Mark Zuckerberg, the CEO of Facebook, told his employees about the company’s ambitious new initiative last month (1). He stated that the firm is looking to go far beyond its current project of creating connected social media platforms and hardware to support them. Instead, he stated, Facebook would strive to be maximalist, interconnected experiences set straight out of sci-fi, a world known as the metaverse.
Facebook’s divisions currently focused on products for creators, communities, commerce, and VR would work increasingly to materialize this vision, said Zuckerberg in a remote address to employees.
“What I believe is the most interesting is how these themes would come together into a bigger idea. Our overarching goal across all initiatives is to help bring the metaverse to life.”
What is Metaverse?
Well, the metaverse is having its moment. The term metaverse was first coined in Neal Stephenson’s sci-fi novel, Snow Crash, in 1992. It refers to a convergence of physical, AR, augmented reality, and VR, virtual reality in a shared online space.
The New York Times (2) talked about how products and companies, including Roblox and Epic Games’ Fortnite, and even Animal Crossing: New Horizons, increasingly have metaverse-like elements. Moreover, Tim Sweeney, CEO of Epic Games, has discussed his desire to contribute to metaverse for several months (3).
In January last year, an influential essay by Mattew Ball, a venture capitalist, set out to find key characteristics of a metaverse (4). Among them was, metaverse has to span the virtual and physical worlds, contain a fully-fledged economy, and offer “unprecedented interoperability.” Moreover, users should be able to take their goods and avatars and move them from one place to another in the metaverse, no matter who runs that particular part of it. It means no single company will run the metaverse; it would be an “embodied internet” operated by several different players in a decentralized manner, said Zuckerberg.
Facebook’s Metaverse Vision: Good or Bad?
While watching Zuckerberg’s presentation, we could not decide which is more audacious, his metaverse vision or its timing. His announcement about his intention to create a more maximalist Facebook version, spanning office work, social presence, and entertainment, came when the US government is trying to break his present company.
A package of bills is making its way via Congress that can force the company to split WhatsApp and Instagram into individual entities and limit Facebook’s future acquisitions or offer services connected to its hardware products (5).
And even if tech ordinance stalls in the US, which is not a bad bet historically, a thriving metaverse would raise several questions both strange and familiar about the governance of the virtual space, content moderation, and its impact on its existence our shared sense of reality. We are still getting ourselves wrapped around the 2D version of social media platforms; wrangling the three-dimension version can be exponentially harder.
Simultaneously, as per Zuckerberg, the metaverse can bring huge opportunities to individual artists and creators, people who wish to work and have homes far from present-day urban cities, and people who live in places with limited opportunities for education and recreation. Moreover, a realized metaverse can be the next big thing to a teleportation device, believes Zuckerberg. With the company’s Oculus section (6), which makes the Quest headset, Facebook is attempting to make one.
Facebook’s Big Plan with Metaverse
In an interview with The Verge (7), Zuckerberg stated that metaverse is a big topic. It is a vision that spans several companies, the entire industry. One can think that it is the successor of the mobile internet. And it is not something any company can create. Still, he believes that a big part of Facebook’s next chapter would hopefully contribute to its base in collaboration with several other creators, developers, and companies.
— The Verge (@verge) July 22, 2021
At the same time, one can also think about the metaverse as an embodied internet, where instead of viewing content, one is in it. And one can feel the presence of other people as if they are in other places, having different experiences that one cannot possibly get on a 2D web page or application, such as dancing or fitness routine, for instance.
Zuckerberg believes that many people confuse the metaverse with virtual reality, which he believes is an integral part of it. We are investing heavily in it since it is the technology that offers the clearest form of presence today. However, the metaverse is much more than virtual reality.
Metaverse would be accessible across all of our computing platforms, VR, AR, PC, mobile, and gaming consoles. Additionally, a lot of people also believe that the metaverse is something that is primarily about gaming.
While Zuckerberg also believes that entertainment would be a big part of it, he doesn’t think it is only gaming. He believes that it is a synchronous and persistent environment where everyone can be together, which would probably resemble a hybrid between today’s social media platforms and an embodied environment for us.
Nonetheless, according to the Facebook boss, the metaverse will be a big part of the technology industry’s next chapter, and it is something we are pretty excited about!
The metaverse touches on a lot of the significant themes that Facebook is working on. We can think about community, creators, digital commerce, or creating the next set of computing platforms such as AR and VR to offer people a sense of presence. According to Zuckerberg, all of these various initiatives that Facebook has today will ladder up together to help to create the base of metaverse vision.
