Commentary

Metaverse: The new entertainment universe?

Virtual reality continues to play an integral part of many of metaverse plans despite extensive criticism and some challenges for Meta.

Image provided by iStock.

January 2, 2023 by Kevin Williams

The international media has fixated on the upsurge of interest in terms such as "the metaverse" — preaching a new religion of virtual commerce and immersive experiences. These developments have been linked, in many cases, to blockchain activity, as well as the need to experience these environments only in virtual reality.

The reality of the immersive VR environments being proposed took a hit from continuing criticism. As with the World Wide Web's aspirations to metamorphosize into the information superhighway that would materialize back in the day — only to becoming the open Internet we know today. The dreams of a walled garden for immersive commerce, as a replacement to the Internet, has been labelled "Web3" and some are seeing the metaverse as the next chapter for the Internet.

The term "metaverse" has been appropriated by the previous Facebook social media corporation, which went all in rebranding to Meta with aspirations that their investment into the metaverse and VR would allow them to dictate the scope of this "bold new world" for immersive commerce.

But this attempted landgrab has been ruptured by other tech corporations. While many agree that VR offers great opportunities, many deride the aspirations of a dystopian and soulless approach, and the competency of Meta to build the needed environment.

One of those critics was former OculusVR Kickstarter supporter Valve, the chief executive of which has been dismissive of the concept of the metaverse and its validity. While at the same time, the chief executive of Apple — soon to launch its own immersive headset platform (rumored to be called Apple Reality) — looks more at a mixed reality approach to future commerce and interaction that is more a mixture of VR and AR applications.

Meta pivots

At the same time, Meta has pivoted its plans in VR, also looking to invest in MR over VR, with the new Meta Quest Pro platform which was launched during its streamed Meta Connect event. This new headset, while employing updated optics and slight processor power, builds on from the previously launched and now two-year-old Quest 2. This new Meta Quest Pro is squarely focused on a creative rather than gaming approach.

The company is heralding a partnership with Microsoft and looking towards its new Horizon Business ecosystem to promote this effort. The creative and productive workspace focus was reflected in a hefty $1,500 price tag for the new platform.

The Quest Pro focus was hoped to entice enterprise and prosumers, with marketing steering it away from consumer adoption — even though it is being demoed in Best Buy retail stores.

Microsoft on board

Microsoft had recently closed its commercial AR headset operation, having originally launched the HoloLens series, and is partnering with Meta towards encouraging users to employ their workspace platform on this new hardware.

Microsoft had partnered with previous OculusVR once before, departing soon after to build its abortive ecosystem (Windows MR). Meta was betting hard on its own ecosystem, the free-to-play Horizon World, offering casual areas for individuals to gather and play in VR — even including a recreation of a classic arcade called Questies. However, adoption has been slow, with sources revealing expectations of 500,000 active monthly users dashed, with latest counts achieving only 200,000.

This compares to rivals such as RecRoom seeing active monthly VR users reportedly of some 3 million. This was also compounded by the retention of users of the consumer Quest 2 VR headset, also showing major signs of slowing — as revealed by Meta Reality Labs in its financial reporting.

Sales of the Quest 2 headset have been impacted by the increase in the price, as Meta changed the amount it subsidized the system, and a general slowing of interest in the two-year-old hardware seeing no major new content.

In a show of defiance, Meta announced it had blocked access to RecRoom for children, stating that the company was applying its safety guidelines, and that VR headsets were "not toys" — and the greater risk to young users was higher.

The age factor

Complaints of young users on this platform, as well as VRchat and Horizon World itself, seemed to underline another issue with the corporate's plans for widespread adoption.

It was later revealed that Meta intended to ban all junior usage across its online Meta Store of VR applications from junior accounts, attempting to block all children's usage — moving the age recommendation to an absolute requirement.

Many saw this action as a self-defeating move, considering their dependence on any usage to support numbers. But it was also surmised that this move to underline its policy, to never allow those under 13-year-of-age to use their platform, was also to defend against any danger of liability.

The company is showing its efforts to try and negate inappropriate activities exhibited to and from minors within the virtual utopia the corporation envisaged with its metaverse plans as well as avoiding possible legal action following damaging media coverage.

Meta has seen significant falls in share prices, as media and industry observers questioned the viability of the claims made in the size and profitability of the metaverse proposed by Meta's founder. The company saw a calculated $700 billion wiped off its value over a period of months to the point that it was estimated to be worth less than retailer Home Depot.

Investors raise questions

Investors have panicked and their faith in the leadership is evaporating. Questions are being asked about the ability to continue down the path of spending lavishly on the dream of the metaverse with no near-term plans to turn a profit.

The stagnation of Horizon to ignite large scale interest and the vast sums spent on the dream of the virtual environment are being questioned by investors. It was revealed that Meta expected to continue to spend billions on its aspirations with a promised Meta Quest 3 platform, this time aimed at consumers and being launched for late in 2023.

