Meta (Facebook) – Circumnavigation.

Meta’s trip around the Digital Life Pie begins.

• Hot on the heels of its name change, Meta has begun to do exactly what I suspected which is to acquire both the technologies and services that it lacks in order to have a complete ecosystem for the Metaverse when it is ready.
• It has only taken two days for Meta to announce the acquisition of Within which is the creator of a workout app for VR called Supernatural.
• Supernatural is an interactive game not unlike the very popular Beat Saber which takes the user on a complete workout as part of hitting balls and other objects within the VR experience.
• I suspect this acquisition is the first of many where Meta will fill in the gaps in the services that it offers as well as pick up proprietary technology that will help it to improve the user experience.
• Facebook has employed a similar strategy in smartphones of which Instagram was probably the most successful.
• This is all about what RFM defines as the Digital Life Pie.
• The RFM Digital Life Pie describes what users do within a particular digital environment such as a smartphone or a vehicle divided by time.
• This gives a representation of the services that need to be provided by a digital ecosystem that wishes to have its users spend all of their digital time within its domain.
• In effect, the RFM Digital Life Pie defines the addressable market.
• For each environment, the RFM Digital Life Pie is different and evolves with time but at the moment it is pretty much all gaming because this is the main use case for VR.
• Within gaming, there is a fitness category within which this fits but also there is a small slice of time where users spend consuming content.
• The Metaverse is still a long way off, but the green shoots of early beginnings are springing up in VR and in Oculus particularly.
• Here, Meta has been shipping good volumes of Oculus Quest 2 devices and 3^rd parties are beginning to earn reasonable revenues from users.
• VR is the obvious starting point for the Metaverse because it has a use case today (gaming) and is technically much easier to get right than AR.
• Furthermore, getting the flywheel effect where users and developers feed off each other off the ground is notoriously difficult but Meta has done it.
• Oculus is now the most vibrant of all the digital Metaverse offerings in existence today which gives it an early lead.
• Furthermore, with a commitment to invest $10bn a year in the Metaverse, a shortage of resources is not going to be a problem.
• This is why I think Meta has an early lead but there remain many obstacles to overcome.
• Not least of these is everyone else who are also investing heavily and have the current advantage of controlling their own platforms where there are already billions of users.
• The Metaverse remains a very long away and Meta’s current PR problems are likely to take a leading role in directing where the share price goes over the next few quarters.
• Hence, I can see the stock being under pressure for a while as these issues work themselves out but once completed, this will be one of the cheapest ways to play the Metaverse theme.
• Hence, I am looking for a good entry point before taking the plunge on the Metaverse.