If Facebook does it well, Zuck believes that over the upcoming five years or so, in the company’s next chapter, we will effectively transition from people seeing us primarily as a social media platform to a metaverse company. He also considers that it is also a big part of the next chapter of the company’s work in the whole industry.
Metaverse: Living in Virtual Spaces
With the metaverse vision, Facebook is looking forward to helping people experience a more robust sense of presence with individuals they care about, the people they work with, and the places they wish to be.
As per Zuckerberg, today, we already have something that most of us access from the moment we wake from the moment we go to bed, thanks to mobile internet. Hence, he does not believe it is about engaging more with the internet; it is about engaging with it more naturally.
Today, when we think about today’s computing platforms, phones, and computers, they are relatively small. Most of the time we spend, we are mediating our communication and lives via these small, glowing rectangles, says Zuck. He believes that that is not how people are made to interact.
He further added that today, in many of our meetings, we look at a grid of faces on our screens, not how we process things. We are used to sitting in a room with others and having a sense of space where we sit next to one another, having a shared sense of space in common.
VR and AR, and metaverse can help people experience a sense of presence in a much more natural way than we are used to interacting. Zuckerberg believes that it will be more comfortable, enable us to have rich interaction, and feel read. In the future, rather than a phone call, we will be able to sit in each other’s couches as a hologram which would feel like we are in the same place, even if we are hundreds of miles apart, which sounds quite powerful.
One of the primary reasons Facebook is investing heavily in AR and VR is because smartphones came around simultaneously as Facebook, and we didn’t get to play a big role in shaping these platforms’ development. Hence, Zuckerberg believes that they were not developed naturally.
According to his perspective, people are not meant to navigate things in a grid of applications. We interact more naturally when we are present with other people. Zuckerberg thinks that if Facebook can help create the next set of computing platforms and experiences more naturally and allow us to feel more present with others, it would be a very positive thing.
The Refinement of AR and VR Devices
Today’s VR headsets are a bit clunky and heavier than one would ideally like them to be. We need to make advances to express ourselves, have higher resolutions, get the ability to read text better, and the likes. Zuckerberg believes that we are getting there; we will be there by the end of the decade, with each version getting better. While giving an example of Quest 2, he further talks about how he was surprised by its real hit regarding how people are using it.
Notably, Facebook had planned on the device mostly being used for games and believed that most social interactions would not come until some point later. However, people spend most of their time with Quest 2 hanging out socially.
At the same time, Zuckerberg also believes that the future would be all about VR and AR. It is a reason why VR is available, why we have things such as Quest 2 years before we can have AR glasses because it is more socially acceptable to wear something like a VR headset in our homes. However, if we can get AR glasses that we can wear around all the time, they need to be normal-looking glasses.
It means we need to cram everything to create what we thought of as a supercomputer a decade ago into a glass frame of about 5 mm thick. For your perception, it includes networking chips, computer chops, holographic waveguides, things for mapping and sensing, batteries, speakers, and everything else. It is a real challenge to fit all of it into these glasses.
As per Zuckerberg, it is one of the most significant technological challenges that the industry will face this decade. However, once we build miniature things and get the supercomputer to fit into a pair of glasses, we can have our AR glasses and comfortable VR headsets, which would enable some really interesting use cases.
Metaverse can Spring Up Whole New Virtual Economies
One is we will be able to snap our fingers, pull up a workstation, and anywhere we go, be it Starbucks or our homes; we can sit down, wave our hands and pull up as many as screens we want, set them up whatever size we want them to be, and bring it with us wherever we want.
If we want to talk to someone, like while we are solving a problem, instead of connecting with them via a phone, they can teleport in with the metaverse, and they can then see all the context that we have. They can see our five monitors, documents, or all the windows of code that we have, or a 3D model that we are working on. They can stand next to us and interact. Then, they can teleport back to where they are in a blink.
Hence, Zuckerberg thinks about focus time and productivity, with the ability to build our ideal setup, which Facebook calls “infinite office.” He is convinced that it would be great for multitasking and setting up our environment everywhere. Several studies indicate that people are more effective when they can pull up multiple things that they are working on related to one another at once. Suppose one is coding, having several windows open, instead of single-tasking, it is a big deal, and that will be one.
