There’s a lot to say about Facebook’s statement yesterday that it’s changing its corporate name to “Meta” as part of a concentrate on online virtual reality. The majority of what has to be communicated isn’t appropriate for Facebook.
Facebook’s rebranding steals another crypto idea
This is a desperate maneuver in the face of a public relations catastrophe that has a limited chance of working as a market proposal and almost no possibility of turning around the company’s falling political and market fortunes in the United States and Europe.
Let’s start close to home, given the target-rich environment: “Metaverse” is the second buzzy idea that Facebook has plundered from the blockchain sector. It’ll almost certainly be as poorly done as Zuck’s first craven magpie act, the would-be stablecoin Libra, now known as Diem.
Libra, Diem, Novi, Calibra, or whatever name you want to give it, was an attempt to steal some vague crypto halo while creating a powerful flood of new data for Facebook, in clear violation of the principles that underpin the entire paradigm being hijacked.
Similarly, the genuine “metaverse” is a blockchain notion, but you can already tell that Facebook’s metaverse will be just as perverted as Bitcoin’s Libra. The blockchain metaverse’s central concept is broad interoperability of virtual assets kept on a neutral and verifiable ledger.
The same blockchain technology that makes non-fungible tokens (NFTs) usable across a variety of immersive experiences, from Decentraland to the second life to Minecraft, would be used to create tokens that represent virtual reality assets usable across a variety of immersive experiences, from Decentraland to the second life to Minecraft.
Though there will be some type of NFT integration in Facebook’s online VR, the wider concept is not what Zuck is releasing. Much of his talk yesterday focused on his dissatisfaction with Apple’s App Store and Facebook’s plan to develop a competing, parallel walled garden focused on online VR experiences.
Facebook will be building up its online VR company at a loss for a while, including by subsidizing devices, according to Zuck. One of the other major red flags for Facebook’s turnaround is this. Very few people desire to use virtual reality, especially in the type of sustained fashion that would make it a profitable walled-garden content store business.
For at least three or four years, the Oculus VR devices at the heart of Facebook’s plans have been quite strong technology, but sales have been disappointing. Other virtual reality and augmented reality startups, such as the famed Magic Leap, have failed miserably.
That expenditure, too, demonstrates how desperate this is. It’s not that this wasn’t clearly a long-term strategy; in fact, it may have been in the cards since the acquisition of Oculus in 2014.
As Zuck admits when he states, “We anticipate to invest many billions of dollars for years to come until the metaverse reaches size”. Compare that to Instagram’s significantly speedier payoff after Facebook purchased it in 2012.
A regular company, one that isn’t under fire for abusing its people and breaking the law, would not rename itself after a corporation that has already collapsed. And spending money to gain clients is the behavior of a risky startup that uses private VC money to improve its chances of seizing a fresh business opportunity, such as Uber employing subsidies to win rideshare.
It’s not clear that the strategy makes sense for a large public firm attempting to breathe life into a business that appears to have little traction on its own.
It also doesn’t make sense because the cost of hardware, like a virtual reality headset, isn’t the limiting barrier in adoption that Zuck would have you believe. In the world of technology, there’s a concept known as an “adoption curve”, in which early adopters spend a lot of money on unusual items, and as they become more affordable, more people buy them.
Even during a pandemic when everyone was trapped at home, the first portion of that adoption curve for VR has yet to materialize. Making the headsets less expensive won’t fix the obvious lack of interest among the hyper-engaged audience who aren’t supposed to be concerned with pricing.
The monopolistic outspend-the-competition strategy, on the other hand, comes from another of Zuck’s favorite people, neo-reactionary authoritarian Peter Thiel.
Returning to a known playbook is presumably comforting to Zuck. And there are probably still enough gullible, bootlicking Web 2.0 investors out there that Zuck will be able to keep the company afloat for the next ten years by saying something along the lines of “you gotta spend money to make money, fam” on investor calls as Facebook’s new VR unit, and then the entire company’s balance sheet bleeds to death.
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Also read: Ubisoft plans to create its own blockchain games