Facebook’s metaverse: What happens next?

Facebook is so keen on the metaverse it changed its name to Meta. What happens next?

Contents

The metaverse is one of the hottest concepts in technology right now: so hot that Facebook has renamed itself Meta Platforms.

The change, according to Mark Zuckerberg, Facebook’s founder and CEO, was because “we’re basically moving from being Facebook first as a company to being metaverse first”. So, as Facebook dives headlong into the metaverse, what can we expect to see?

Metaverses explained

First, it is better to clear up some ambiguity over the term ‘metaverse’. The metaverse, with the definite article, is, at its heart, a concept. The idea is that there will be, at some unspecified point, a singular virtual world where all humans will interact with each other and have their own avatars.

The concept has been around for a while, with the term invented 30 years ago by the American science fiction writer Neal Stephenson in his novel Snow Crash. Virtual reality technology is a crucial part of the metaverse.

However, as you may have already noticed, such a singular realm does not exist yet. There are, on the other hand, a variety of smaller online worlds where people can interact with each other using their own avatars, and these places are called metaverses. 

Metaverses are currently big business in the crypto sphere. Worlds like Sandbox and Decentraland are highly popular, giving users the chance to buy and sell property, alongside non-fungible tokens (NFTs), unique pieces of digital art that exist on the blockchain.

Online experiences like Second Life, which began in 2003, and massive interactive gaming worlds such as Minecraft, which began in 2009, are nothing new, but the current wave of metaverses are taking things to a new level. Generally, the combination of metaverses is also referred to as the metaverse.

Facebook: going Meta

In October 2021, the company Facebook, which not only owns Facebook the social media site, but also Instagram and WhatsApp, among others, rebranded as Meta Platforms Inc, or Meta for short. 

Before we look into things relating to Facebook’s metaverse, we should also take a look at what Meta and Facebook have done in the crypto space.

The Diem stablecoin was an attempt to create a cryptocurrency that would allow people to buy things on Facebook, with a blockchain division set up in 2018. The Libra Association, which was due to run the coin, consisted of Facebook and a range of big businesses.

However, in October 2019, names such as Visa, Mastercard, PayPal, Booking Holdings and eBay all pulled out of the project.

The crypto was originally called Libra and was meant to launch in 2020, but changed its name after a series of regulatory challenges meant it sought to distance itself from Facebook.

A Facebook crypto wallet came out in 2021, but ultimately Diem was unable to pass regulatory hurdles, and in early 2022 it was sold to Silvergate Capital in a deal worth around $162m. Silvergate aims to relaunch the token based on the existing infrastructure.

The Meta metaverse: a potted history

Facebook dipped its toes into the Metaverse world when it bought the Oculus virtual reality company in 2014. In 2019, Facebook released its own virtual reality headset.

Early in 2021, before the rebranding to Meta, Zuckerberg gave an interview in which he said: “I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company. All of the work that we’re doing across the apps that people use today contribute directly to this vision in terms of building community and creators. 

“This is something that I’m spending a lot of time on, thinking a lot about, we’re working on a ton. And I think it’s just a big part of the next chapter for the work that we’re going to do in the whole industry.”

On 15 February 2022, Zuckerberg announced in a Facebook post that Meta was “a metaverse company” and that there were four values that would lead to this. These were “Move fast”, “Focus on long-term impact”, “Build awesome things” and “Live in the future”.

Whether these buzzwords will lead to a stronger metaverse and more take-up among users remains to be seen. While there is a potentially massive audience for the Facebook/Meta metaverse, with 1.929 billion users a day logging into Facebook in the last quarter of 2021 (down slightly from 1.93 billion in the third quarter), there is still not much uptake for the Metaverse itself.

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According to Statista, there were just 50,000 users of the Web3 iteration of the metaverse, which indicates that either Meta will need to expand the user base or there will need to be a more general push into this particular field. 

Virtual vs. financial reality?

There are some concerns about the profitability of the metaverse, at least in the short term. When Meta released its latest financial figures in February 2022, one of the most notable bits of news was that Meta’s metaverse work was losing it an increasing amount of money.

