Facebook’s Metaverse Efforts Shine Light on Future of VR, Social Media, and Collaboration

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By Eric Abbruzzese | 3Q 2021 | IN-6240

Facebook has begun assembling the pieces it needs to create a metaverse product.

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Facebook Reality Labs Grows Once Again


Facebook has officially created a Metaverse product group within its Reality Labs branch, after Mark Zuckerberg talked up the idea in the press prior. So far, Reality Labs has housed both AR and VR efforts, including Oculus VR, Horizon social platform, Spark AR content creation tool, as well as the Portal video calling device. More recently, the company’s plans in augmented reality smart glasses have come through Reality Labs. Now, there will be a dedicated product group for the metaverse alongside these other efforts. While this fits well with the company’s efforts in social media and virtual reality, much remains to be seen around how Facebook will approach the metaverse idea, including content types, monetization options, market focus areas, and more.

Building Towards the Metaverse, But What does that Mean?


Even with the most aggressive outlook, it’s early days for the metaverse. Smaller scale examples, akin to siloes rather than a broader persistent platform, are already available and in use. While an end-to-end metaverse only requires stitching a number of these siloes together, this is a significant feat. Cooperation among content owners, content creators, enabling technology vendors, and other parties is required—for a company with the scale and breadth of Facebook, this could be handled all in house while still enabling a complete metaverse experience. For most others, cooperation and partnership is required, with ever-present M&A potential constantly disrupting the space.

The Portal, Oculus, and Horizon combination from Facebook today provides a strong foundation to build a broader metaverse platform on. Add on existing VR hardware with Oculus and upcoming AR hardware, and the theoretical platform begins to take shape. That’s not even mentioning the social media heart of the company; user acquisition is where a platform like this lives or dies, so again Facebook has an incumbent advantage. The company also acquired Unit 2 Games quietly in June 2021; it’s not yet clear how that acquisition will play out, but the ties to social gaming and content creation are clear.

Privacy has not been Facebook’s strong suit in the past, and a metaverse platform by nature must include as many content sources, experience types, device types, etc., that a user will run into during use. Any time an element is missing, the chance of user churn increases dramatically, as the value of an end-to-end metaverse lessens with these gaps. Facebook will likely run into resistance here as they expand the metaverse platform.

Looking Towards the Horizon


The metaverse in science fiction has been portrayed as a social haven for digital interaction and experiences. For Facebook, the endeavor is much more fiscally driven, with monetization opportunities never seen before. Native advertising, taking the form of seamless ad placement as part of the content itself, takes on an entirely new form as digital stand-ins for physical advertising today (billboards, etc.) are combined with more traditional digital advertising in commercials, banner ads, and more. NFTs can play a role as well, offering verifiable and unique digital ownership of nearly anything.

For Facebook’s metaverse—or any metaverse, for that matter—to be successful, a balance must be struck between monetization and usability. This is true of any platform, but metaverse type offerings offer little escape from monetization and user churn will be significant if overwhelmed. Facebook has experimented with direct VR advertising, which was received poorly by Oculus users to say the least. However, these early tests are necessary to understand user sentiment and monetization opportunity in a newer medium.

A metaverse play is uniquely not limited to either the consumer or enterprise space either, being mostly agnostic in terms of user type and even application. The “siloed” metaverse experiences of today are not as broad in capability or usability, but the broader the platform the larger and more diverse the addressable market. Especially in today’s working world that is increasingly leveraging virtual tools for collaboration and work, a digital platform enabling multi-user collaboration across media is a boon for most markets.

There are too many variables today to estimate the potential for a Facebook metaverse, but many pieces are in place. The company has a hold on the VR hardware market, and assuming that remains over the next few years, placing Oculus VR at the heart of the platform can be expected. Horizon has not taken hold as a standalone social VR platform, but as a piece of a broader platform play its utility makes more sense. As the AR devices from Facebook come to fruition (both non-display glasses and true AR smart glasses), those become integrated as the AR enabling device, which right now is relegated to smartphones. Facebook may struggle to realize the true metaverse vision, which would require opening up their own platform to others while also integrating third party solutions into their platform. Since Facebook has most pieces in place, they could take a walled garden approach which is simultaneously an antithesis to the metaverse but also viable with enough users.

There are some (fair) questions around whether metaverse plans like Facebook’s are realistic, but it’s more helpful to analyze it as a scale of potential rather than a binary success/failure option. Expanding the pieces the company has today should be expected whether branded as a metaverse play or not; digital ties between these efforts being built along with strong enough marketing and user acquisition (along with user retention coming from those component elements) does in theory create a cohesive, value additive platform, even if the ultimate product falls short of the science fiction idea of a metaverse.