How Meta, the global social media giant, is laying out the meta-universe after investing $10 billion

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How Meta, the global social media giant, is laying out the meta-universe after investing $10 billion

 

How Meta, the global social media giant, is laying out the meta-universe after investing $10 billion

In October 2021, Facebook, a social media giant with 2.8 billion users, announced that it would change its name to "Meta" and focus on virtual reality and augmented reality in the future, which completely triggered the explosion of the metaverse concept.

Zuckerberg, the founder of global social media giant Meta, said he hopes to build Meta into a meta-universe company in about five years, and the name change move confirms Meta's ambition to be All in the meta-universe.

But this feast for the meta-universe was laid back when Meta acquired Oculus, and in 2019 Meta announced that Horizon would become a new social virtual world.

Then, at the end of 2021, Horizon Worlds officially opens as a metaverse platform.

At the beginning of 2022, Zuckerberg promised to invest $10 billion per year in the meta-universe over the next ten years, and it is easy to see the importance Meta attaches to the meta-universe from such a huge investment.

Not only that, last week Meta announced that it will suspend this year's F8 developer conference because it will devote more time to the meta-universe.

So how did Meta lay out the metaverse? What is the reason behind the heavy bet on the metaverse?

When did Meta, the global social media giant, start laying out the meta-universe?

Facebook acquired Oculus for $2 billion in cash and stock in March 2014, when Zuckerberg said in an announcement that "mobile is the platform of the moment, and the Oculus acquisition is a preparation for the platform of tomorrow."

After this huge acquisition, Meta made a series of upgrades to Oculus until September 2020, when the Oculus Quest 2 headset went on public sale for $299, which quickly ignited the market once it was launched.

Although the concept of metaverse had not yet caught on, each step of Zuckerberg's journey towards it proved to be carefully paved.

March 2021RobloxHitting the meta-universe concept listed on the New York Stock Exchange, the market value once exceeded $48 billion. This meta-universe trend quickly swept through all walks of life around the world.

The immersion emphasized by the meta-universe needs to rely on the terminal device as the connection interface to achieve, and the VR track, which Zuckerberg identified as having good development prospects, has naturally become an important entrance to the meta-universe.

Finally, Facebook directly announced the company's name change to Meta at Connect's annual general meeting, and the plan of the social platform with a huge number of users to lay out the meta-universe was completely open.

It's not just Facebook's parent company that changed its name, as its Oculus Quest VR headset was also officially renamed "Meta Quest" on Jan. 27, to which Meta Quest added that "change is sometimes not a bad thing, we We want to help build the meta-universe better, and the new name will make that process clearer".

At this point, Facebook has completely transformed from a social media platform to a meta-universe concept company called Meta, and Meta's meta-universe map is still exploring richer application areas, so what specific tracks has Meta bet on?

What directions is Meta currently betting on for the metaverse?

Meta may not be the first technology company in the world to focus on the metaverse track, but it is undoubtedly a pioneer in throwing itself into the metaverse.

However, All in Meta Universe is not just a name change, what exactly Meta is doing in the meta-universe is explained below.

 Heavy investment in hardware track

The early stages of any industry are inseparable from the construction of infrastructure.The development of hardware provides the necessary infrastructure for the realization of the metaverse, which is the user interface and immersive experience of the "four giants" of the metaverse.(The "Big Four" refers to what we often refer to as "BAND" (Blockchain Technology, Gaming, Networking, and Display).

The current hardware track of the meta-universe is mainly divided into two major parts, AR glasses and VR headsets, with slightly different consumer groups. AR glasses have become the darling of industrial enterprises for their superiority in training and remote guidance.

The VR headset has become the first choice of ordinary consumers with its colorful and entertaining applications.

Although the current VR headset due to personal privacy data leakage, security protection and many other aspects of the problem in a certain degree of public concern, but in no way slow down the pace of the VR headset market continues to develop.

And according to IDC's latest report released in March, global AR/VR headset shipments reached 11.23 million units in 2021, up 92.1% year-on-year, while Meta's Oculus market share reached a staggering 80%.

The accumulation of dirt is not the work of Sisu. As the market leader, Meta's investment in the hardware track can be said to be a throwaway.

