Meta Platforms or Facebook’s parent is making a big move into the metaverse and I see it as an inevitable choice, whether Zuckerberg likes it or not.
Facebook is already the most populous place on earth with 2.9 billion monthly active users. That’s 32% higher than second place YouTube with 2.2 billion. It was a phenomenal achievement given that social media platforms are generational and hard to attract younger users after a while – it managed to capture millennials via Instagram which itself has 2 billion monthly active users.
But it can’t keep acquiring (Snap refused to sell and FTC is watching) and yet, Meta has to keep evolving to constantly appeal to users, especially the new ones. Staying where they are is suicidal and the two dimensional social media format would become obsolete eventually. Zuckerberg definitely knows this and acquiring Oculus in 2014 was one of the moves he made into a 3D world. He had to build it.
He knew VR was the direction but not sure when it would pick up momentum. If you launch it too early (like Google Glass), you fail. Too late and you are behind. Given that Zuckerberg’s push to rename the whole company to Meta in 2021 means that he believes the timing is now.
Indeed, about 90% of headsets sold today are VR and out of which, Oculus has captured 80% of VR sales by volume in 2021. That’s a massive lead ahead of other makers that include Microsoft, Sony, HP and HTC.
Meta has never been good with hardware (Facebook phone was an instant flop) and nobody does it better than Apple. That said, my review of Oculus Quest 2 was favourable and it is intuitive to use. Of course I believe Apple will mount a serious challenge to Meta when the Apple headsets are released in 2023.
Meta had some setbacks lately. The original plan was to develop Oculus’s own software and chip. Both has fallen through as Android was used to power the software and Qualcomm chip was used instead. I believe they are the right moves now as getting to market is more important than controlling the design, which can be developed later – just like Mac used Intel chips before ditching them for their own M1 chips much later.
Meta has just announced that creators can now sell things to make money in its metaverse. The first reaction of many was to balk at the fees.
First understand that there’s an app store layer called Quest store. This is where you can buy and install apps in your Oculus account. It is charging creators 30% of the sales, which is similar to Apple and Android.
Horizon Worlds is an app that can be downloaded from the Quest store. It is the VR social media app by Meta. It has since allow creators to sell virtual items in it. The app charges 25% fees. That means that the overall fees would add up to 47.5%.
It seems high until you compare it to Roblox. First there is an average 24.3% to the app store. Roblox takes 19.6% share as well as charging 16.8% for platform and hosting support, and 11.1% in platform investment. The creators are getting just 28.2% of the sales. So Meta is considered more generous by giving the creators 52.5%, almost double that of what a creator could earn in Roblox.
Hence I believe the pricing was made in strong consideration to Roblox and not the Apple or Google app stores. This is where the hardware advantage comes in as Meta was able to make fees at the store level unlike Roblox had to share with Apple, Google and Microsoft. Meta had more margin to give higher creator fees.
It is still early days to see if Meta can attract creators to build in its metaverse. But definitely it is advancing as we speak.
