{"id":4695,"date":"2021-08-02T22:38:55","date_gmt":"2021-08-02T20:38:55","guid":{"rendered":"https:\/\/thefinanceghost.com\/?p=4695"},"modified":"2021-08-02T22:38:55","modified_gmt":"2021-08-02T20:38:55","slug":"metaverse-mania-in-big-tech","status":"publish","type":"post","link":"https:\/\/thefinanceghost.com\/index.php\/2021\/08\/02\/metaverse-mania-in-big-tech\/","title":{"rendered":"Metaverse Mania in Big Tech"},"content":{"rendered":"

S<\/span>o here we are, Q2 earnings season in the United States. As much as investors are interested in how the companies performed between April and June, they\u2019re a lot more interested in what the companies have planned for the future. It\u2019s also a rare opportunity for CEOs to have the full attention of investors. And these days, especially for Big Tech CEOs, it\u2019s not enough to simply say that you forecast growth in revenue or the user base. <\/span><\/span>You need to <\/span>dazzle<\/span><\/i>. You need to <\/span>amaze<\/span><\/i>. You need to sing for your supper.<\/span><\/span><\/p>\n

Enter the jargon.<\/span><\/p>\n

Disruption<\/span><\/i> has become a word synonymous with Silicon Valley. Every tech company wants to label itself as a <\/span>disruptor<\/span><\/i> to its industry. <\/span>Disruption<\/span><\/i> is what draws investment, media interest, and ultimately what gets people speaking about your business.<\/span><\/span><\/p>\n

Previously, if you really wanted to get tongues wagging, you’d bring up <\/span>disruption<\/span><\/i> alongside another hot tech buzzword: the Fourth Industrial Revolution (4IR), that popular descriptor of…well…anything you really wanted it to be.<\/span><\/span><\/p>\n

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Along with \u2018Internet of Things\u2019, it was a great way to sell tickets to conferences. Discussing Uber or Airbnb? Throw in 4IR. Discussing artificial intelligence or machine learning? Throw in 4IR.<\/span><\/p>\n

However, much like over-crowded offices and business trips that could have just been a Zoom call, 4IR seems to be a relic left behind in 2020.<\/span><\/p>\n

Its successor? The Metaverse.<\/span><\/h4>\n

First popularised by Neal Stephenson\u2019s 1992 dystopian novel \u2018Snow Crash\u2019, the idea of the \u2018metaverse\u2019 was a virtual world complete with avatars, rules and social norms that differed from the real world. No one has managed to pin down a definition for what the actual metaverse would be, but the underlying concept is that it is a \u201clive, shared, persistent universe of interconnected virtual worlds\u201d.\u00a0<\/span><\/p>\n

Facebook CEO Mark Zuckerberg describes it as \u201can embodied internet, where instead of just viewing content – you are in it\u201d.<\/span><\/p>\n

MetaBook? FaceVerse?<\/span><\/h4>\n

Zuckerberg has never been shy about how unbounded his ambitions are for Facebook. He has always wanted to build Facebook into the ultimate \u2018walled garden’ – a Facebook so intertwined with the internet that the two are essentially one and the same.<\/span><\/span><\/p>\n

It wouldn\u2019t even need to be a monopoly, it would just need users to <\/span>think<\/span><\/i> it is.\u00a0<\/span><\/span><\/p>\n

Zuckerberg has hinted towards his aspirations in the past, but always stopped short of making a definitive statement. Before its development was halted, Facebook\u2019s Aquila drone was envisioned as a way to bring internet access to everyone on Earth, with Zuckerberg claiming that it would \u201clift millions of people out of poverty\u201d in the process.<\/span><\/p>\n

In 2015, after purchasing the virtual reality (VR) headset producer Oculus for $2bn, Zuckerberg told a room of developers: \u201cThere\u2019s always a richer, more immersive medium to experience the world. And after video, the next logical step is fully immersive virtual reality.\u201d<\/span><\/p>\n

This past week, in an interview with The Verge, he clarified his vision:<\/span><\/p>\n

\u201cMy hope, if we do this well, I think over the next five years or so, in this next chapter of our company, I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company. And obviously, all of the work that we\u2019re doing across the apps that people use today contribute directly to this vision in terms of building community and creators.\u201d<\/span><\/p>\n

On the Facebook earnings call, \u201cmetaverse\u201d was mentioned 20 times during just one hour. One key quote stood out:<\/span><\/p>\n

\u201cThe defining quality of the metaverse is presence, which is this feeling that you’re really there with another person or in another place. Creation, avatars, and digital objects are going to be central to how we express ourselves, and this is going to lead to entirely new experiences and economic opportunities.\u201d<\/span><\/p>\n

