Meta – Misplaced message

Missed the connection.

• Meta headlined its Connect 2022 event with its new pro-headset but its real message was completely lost meaning that what Meta is really doing in the Metaverse will remain a mystery to the market for at least another year.
• Most commentators looked at what Meta has today and used this to predict where the company is going, thereby missing the point.
• In the long-term, AR is likely to be far more important than VR but the Metaverse today lives in VR and is likely to grow from the VR games industry.
• The new pro headset improves on many of the features of the Quest 2 and adds body tracking to enable a much more realistic emulation of the individual in the Metaverse.
• It is also much smaller and lighter than many of its peers in the professional segment, but it needs to be something special in order to justify the $1,499 price tag which is 3x higher than the Quest 2.
• The response was not great as why it should cost 3x more than the Quest 2 was not very well explained and the demos looked pretty basic leaving many people wondering why they would want to do any work or collaboration in VR at all.
• Having tried Workrooms and the virtual desk, I can concur with this sentiment as neither of them work well and actually make collaboration more difficult and one gets a lot less done.
• However, this completely misses the point as what one can see now is not the endgame which becomes clear when one looks at how the Metaverse is likely to emerge and the other features that Meta discussed during its event.
• I don’t think that Meta really thinks that users are going to strap a VR unit to their faces for 12 hours a day, but it does think that users might wear a pair of glasses (as they do today).
• It also recognises that the avatars that it has today are pretty poor and it has been working on enabling much better digital representations of people.
• These demonstrations were very good and show the potential to underpin much more meaningful virtual interactions.
• However, while the data for these is quite easy to collect, they take hours of compute time to render meaning that they are impractical and too expensive to make any real use of today.
• Furthermore, the Metaverse is very likely to see traction in the enterprise first which is why Meta is pushing this angle now despite being predominantly a consumer company.
• In this area, its collaboration with Microsoft makes a lot of sense with Workrooms coming to Teams and Teams coming to Quest.
• Meta is moving to try and capture the early iterations of the Metaverse in the hope that this gives it the head start that it needs to dominate the real Metaverse if or when it comes into being.
• RFM research has concluded that this could be 10 years away or more and there are plenty of factors that could trip up or delay this transition.
• We are seeing some of these already as the economic climate has hit digital advertising which in turn has reduced Meta’s appetite to invest huge sums of money right now to get the Metaverse into the hands of users.
• The Metaverse is already going to take a long time to really take off and hiccups like a major recession or revaluation of the stock market could mean it takes even longer.
• Meta is now one of the cheapest of the large capitalisation technology companies but I am still concerned that it could unwind further given the impact that inflation may still have on digital advertising.
• I am still content to wait for an entry point lower down.