In 2014, Meta acquired Oculus, followed by CTRL-labs, a startup in the AR glasses track, in 2019, and Play Giga, a video game startup, in the same year for $78 million, and recently Meta acquired Within, the developer behind the VR fitness app Supernatural, for an amount or more than $400 million.

Moreover, in the future, when XR is in powerMeta is not satisfied with what Oculus Quest has brought to it, but is actively exploring new areas.

In March this year, Meta poached Rune Jensen, director of hardware engineering for Microsoft's AR glasses HoloLens, at twice the salary, and put him in charge of AR/VR cutting-edge technology research and prototype device development.

But these investments are just the tip of the iceberg. Meta AR/VR business group Reality Labs has invested more than $12 billion in 2021 alone, so it can be said that Meta has invested a very large amount of money and effort in hardware.

Trying to build a meta-universe social platform

In addition to making efforts in the hardware track, as the parent company of traditional social media Facebook, Instagram and Whatapps, Meta, which has a huge user base, has undoubtedly spared no effort in creating a meta-universe social platform.

December 2021Meta officially opens Horizon, a VR social platform where users can create virtual images and interact with other users. Although only the upper half of the user's body is available in Horizon's incarnation, more than 300,000 people have participated since its launch.

How Meta, the global social media giant, is laying out the meta-universe after investing $10 billion

Horizon is actually comprised of Horizon Worlds, Horizon Venues, Horizon Workrooms and Horizon Home, which is still under development.

Horizon Worlds, made up of user-generated content, is a new social virtual world where creators can design their own worlds by using the tools in the VR app.

Users can adventure, be entertained and get a novel experience in Horizon Worlds that is completely different from their daily life.

Now Meta has announced the start of testing a commercialization tool for selling digital assets, allowing users to sell access to items and experiences, providing the necessary path to circulate the value of digital assets.

Horizon Venues, on the other hand, provides the necessary conditions for hosting large events in VRIn November 2021, Meta officials noted that users can watch NBA games in Quest through Horizon Venues.

After the Super Bowl show in February 2021, the veteran American rock band Foo Fighter is hosting a VR concert in Horizon Venues, which Quest users will be able to sit in the front row to experience.

And Horizon Workrooms makes VR Office easier and better to use, providing businesses and employees with more ways to work from home to improve communication efficiency during an epidemic. However Horizon Workrooms is not Meta's first attempt at building a metaverse social platform.

Back in 2016, Meta launched Workplace, a cross-platform VR collaboration platform for VR users, allowing users to live stream and enable multiplayer chats. And Horizon Workrooms, built on Workplace, takes VR office to a new level.

The Meta Meta Universe social platform is growing steadily and we look forward to seeing more from Horizon.

Create a meta-universe infrastructure platform

However, Meta's ambition does not stop there. Committed to becoming the benchmark company of the metaverse, Meta is also working hard to build a metaverse infrastructure platform.

In addition to promoting the development of hardware and creating a metaverse social platformMeta has also teamed up with NVIDIA to launch a new AI Research Supercluster (RSC)The company has also joined forces with Telefónica, a Spanish telecommunications company, to establish a metaverse innovation center to drive multiple metaverse infrastructures such as AI, computing power, and network transmission.

Meta said, "We hope that the leap in computing power will not only help us create more accurate AI models for existing services, but also enable new user experiences, especially in the meta-universe ...... is helping us create the technology that powers the meta-universe and drives the broader AI community forward. community forward with the underlying technology."

In the second phase in FY2022, RSC will be able to achieve 5 tens of trillion operations per second with a target transfer bandwidth of 16 TB/s, making it one of the world's fastest AI supercomputers.

And RSC will enable the models needed for technologies such as speech recognition to work in hundreds of different languages, and seamlessly analyze text, images and video, develop new tools for augmented reality, and build entirely new artificial intelligence systems.

RSC will drive products related to the metaverse space to the ground, including reviewing massive amounts of content, real-time translation, and combining high-performance AI with ARAnd so on, eventually building the meta-universe.

How Meta, the global social media giant, is laying out the meta-universe after investing $10 billion

In addition to RSC, Meta is committed to providing better network support and making great strides in latency and bandwidth to achieve low latency and immersion in the metaverse.

 Exploration of blockchain technology

Meta has been exploring blockchain technology as an important part of the meta-universe since the days of Facebook.