The Reality Labs (RL) branch, including augmented and virtual reality-related consumer hardware, software and content, posted a $10.1bn 2021 loss, increasing from the $6.6bn loss in 2020, as the company said it was investing in the development of the metaverse.

Meta has already spent $10bn on its metaverse. However, Meta has lost around a third of its market value since the latest results came out at the start of February, when it was announced that the company’s Q4 net income decreased slightly on a yearly basis by $1bn, from $11.2bn in 2020 to $10.2 in 2021. It will be interesting to see if that sort of investment continues. 

A new thing or a second Second Life?

The idea of a massive online world nearly came to pass with Second Life. In an interview with Bloomberg, tech writer Wagner James Au said there were links with Mark Zuckerberg’s metaverse, saying: “For any story I’ve seen about the metaverse now, there’s an analogue to what happened in Second Life.

“This talk of a metaverse real estate boom? Yes, that definitely happened. Talk of big companies opening up virtual headquarters? There were a lot of other Fortune 500 companies that opened up a site in Second Life.”

Au acknowledged that there were some notable differences, such as the growth of technology meaning that a metaverse was no longer a niche activity only available to people who had made an investment in high-end kit. 

One important point that Au made is that one of the challenges the Facebook metaverse will have to overcome is the age of its users. There is a high take-up of metaverses in general among those in their teens and early 20s, but people stop using the networks as often once they reach the age of about 24.

It will be interesting to see how Meta makes its system more attractive to older users, if at all. 

Accidental boosts to metaverse coins

Facebook rebranding as Meta is likely to help what we might call “traditional” metaverse cryptocurrencies. According to a report by JP Morgan, the market cap of metaverse cryptos boomed when the Meta announcement was made. Decentraland’s price shot up more than six-fold at the time, going from $0.7535 at the start of 28 October to an intraday high of $4.69 on 31 October.

How much the Meta project will have an impact on the future prices of the likes of MANA and SAND remains to be seen. 

Final thoughts

There are certainly a fair few hurdles Facebook/Meta will need to overcome in order for the Metaverse to become as big a phenomenon as social media has.

Meta will need to convince people that putting on a VR headset is not all about playing games. In a post-pandemic world, it will have to make the somewhat suffocating experience of working while wearing a headset more comfortable, more convenient, more enjoyable and more efficient.

It will also need to reassure people that it is not attempting to serve as a replacement for the reality we have now. And it will also have to convince people that their data is truly secure  – and they themselves are safe. Already there are reports of women being sexually assaulted and even ”raped”  in the metaverse.

There is also the fact that Meta and its businesses might be seen as being somewhat old hat by the true believers of blockchain, who will want to promote the use of what could be described as “true” Web3 metaverses, which would be, at least in theory, decentralised when it comes to operating.

These alternatives could well be more secure but, as ever with this sort of thing, we will have to wait and see what happens. 

We have asked Meta precisely what its plans for its metaverse are, but we have not yet received a reply. 

FAQs

No. Where there might be some confusion is that Facebook, the company behind the social media site, changed its name to Meta in 2021. Facebook itself will continue to operate, largely in the same way that it has done before. Meanwhile, Meta is working on its metaverse project. 

Unless you are living in a dystopian novel, this is not going to happen. People will still need to eat, drink, have interactive communication and do all the sorts of things that they cannot do in the metaverse.

To put it somewhat indelicately, you cannot have sex in the metaverse so, for the sake of humanity’s future if nothing else, the real world will still continue. Perhaps more to the point, it is possible that the metaverse could end up fizzling away into nothingness.

Even among people who are incredibly excited about the metaverse, it is worth pointing out the JP Morgan report, which says: “Despite much excitement about the possibilities of the metaverse, in order for it to enable its full potential for engagement, community building, self-expression and commerce, key areas need to be further developed and matured.” 

Ultimately, the metaverse has a long way to go, and the real world is here to stay. 

Further reading

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