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Monday, 07 February 2022 14:18

Meta’s $10 Billion Metaverse losses, Are They Normal or an Indication?

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There has been a lot of talk about Meta’s The Reality Labs department losing $10 Billion on devilment of Metaverse. Mant articles have focused on the negative and the overall amount of money lost while others have chosen to focus on more positive or normalized effects of the loss and what is means long term. The argument seems to be split in a couple of ways. The first is that $10 Billion is not a devastating loss in terms of R&D on a potential defining product for a company that made $117+ Billion in 2021. The second is that a $10 Billion dollar loss on a new product is a bad thing and might be an indication of a lack of true acceptance.

Losses and earnings aside, the concept of Meta and the Metaverse is something that is not getting the warmest reception. I am not talking about the industry analyst or a corporate CEO. I am talking about the average person and the general market. You know, the people that must buy the product to pay for the services behind it. In this arena there is resistance and some pushback on the overreaching concept that has been likened to many a dystopic movie where everyone spends too much time in a virtual reality and the world falls apart. Movies like Ready Player One with IOI and their loyalty centers are brought into the conversation.

Proponents of Meta and their vision often discard these topics. However, there are indications that the systems for this type of behavior are already present and could be quickly brought into something like the Metaverse. Take many of the “play to earn” groups that are already inexistence. People will go so far as to take out loans so they can play in the hopes of earning money. These financial arrangements are sometimes referred to as scholarships. They are not exactly in the players’ best interest though as the sponsoring organization collects a hefty share of any winnings until the scholarship is paid off. This puts people in significant debt to a group that has little to no regulation (these will almost always use one type of digital currency or another). Not the best arrangement and strikingly like what IOI was doing.

Next we have concerns over how Facebook has abused their dominance in the market as well as their connections to people. They have been implicated more than once for using the data they collect for not so above-board purposes. Let’s also not forget when they were caught experimenting on their users by manipulating what was in their news feed. The list really does go on and on. Considering their past, what is a company like Facebook potentially going to do when they have an even more captive audience and can control all access to areas and services in their own little universe?

Looked at from this angle it is not surprising that some are skeptical of Meta and their Metaverse. Everything about it seems creepy and concerning. If you add in the possibility of NFTs and cryptocurrency the whole thing seems like a VR scam zone waiting to happen.

This does not mean that it will never take off. In fact, if you look at what Meta has said about this segment, they do have a good chance of making this work for them. Their estimates are that it might take as long as 15 years to become profitable. That is about the length of a generational turnover, so their targets are not us, but our kids and grandkids. In that light $10 Billion is not a lot to spend when your stakes could be an entire generation.

VR and AR are great technologies and have come a long way since they were first kicked out the door. Defining gams like Valve’s Alyx have show what you can do with the technology. Products like the Vive, and Oculus have only grown better and better. The immersion is staggering when you are in one of these games, they make playing on a console or with keyboard and mouse like an old slideshow by comparison. I am not knocking VR, AR or XR in any way. I am only saying that Zuckerberg’s vision for his own private reality that he gets to be the gatekeeper on is a tad concerning and I am not the only one that thinks so.

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Sean Kalinich

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