In 2018, Facebook had plans to develop a Crypto-based payment platform, appointing a former president at PayPal who was also an exchangeCoinbaseDavid Marcus, vice president of the board of directors, is the head of the blockchain division and subsequently continues to hire Crypto developers.

One year later, on June 18, 2019Facebook has releasedLibraWhite Paper, officially announcing the launch of the pass-through LibraLibra is a fiat currency asset and a high-credit government bond (basket of currencies) backed by reserves in U.S. dollars Stablecoin, issued by the Libra Association, a multi-member organization.

As the world's largest social platform with nearly 3 billion users, Facebook has many users in various countries. If Facebook really issues such a currency, its influence can be unprecedented and will also have a profound impact on the finance of various countries.

Therefore, the launch of Libra is like a stone stirring a thousand waves, causing various countries to compete for research, and at the same time, it also gives countries great pressure, indirectly accelerating the progress of the research and development of the central bank's digital currency CBDC.

However, Libra has a wide impact, and countries have taken it seriously. In such a situation, Libra has hit a wall everywhere, and the regulatory authorities of various countries have unanimously given Libra a red light, while Libra is gradually losing its association members.

Seeing so much resistance, Facebook decided to take a step back and rename Libra on December 1, 2020DiemThe original basket-based design was also changed to a single dollar backed and anchored to the U.S. dollar, a form that would be similar to, for exampleUSDCAnd other Crypto dollars Stablecoin like too.

However, this step back did not let the regulation buy, and after continuing to insist for more than a year, Facebook, which had by now changed its name to Meta, finally decided toDiemSell.

On January 31, 2022, Meta officially announced the sale of its Crypto payment network, Diem, to Silvergate Capital Corporation for $182 million.

However, Meta did not completely abandon Crypto's cryptocurrency play, and this time the failure was only the issuance of USD Stablecoin, Meta turned to the idea of a payment platform and started to go.

It was the same day that Diem was sold.Meta turns his head andJoined the Crypto Open Patent Alliance(COPA)The consortium consists of more than 30 members, including MicroStrategy, Kraken, CoinbaseUniswapetc.

Members pool their Crypto patents to form a shared patent pool, and any member is free to use the technology behind the patents to protect Crypto's innovations.

Meta's move is also a quick adjustment strategy, since the road to distribution does not work, it can also directly use the existing Crypto, but also to explore more use scenarios and revenue sources.

Meta's products will likely also be connected to Crypto support in the future, allowing traditional Internet Web2 users to manage their Web3 assets.Meta can also use this to become a bridge between Web2 and Web3 and grasp the wind of Web3..

In addition, Meta's financial arm, Meta financial Technologies, has been exploring the creation of a virtual currency, known internally as "Zuckercoin," to reward creators, lend money, and support other financial services.

Its goal is to support Meta's metaverse world, but it may not be developed based on the blockchain, which is a bit like the Q coin we know so well, and it has to be said that it is an existing success and worth a try.

At this point, it seems that Meta's grand plan, which has been planned for nearly four years, has died before it can be accomplished, but it is good to see that there are still positive adjustments and some new hopes.

In addition, with the popularity of NFT in recent years, theNFT is already a new application direction with no less attention than Crypto.

Many traditional companies and organizations have entered NFT and tried to combine their business with NFT, including some familiar brands, such as Adidas, Time, Louis Vuitton and so on.

Some avatar-based NFTs are also rapidly spreading across overseas social media. These NFTs are often a series of NFTs with similar characteristics, and in addition to being liked for their own style, they can also be used as a way of self-expression for their owners.

Therefore this type of NFT is also defined as a new category of NFT called PFP (profile picture), i.e. profile picture.

More and more celebrity stars are joining the PFP playbook, switching to their own PFPs on their various social media profiles.

And this craze has reached more people with their influence. It can be said that PFP is the application where social and NFT can fit perfectly, and how can such a feast be missing the social giant Meta?

On April 8, Meta has set a rough timeline for the integration of NFT and blockchain technology into its applications and services, and plans to be the first to launch an NFT pilot program on Facebook this May, according to a newly disclosed memo from Meta obtained by the Financial Times.

There are few social platforms that have made this move, and Twitter has previously launched the NFT avatar feature, allowing users to use NFT as their personal avatar.

It seems that a battle between the social giants for the high point of NFT has already started, and as NFT is an important technology in the meta-universe, this exploration can also explore the direction of Meta's layout in the meta-universe, whether Meta can use this to continue its dominant position in the meta-universe, let's wait and see.