Throughout the call, Zuckerberg emphasised that while advertising would be a \u201cmeaningful part\u201d of the metaverse\u2019s business model, the biggest opportunity lay in the sale of digital goods, including digital clothing. Remember all the hype around non-fungible tokens? It was for a reason – NFTs would be an integral part of the eventual metaverse economy.<\/span><\/p>\n

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Earnings aplenty.<\/span><\/h4>\n

Speaking of earnings, Facebook delivered an impressive Q2:<\/span><\/p>\n

    \n
  • Revenue of $27.8bn, a 56% year-on-year increase.<\/span><\/li>\n
  • This was driven by a 47% increase in the average ad price. Surprisingly, while the cost of an ad rose dramatically, the amount of ads delivered only increased by 6%. It\u2019s creating what Ranjan Roy refers to as the \u201cperfect stagflationary storm\u201d – costs are increasing, while economic output slows.<\/span><\/li>\n
  • Net income increased by 101% y-o-y to $10.4bn.<\/span><\/li>\n
  • Monthly active users across Facebook\u2019s properties increased 50 million quarter-on-quarter to 2.9 billion.<\/span><\/li>\n<\/ul>\n

    Despite the robust earnings, Facebook\u2019s shares opened at $375 on Wednesday morning and dipped to $356 following the earnings report. Facebook cautioned that the company expected revenue growth rates to decelerate for the rest of the year, as 2020\u2019s Q3 and Q4 growth rates were particularly robust. Further, it expects Apple\u2019s privacy-focused iOS updates, which asks users if they want to allow apps to track their digital activity, to negatively impact its ad targeting.<\/span><\/p>\n

    MetaSoft? MicroVerse?<\/span><\/h4>\n

    Elsewhere in Silicon Valley, Microsoft joined in on the buzzword frenzy. Microsoft CEO Satya Nadella described Azure as \u201cleading in a new layer of the infrastructure stack, the enterprise metaverse\u201d. Although he was ribbed online for jumping on the jargon bandwagon, this wasn\u2019t Nadella\u2019s first time in making reference to the metaverse.<\/span><\/p>\n

    Nadella mentioned metaverse twice during April\u2019s earning call, once when describing Azure\u2019s potential to be a first-class platform for simulated environments and mixed reality, and again when discussing gaming. \u201cAs games evolve into metaverse economies, we are building new tools to help anyone sell creations on our platform,\u201d he said, \u201cMinecraft has nearly 140 million monthly active users, up 30% year over year, making it one of the leading platforms in the creator economy.\u201d<\/span><\/p>\n

    Minecraft, Nadella\u2019s first major acquisition as CEO of Microsoft, has been described as the perfect reference for how the metaverse could function. A virtual world like Minecraft, and similarly Fortnite and Roblox, would be a destination within the metaverse that players could visit and interact with.\u00a0<\/span><\/p>\n

    Fortnite is already leading the pack in world-building. It has its own digital clothing catalogue in the form of \u2018skins\u2019 and hosted an in-game concert headlined by a 60-meter tall Travis Scott that had players floating around and, at one point, completely submerged underwater. It was attended by 27.7 million players.<\/span><\/p>\n

    A Reality Check<\/span><\/h4>\n

    As fascinating as it all sounds, the actual metaverse is still years away. The fact that it\u2019s still so non-specific should be a sign that no one quite has it figured out yet.<\/span><\/p>\n

    That\u2019s the thing with buzzwords – part of why CEOs love shifting definitions and jargon is that when they don\u2019t exactly deliver on the <\/span>disruptive<\/span><\/i> technologies they promise, it can be blamed on a misunderstanding of the concept.\u00a0<\/span><\/span><\/p>\n

    That may help founders who rely on buzzwords to cloud over their rickety business models (WeWork securing funding by calling itself a ‘tech’ company being a prime example), but it doesn’t help anyone trying to understand what the future of business actually looks like. It may also be causing new businesses to overthink their value proposition in order to sound <\/span>disruptive<\/span><\/i> enough.<\/span><\/span><\/p>\n

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    So here we are, Q2 earnings season in the United States. As much as investors are interested in how the companies performed between April and June, they\u2019re a lot more interested in what the companies have planned for the future. It\u2019s also a rare opportunity for CEOs to have the full attention of investors. And these days, especially for Big …<\/p>\n","protected":false},"author":1,"featured_media":4702,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[64],"tags":[247,1002,325,1004,1003],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/posts\/4695"}],"collection":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/comments?post=4695"}],"version-history":[{"count":0,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/posts\/4695\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/media?parent=4695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/categories?post=4695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thefinanceghost.com\/index.php\/wp-json\/wp\/v2\/tags?post=4695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}