The Metaverse – Turing test

Turing is not the issue.

• Meta Platforms has revealed a series of prototypes that it intends to develop into products that will make its Metaverse irresistible to users but I continue to think that hardware and technology are not the real problems that will determine whether the Metaverse takes off.
• In an uncharacteristically candid media event, Meta showed off a series of prototypes that it thinks puts it on the path to making the virtual world almost indistinguishable from the real one.
• To achieve this, Meta is aiming to deliver 20/20 VR vision, variable focal depth and eye-tracking, best-in-class optics with no distortions (like today) and HDR.
• Meta showed a range of devices all of which make compromises somewhere.
• There are small and sleek devices which are not much better than what the Oculus Quest 2 delivers today as well as huge devices that cant fit on one’s head but deliver a big leap in optical performance.
• Meta’s idea is that fixing these four issues would represent a step towards solving what it calls the visual Turing test that would allow VR to take off in a big way presumably kick-starting a migration to the Metaverse.
• Quite why Meta has held this event is unclear (perhaps there was a leak or investors are wondering where $14bn is going) but it is abundantly clear that there remains a very long way to travel.
• Everyone else is pretty much in the same boat and so this bevvy of early-stage technology is in no way a sign that Meta is struggling or is behind.
• On the contrary, Meta is investing vast sums of money in VR where I suspect that Reality Labs might lose something in the region of $14bn in 2022 alone.
• These issues are engineering in nature meaning that with enough money (Meta has plenty) and time (probably also in good supply), these problems will be solved and VR will eventually pass the visual Turing test.
• I continue to expect this to occur in the 2025 to 2026 time frame meaning that Meta is on track to be early or even first to market with a device that will appeal to the mass market.
• However, RFM research indicates that the real Metaverse traction may occur in AR (which Meta is also working on) rather than VR and that this is going to take even longer to get right.
• At the end of the day, even AR is still an engineering problem at its heart and with enough money, time and effort, the problems will be solved.
• The stickier problem is what RFM Research refers to as the “surfeit of silos” problem which is where all of the players are building their own Metaverse and where there is virtually no interoperability between them.
• If the Metaverse is to be the next iteration of the Internet (which is what it needs to take off), there can be only one Metaverse with all of the players allowing users to roam freely from one place to another and take their digital assets with them.
• This is not a technology issue but a business model and strategy issue and history indicates that this might be far more difficult to get right.
• I suspect that Apple will be going for a vertically integrated solution where it has complete control at every level and will be unwilling to ensure that others can access it from non-Apple devices.
• It clearly intends to use its market power to become a defacto standard in the Metaverse such that users come to it rather than it goes to its users.
• Apple’s current ecosystem is built on the open standards of the Internet, and it is these standards that have allowed the Internet on smartphones to be as ubiquitous and successful as it is.
• I think that this approach will be emulated by others and will mean that there is a general unwillingness to ensure interoperability.
• This is RFM’s Metaverse fails to take off scenario and in this instance, Metaverse devices remain within the thrall of the smartphone which keeps its place at the centre of the digital universe
• It also means that the Metaverse will be a niche destination where users go for specific activities like playing certain games or consuming certain media types.
• In this scenario, the Metaverse will never be able to earn a return on its cost of capital meaning that those that are betting everything on the Metaverse are likely to suffer big losses.
• This is why it is in everyone’s interest to ensure interoperability but achieving this is always far harder than it sounds.
• The long-term outlook for the Metaverse is very uncertain but that will not stop tens of billions from being bet on it.