Why does Meta value the metaverse?

Its social platform user growth peaked

On February 2, 2022, Meta announced its fiscal year 2021 fourth quarter earnings, in which the data of users is worth pondering. 2.91 billion monthly active users (MAU) of Meta, with no more growth quarter-over-quarter.

But at the same time, its daily users have decreased by about 500,000, and the total number of Facebook users has seen a decline for the first time since its birth.In terms of business growth curve, Facebook has stepped from the rapid growth stage into the maturity stage.

Facebook's user growth has stagnated due to a number of factors, one of which is that the number of users is nearing its ceiling.

At present, Facebook has about 3 billion users, while there are about 4.8 billion Internet users worldwide, excluding individual countries that are not open to Facebook, such as China's 1.08 billion Internet users, the remaining market capacity has been relatively limited.

And now Facebook has developed all the countries it can, there are no new countries to expand to, and the growth of users has seen the ceiling.

The second is the user's own attributes, Facebook as a product has been developed for 18 years, its user base tends to be older, less accepted by young people now.

And with the rapid development of the network, video applications are on the rise. Tiktok, as the international version of Jitterbug, has become one of the hottest social software overseas in just a few years since its launch in 2017, perennially dominating the application market.

With limited market capacity, difficulty in continuing to expand the market, as well as the continued impact of new products and the absence of new users, old products like Facebook are like a pool of stagnant water, and without new water injection, Facebook will evaporate day by day.

Therefore, in order to break the game, new markets must be explored. Nowadays, the market for video applications is already a red sea and the pattern has been set.

But the sudden explosion of the metaverse concept in 2021 has given Meta new inspiration. Given that Meta has been laying out the VR field since a long time ago, especially in the VR hardware market, Meta has an overwhelming advantage.

One of the key ways to show the meta-universe is through VR headsets, and Meta has such a good hand, so naturally we have to go with the flow.

Obviously, from the current situation, Meta is not just following the trend, but directly pouring all its strengths to expand this uncultivated blue ocean with its innate advantages.

But this time, Meta doesn't just want to recreate a social empire on the app.

There are multiple reasons why Apple is the largest company in terms of market capitalization, but the one that most supports its revenue relies on its superior hardware products and the App Store it carries.

The combination of hardware and application stores is the right secret to wealth, which is why we can also see that Huawei cell phones have Huawei market, Xiaomi cell phones have Xiaomi market, we all know it well.

Similarly, this set of logic can also be applied in the VR field, who can take enough share of the VR hardware market, who will be able to dominate the future of the VR application market, will be able to have a constant stream of cash flow.

Meta currently occupies about 80% of the market for VR devices, and it is easy to take the share of the application market with further efforts, but the overall number of VR users is still only in the tens of millions, so Meta needs continuous investment if it wants to maintain its advantage and make the market bigger.

 Business earnings are not promising

The earnings report in early February attracted a lot of attention because it was Meta's first earnings report after its name change, but it was the less-than-expected earnings report that sent its share price plummeting by 21%.

The company's market value evaporated about $252 billion (about RMB 162.8 billion) in a single day, also hitting the largest single-day drop since the company went public in 2012, a veritable "trillion down".

In this earnings report, we can see that Meta2021's main advertising business growth is weak and has lost the brightness of previous years.

At the same time, the meta-universe development division, which had high expectations, did not make a profit, but brought a loss of $10 billion.This is the first time since Meta's name change last year that the " Reality Labs" financial segment, which represents the metaverse business, has been listed separately.

Let's put aside for the moment the profitability of the innovation business (with emphasis on the meta-universe) to look at the overall numbers, Meta revenue in Q2021 was $33.67B, up $20% year-over-year, slightly exceeding expectations but slowing significantly from the first three quarters of last year.

As for net profit, Meta even saw its first decline since the second quarter of 2019, recording $10.29 billion, down 8% year-over-year, and we know that Meta's traditional way of earning profit is mainly through advertising.However, as we mentioned above, the decline in user activity on its social platforms has directly impacted revenue.

Of course, revenue from the old business (advertising sales of $32.6 billion) still outpaced many Internet companies throughout the earnings report.

But in the face of declining revenue from the old business, opening up innovative business is naturally imminent, so even in the face of the current loss of tens of billions, Meta still chose to bet on the meta-universe.

