Customer Experience

Revisited: The risks of Facebook’s “Metaverse” big bet

Updated to add this reference to a conversation with Noz Urbina on Ian Truscott’s Rockstar CMO Episode 146 podcast where we discuss the metaverse and what it actually means for marketers.

Since this was first published, it’s worth noting that Facebook and others have largely pulled back from their metaverse bets, though Augmented Reality (AR) may yet take some of this attention (and more interesting use cases). However, Statista pulled some reporting on the Reality Labs division and noted that while investment has seems to have stopped growing massively (at least based on a 3 quarter estimate), it is still significant.

Chart showing Meta investment in Metaverse.

“future cities would be designed around the device…”

Steve Jobs

Of course, that quote was about the Segway, and not the metaverse – but I think there are similar parallels behind the hype, and ultimately, disappointment behind both.

The inventor of the Segway, Dean Kamen, was already a successful inventor and entrepreneur many times over. In the early phases, he amassed a massive amount of interest among tech investors and media as his “Ginger” project started development.

But ultimately, the Segway became a niche device – used primarily by city tours and mall cops. But what prevented it from living up to the hype?

Cost: In the case of the Segway, the original device was about $5,000 – about half the price of a small car. Similarly, a good VR headset costs about half as much as a top-end phone, which has far more utility.

Granted, I do expect the cost to continue to parallel the development of similar optical devices such as TVs, namely that the cost stays relatively constant but that optics and resolution improves (better tracking, OLED, higher resolution, etc.) – but this still means that a minimum, it will be prohibitive enough that most people will not purchase one without a significant compelling reason to do so.

The Oculus remains somewhat cheaper than competitors such as the Valve Index or HP Reverb G2, but I suspect that some of that cost is subsidized by the rest of the Facebook business (particularly since you need a Facebook login to actually use the device).

Comfort: VR is currently fairly taxing to use. “Zoom fatigue” is real. VR fatigue is even more real. VR has significantly more eye strain compared to video.

Limited usefulness: In contrast to VR, if you look at mobile devices they are almost the exact opposite usefulness profile – the costs have dropped to the point that smart phones can be in the hands of almost anyone worldwide and as a general computing device (usually with camera) they have almost unlimited usefulness. Those that think of VR as the next, inevitable phase, will be sorely mistaken.

In addition to those shared problems to general VR, the metaverse vision from Facebook faces additional problems. Facebook as a company has some massive structural issues which likely limit adoption. Despite the acquisition of Oculus and manufacturing devices such as the Portal, advertising still accounts for nearly 98% of Facebook’s revenue. In other words, Facebook as a company doesn’t even really know how to make products for consumers. They make products for advertisers, and their consumers are the product. The primary form of engagement come from the sharing of social content that is produced by others. Facebook optimizes this based on “engagement” which is primary led by emotion – the famous “rage click”.

If you consider the metaverse – how will Facebook maintain engagement? The creation of content would have to be extremely easy (anyone can do it) and also have viral capability (emotional impact and easy to share). Don’t get me wrong, I personally love VR – I spend significant time in Microsoft Flight Simulator (MSFS) with a VR headset, but creating that engaging world is incredibly difficult and resource intensive. In the case of MSFS, it is very much a “one to many” relationship, where Microsoft (or individual developers) are the publisher of the application and objects within that world. The skills to build these add-ons are incredibly difficult.

In comparison, Facebook frankly lacks the institutional knowledge of developing their own content, and the format of the metaverse means their existing core competency of enabling others to create and share viral content doesn’t apply in the same way. The metaverse lacks the ease of creation and emotional impact of viral posts and photos which their core business depends on.

Stepping outside the immediate problems of the metaverse, the announcement from Facebook quite frankly felt rushed and as a means of distraction. The videos released by Facebook for the announcement are very long on vision, but short on actual details. And if you look closely, it reveals that very little UX research has actually gone into the effort. And yet, Facebook continues to burn capital on the effort.

This itself reveals another weakness – Facebook is still very much under the sole influence of one person – Mark Zuckerberg. His board is appointed of confidants who don’t have the authority to challenge him anyway. Zuckerberg himself probably has a pretty different experience of what it means to be human compared to the rest of us. He hasn’t been an employee of any business, and probably doesn’t socialize in the same way as the rest of us.

The metaverse vision seems like his idea of cool sh** that he can buy in reality (surfing on a hoverboard with a flag, for example) and he thinks “this is cool – everyone would want to do this – but I can make it “reality” for them in the metaverse. Which feels a little emotionally stunted and reflects itself in that vision from the ground up.

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