The metaverse is rapidly expanding in every direction, embracing all kinds of well-known brands and challenging companies to find interesting ways to bring more virtual life into the real world. One company that was late to the game, Meta Platforms (META -0.52%), has been trying to imply that it will be the future of the metaverse, despite being a rather late-comer to the scene.
Although metaverse real estate has great potential, not every platform is going to make it. It's simply not possible. People will stay where there's interest, and we're going through the growing pains of figuring out where that is right now. But Meta, which used to be known as Facebook, isn't it. Here's why:
Image source: Getty Images.
1. Meta Platforms relies on proprietary hardware that's not had widespread adoption
Sales of Meta's Oculus Virtual Reality (VR) headset amounted to an estimated 11.2 million sets in 2021, making it one of the world's more popular headsets. That may sound like a lot of headsets, but it's important to remember that gaming platform Roblox has 54.7 million daily users, and Microsoft's Minecraft has 140 million monthly users, and neither of these platforms requires additional equipment or bulky VR gear that has been known to cause physical side effects in some people.
Meta Platform's Horizon Worlds and Horizons Venues were reported to have 300,000 total users as of February 2022, a far cry from even the 600,000 monthly active users of Decentraland (MANA -8.37%). The hardware requirement definitely plays a part in the lack of adoption of Meta Platforms' VR platforms and -- because this is integral to the software's functionality -- will continue to hold it back until something gives with VR hardware.
2. Meta Platforms doesn't give true ownership to users
Unlike blockchain-based metaverse platforms like Decentraland and The Sandbox (SAND -9.47%), Meta Platform's projects are owned by Meta at the end of the day. They don't allow for users to really own their own designs or real estate, regardless of whatever money those users may put into it. For some, this may feel like no big deal, but for many people who are adopting the metaverse, ownership is the entire point. They want to be able to wholly own what they buy and what they create, even if it's a pair of virtual sneakers or a piece of virtual art.
More importantly, Meta Platforms will never allow the control of the Horizon projects to go to its community, because the whole thing is still centrally owned by Meta Platforms. Decentraland and The Sandbox either have decentralized autonomous organizations (DAOs) as their ruling body or are in the process of creating them. These groups allow users to democratically make decisions for their own communities, including things like setting fees and deciding when or if the platform should close.
The difference in the legal structure of goods between Decentraland and The Sandbox and Meta Platforms is that both Decentraland and The Sandbox are built on top of a blockchain system that allows true ownership of virtual property. Items that are sold are deeded to the buyers, who can then do whatever they please with them, including selling them off-platform, or, as technology develops, even moving them into different metaverse spaces.
Creators of blockchain-based items that are secured by non-fungible tokens, as they are on Decentraland and The Sandbox, can also draw royalties from their creations over time, depending on the contracts tied to these items. None of this is possible with Meta Platform-based items, and if Meta Platforms decided to close shop or make an item illegal and remove it entirely, there would be no mechanism in place to appeal or draw any value from things that users may have invested in, even to the point that selling for scrap would be impossible.
3. Meta Platforms fees are egregious
There's no two ways about it, a metaverse platform is only as strong as its community, and that community is influenced by the power of the social, as well as the financial, ecosystem. By Meta Platform's own admission, it will be taking a 47.5% cut of any sale of digital assets on Horizon Worlds.
Without a healthy creative community, one that's properly incentivized, it's going to be hard for Meta Platforms to really set roots. By comparison, The Sandbox charges just 5% to users and Decentraland only 2.5%, part of which is then rolled back into those communities.
Meta Platforms isn't where the metaverse is headed
It was unsurprising that Meta Chief Executive Officer Mark Zuckerberg took an idea that was already working and tried to imply that he created it by changing the name of his company from Facebook to Meta Platforms, but the sad truth is that he's already missed the boat. Not only are Meta Platform worlds reliant upon proprietary hardware that many home users may not be willing to commit to, they aren't really even built in the spirit of the metaverse.
The metaverse is a place that's built on a strong sense of community, and often on top of a blockchain backbone. These two things go hand in hand, really. Crypto communities are growing in power and influence, and they're using the metaverse as a place to show what a person can do with these currencies. At the same time, the power of the blockchain can't be ignored, as it literally keeps track of every transaction in many metaverse platforms, so there's a solid and transparent sales history on any given item.
Transparency is going to be everything as we move toward a metaverse future. Property types like real estate, especially, require a dedicated record that demonstrates ownership beyond a doubt, and that goes doubly for metaverse real estate. The metaverse is a place where no one centralized company owns everything, and where community is what makes a platform worth engaging with.
Zuckerberg has created a VR game. It might be useful for certain activities, like having meetings for work, but it's not the thing that's going to revolutionize the metaverse concept. Proto-metaverse platform Second Life did that in 2003; we just didn't realize the impact or importance of it at the time.
