metaverse’s full potential, including VR, AR, AI, blockchain and crypto economies, and artificial vision, among others. Furthermore, the platform has launched a $50-million fund to invest in global research and program partners to help build the metaverse collaboratively.
Despite these efforts, Meta was one of the most impacted Big Tech companies from a turbulent macro environment and general market crackdown: Meta had to lay off over 11,000 employees and saw a sharp decline in its own stock, which lost 70%+ of its value from its peak of $300 per share down to $90 per share. Furthermore, in its Q4 2022 earnings call, the company announced that its metaverse unit (Reality Labs) recorded a $4.28-billion operating loss, bringing its total for 2022 to $13.72 billion. Although the unit only accounts for less than 2% of Meta’s revenue, it’s losing six times the amount of money it generated as revenue.
Despite this, the company continues to support its new vision, saying, “Reality Labs’ losses will increase in 2023 as they will continue to invest meaningfully in this area given the significant long-term opportunities that we see.”
The company has also been working on its own virtual realm; however, Microsoft’s strategy is different from Meta’s, as the Bill Gates-founded company is aiming to build a more work-focused metaverse, currently called “Microsoft Mesh.”
In its strategy, its “metaverse” is expected to be connected with Microsoft’s product offering and allows teams and people in different physical locations to send chats, join virtual meetings, collaborate on shared documents, etc. and will include different ways to share content, including “Presenter Mode” and “Together Mode.” These modes are already live on the platform.
Apart from this, the company has developed its tech in-house: It owns augmented and mixed reality lenses called HoloLens. This hardware is currently used by several big enterprise clients, including Audi, Toyota, Airbus, Goodyear and the United States Army.
Furthermore, the company is well-positioned to grow and interact with gaming-related metaverses, which is supported by Satya Nadella, CEO of Microsoft, who believes “gaming will play a key role in the development of metaverse platforms.” The company currently has a strong footprint in that vertical:
- Activision Blizzard acquisition. In early 2022, Microsoft acquired Activision Blizzard, a leading game developer studio, for $68 billion, making it the most expensive gaming acquisition of all time. This acquisition gives Microsoft the intellectual property of top-tier games, including Guitar Hero, World of Warcraft and CandyCrush, among others.
- Owning Mojang Studios. Microsoft owns the creators of one of the most popular virtual world games, Minecraft, which has over 141 million active users and has sold 200 million copies since its launch. It’s important to highlight that Minecraft is often cited as an example of an existing, early-stage, closed version of a virtual world with metaverse characteristics. However, the company has banned NFT-related tech use cases.
The company is focused on the tech stack and has already invested millions of dollars in Big Tech trends: VR, AR, XR and 3D cloud storage content.
- The company also launched Google Labs, committing strong efforts to R&D for projects such as Area 120 (Google’s in-house incubator) and ARCore, among others.
- Furthermore, Google relaunched its AR Google Glass and has secured a European trademark for the new version. According to company’s announcement, it will test the prototype in a public setting when available.
Despite the turbulent macro environment and substantial financial losses, Meta remains undeterred, continuing to invest heavily in the metaverse. The company views this sector as a long-term opportunity with significant potential. Despite the skepticism and the financial hurdles ahead, Meta’s commitment to the metaverse signals a shift in how we perceive and interact with digital spaces. As we move forward, it will be intriguing to see how this bold vision shapes the future of the internet and whether other companies will follow suit in this brave new digital world.