How Meta, the global social media giant, is laying out the meta-universe after investing $10 billion

States' privacy bills limit development, new stories needed

When we focus on Meta's earnings report, we are bound to be shocked by the percentage of its advertising revenue, which totaled $117.929 billion for Meta's fiscal year 2021.

And its advertising revenue reached $114.934 billion, while its Reality Lab revenue was only $2.274 billion and its other business revenue was less than $800 million.

Such revenue distribution naturally makes people wonder where this huge advertising revenue actually comes from. If we look back at the heels Meta has planted on privacy data in the past years, there may have been countless, and even the number of people affected has expanded again and again, from millions to tens of millions, and then to 500 million people last year, Meta has been haunted by privacy breaches.

Even just before its annual earnings were made public, senior British officials warned that Zuckerberg could face stronger legal recourse if Meta did not comply with the new Cybersecurity Act.

Meta's advertising revenue is supported by various kinds of user data. Simply put, when you use its social products, it will learn more and more about you as the frequency of use increases, and this knowledge will be used as a reference for advertising recommendations.

So as countries' privacy laws get tougher, Meta has to choose to consider new storiesAfter all, if privacy protections become stringent in all countries, the decline in its advertising revenue in a year may not be as much as the loss of the meta-universe business in a few years.

 Competing for hardware and software scenarios for next-generation smart devices

If Meta's name change is the curtain on its meta-universe business, then the acquisition of Oculus years ago is already a proactive feat.

After all, placing a bet on the VR business in 2014 seems to be like Mr. Li Lu of Himalayan Capital placing a bet on BYD 20 years ago (which brought it nearly 70 times return) today.

Of course, Meta's current layout in the field of VR and AR is not to be underestimated, after all, the VR market share of over 60% will be a very scary figure if it is continued in the future.

And according to the latest report released by international data analysis firm IDC, global AR/VR headset shipments reached 11.23 million units in 2021, a year-on-year market growth of 92.1%. Among them, VR headset shipments reached 10.95 million units, breaking the industry's important inflection point of 10 million units shipped annually.

And it expects global VR headset shipments to exceed 15.73 million units in 2022, up 43.6% year-on-year.

How Meta, the global social media giant, is laying out the meta-universe after investing $10 billion

Imagine, 2021 global mobile smartphone annual shipments of 1.35 billion, not to mention reaching the same level, once over 100 million, VR hardware market will rocket up.

This does not include all kinds of matching software market growth, to know the annual matching software market size is also trillions of volume, perhaps Meta see a trend, even all Internet giants have seen, otherwise why enter one after another?

Perhaps there are still people who use Facebook's "shame" to mock its move to change its name to Meta, but when we look back at the above list, we have to feel that it is not easy for the giant to turn around, but they seem to see the future of the meta-universe, whether it is the physical practice or the capital investment, we should admire. Meta is worthy of our admiration.

Can a centralized Meta meta-universe take shape?

Despite Meta's ambitious bets on the meta-universe.ButThe metaverse's emphasis on openness and decentralization may also prevent it from creating what will become a true metaverse in the true sense of the wordThis is also criticized by the practitioners of the multiverse.

After all, Meta has been accustomed to using the advantages of centralization to earn capital income for decades, and it seems difficult to let go of the "inertia".

But as we see more and more of the so-called "centralized" giants dabbling in the metaverse, we start to think differently.

Do users need a completely free and open Internet or meta-universe, or do they need to find a new balance between convenience and privacy?

IfMeta has created a meta-universe that fits both the Web3 concept and the public perception, so perhaps the story will take a new turn.

Unlike many startup metaverse companies, Meta is more like an "internal startup", or even an all-inclusive transformation, and the metaverse they create is inevitably more accessible to users.

After all, with 2 billion active users, no one knows Meta better than they do.

So while we worry that Meta creates a meta-universe that is not what we envisioned or not our ideal build, they likewise think about what mainstream users would want and what they would like.

And this fun game is the real challenge that Meta faces.

Apple founder Steve Jobs always believed in one guideline: users simply don't know what they want.

So, what kind of metaverse do we want, or do we ourselves not know, as described by Ford, the founder of Ford Motor: If you ask people in the late 19th and early 20th centuries what they want, they would never say a car, but rather I want a faster horse.

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