At the same time, Meta had to weather the storm of criticism over its streamed Meta Connect event, with some of the claimed features being made available for its Horizon environment such as addressing the lack of legs for the avatar. Much criticized, the promotion of legs in the stream were later revealed to have been created offline using motion capture and were in fact not yet ready for implementation.

For Meta, much now rides on being able to achieve any of the milestones in its envisaged virtual commerce space. Meta Reality Labs, the last remaining redoubt of many ex-OculusVR staffers and the driving force behind Horizon and the VR and MR projects within the company comprising 1,900 staffers, revealed the division had lost some $9.4 billion in the first nine months of 2022 and they were anticipating even greater losses into 2023.

The Meta executive leadership attempted to placate investor concerns, but the company's metaverse dream, based on its plans, seemed during this period to be in serious doubt. Many observers are speculating considerable restructuring of the leadership within these divisions in the coming months.

This speculation comes just as the corporation revealed massive widespread layoffs of more than 11,000 of its staff, 13% of the worldwide workforce. These cuts were stated to have been done to continue the long-term vision for the metaverse to win back young adult users, making them their new "North Star" — as quoted by the corporation's founder and CEO when announcing the departures, taking responsibility for them, stating a premature decision to accelerate hiring, made after the pandemic and an unforeseen macroeconomic downturn.

Tech job apocalypse?

This situation is what some are calling the beginning of the "tech job apocalypse" — as major social media and IT positions are culled.

However, investment in the immersive commerce space continues from other corporations with alternative approaches towards creating "metaverses" of their own. This was illustrated by special distributed computing start-up Hadean receiving a $30 million Series A round of funding from investors such as Epic Games and Tencent.

The company is involved with the development of distributed "supercomputer" quality processing power — power that could create massive multiplayer games with incredible quality, distributed online. It is this kind of performance that would be needed to achieve the expectations for Web3 proffered by some corporations.

Hadean is not the only corporation looking at distributed computing game platforms that offer amazing performance.

Sega entered a round of investment to develop what they had originally called "fog gaming" based on special data center, cloud-distribution of the computational processing in games, offering impressive performance that is shared between connected consumer terminals, providing a fully shared or "fog" of competitive power.

Initially this was proposed to be part of a new initiative within the then corporation's amusement venue operation, but after the sale of this operation to Genda, Sega has partnered with Microsoft towards developing what has been internally described as its "super game" project — a project reported to be using Microsoft's cloud-distribution platform Azure standing in for the "fog." The results of this new platform, scheduled for a March 2026 timeframe, is speculated to generate lifetime sales of at least 100 billion yen, or about $672 million, as stated by the company CEO in Sega Sammy's integrated financial report.

It was also revealed that another Japanese entertainment corporation was actively investing in its metaverse and Web3 aspirations, with new jobs listing and increased resolve to create its own ecosystem.

Konami announced it has been conducting research to incorporate the latest technology into its games towards launching a service for players to trade in-game non-fungible tokens (NFTs) through a unique distribution platform using blockchain.

This statement was followed by the posting on the company's job page for developers with Web3 and metaverse experience to join a dedicated team focused on this business. The company has already experimented with NFTs based on properties — and is now looking to grow this investment.

Vending entrepreneur Wow Bao weighs in

The continuation of corporations looking at the metaverse bandwagon even entered the vending sector, with the announcement from developer Wow Bao which revealed its vending machine concept for the Web3 universe.

The company is proposing its own NFT-based extension to its existing "Bao Bucks" reward program — with subscribers being able to pay a monthly fee for access to the unique NFT-powered access and sales platform that will not need a cryptocurrency virtual wallet to use.

The initiative is planned to kick off the creation of a dedicated metaverse to support this platform and create a space for commerce.

This is one of a universe of new initiatives to be part of this landgrab. The linking of these plans to cryptocurrency and NFTs, however, shows the fragility of the business models as the blockchain commerce sector has seen incredible declines in transactions and vast amounts knocked off the worth of the currency and the virtual items over the last few months.

It was reported by Bloomberg, in September, that a staggering sum of $2 trillion was wiped out in the crypto sector over the recent months, causing the sector to reel.

VR, meanwhile, seems to play an integral part of many of these metaverse plans.

Vending Music & Games

About Kevin Williams

Along with advisory positions with other entrants into the market he is founder and publisher of the Stinger Report, “a-must-read” e-zine for those working or investing in the amusement, attractions and entertainment industry. He is a prolific writer and provides regular news columns for main trade publications. He also travels the globe as a keynote speaker, moderator and panelist at numerous industry conferences and events. Author of “The Out-of-Home Immersive Entertainment Frontier: Expanding Interactive Boundaries in Leisure Facilities,” the only book on this aspect of the market, with the second edition scheduled for a 2023 release.

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