The other area which Facebook finds exciting is doing meetings in VR. Even though today, the avatars are not as realistic as they will be in the future, it feels more real and gives a sense of space compared to a Zoom call. We are at the beginning of it. Hence, it would be very exciting to see how people can customize their office space and feel like their physical office and the digital continuation. It would be pretty neat, said Zuckerberg.
Apart from the kind of work we are typically doing in our offices today, metaverse will also lead to entirely new types of work. Hence, in terms of designing spaces for people to hand out, it will be a huge part of the creator economy, thinks Zuckerberg. We will have individual creators design places and experiences, artists doing different things, and feel like we are there with others, which is more engaging than looking independently at a screen.
We can get virtual concerns in the metaverse, and creators building different experiences to have our avatars and travel across these experiences. We can teleport instantly and bring our outfits and digital objects with us; hence, Zuckerberg believes that there would be a whole economy. When we build something where everyone can participate, an ecosystem, it creates economic opportunity.
Millions of people will be creating content, whether virtual experiences, spaces, virtual clothing, or other goods, or curating and introducing people to new spaces and keeping them safe. As per Zuckerberg, it would be a huge economy.
One of the most interesting things about metaverse is that the flattening distance would create more opportunities for people. Moreover, it would enable us to have equal opportunities (8).
According to Facebook, remote work would be a bigger part of the future; in the next five to ten years, about half of the company would be remote. And we would be creating more opportunities while hiring people from different areas. Because, when we have technologies like AR and VR, we would be able to offer the same opportunities to people working remotely like the people who are there physically.
Our Take: Is it All Possible?
Facebook started its metaverse journey when it acquired Oculus in 2014 (9). It is trying to build the next social media, the next iPhone, and the next society.
Facebook, a text-based platform, had become a reality with the rise of 3G, the rise of 4G made the picture and short-video-based Instagram a reality. And now, with the rise of 5G, Facebook believes it can create another social media.
It is worth highlighting that the 4G’s advent didn’t only bring faster internet; it created new business opportunities like live sports, YouTube, app stores, and more. Similarly, 5G will also bring other unique opportunities, such as the metaverse.
We can’t deny the fact that the metaverse has several potentials. In other words, it is a fictional, virtual universe connected with our reality.
Today, more than 10k Facebook employees, or 20% of its entire workforce, work in the Reality Lab division creating AR VR technology (10). However, its non-ad revenue in the 2020 December quarter was only 885 million USD (11), about 3% of its total revenue. The company is investing 20% of its workforce for 3% of its revenue, which means that Facebook is taking it seriously and believes that the virtual world can be the next big thing (12).
But the bigger question is, is his vision realistic?
Well, technology is making his vision more and more realistic. However, we will still need millions of hardware to make a virtual ecosystem.
The VR is expected to rise by 48.7% CAGR from 2020 to 2026 (13). The current market size is about 18 billion USD, and there are expectations that it would reach about 184.66 billion in 2026.
Facebook’s revenue on Oculus in both hardware and software is likely to grow even more rapidly than industry growth. Its 2020 Q4 non-ad revenue growth of 156% y-o-y indicates that Facebook’s market penetration is extremely high (14).
Moreover, Facebook is not the only firm seeking to gain from the metaverse trend. There are rumors about Apple making its MR, Mixed Reality glass. Louis Vuitton in the LVMH group is selling its trophy bag online via a game called League of Legends. Travis Scott organized a live concert online in Fortnite, attended by 10 million people (15). (Notably, the biggest concert stadium in the world can only be 150k people.) All of these are enough evidence to prove that metaverse, a virtual world, is impending (16).
There is a fast paradigm shift in the market. Before 2017, no one imagined that all major auto manufacturers would transit to electric vehicles. Similarly, we believe that VR will also ingrain our lives, and Facebook is at the front and center of this transition. As it currently has no real competitors.
Moreover, Facebook is a profitable company with a healthy balance sheet, which means it is more than capable of supporting its metaverse business.
I hope you can see Facebook’s vision with metaverse. It is not only building virtual social media; it will create a virtual society. People would be able to do anything there as they do in the real world. What’s in it for Facebook? Facebook will sell hardware and then leverage that hardware to sell service businesses inside the virtual space. People can watch movies, attend concerts, play games, meet in an office, buy clothes, and goods, even advertise in the virtual world.
While we can’t estimate the financial benefit today, we can say for sure that the possibility is endless!