Understanding the Metaverse Experience

Having spent a week engaging with 'the Metaverse,' I find it captivating, yet wholly irrelevant to Facebook's interests. There are opportunities within this virtual landscape, but they do not align with Facebook’s current business model. Meta is unlikely to achieve the extraordinary returns that its investors are anticipating.

Facebook's Revenue Framework

Facebook's operational model resembles a Marxist dilemma. Users supply their own resources and efforts to create content, which Facebook then monetizes for profit. When you share a photo or video, you're effectively generating value for Facebook. Even using WhatsApp contributes a wealth of data.

Both everyday users and high-profile individuals invest significant effort into producing content for Facebook, which is then sold to advertisers for considerable profit. Users also come equipped with their own devices—computers, smartphones, and cameras—while companies provide full-fledged production resources. This model allows Facebook to harness free labor and capital, creating a highly lucrative enterprise reminiscent of a self-sustaining newspaper.

However, this revenue approach is disconnected from the Metaverse.

Meta's Standard Business Approach

The Meta business model appears more conventional. The platform essentially functions as an expansive app store. For instance, I might purchase a game like Fruit Ninja for $15, with Facebook taking a portion of the sale—a typical arrangement for any app store. Assuming a gross profit margin of 30%, this isn't the high-profit scenario investors might envision.

When navigating the Metaverse, I find myself merely as an avatar without real engagement. I am just another shopper in a virtual marketplace. This experience diverges from what Facebook's investors expect; if they wanted an investment akin to Steam, they would have pursued that avenue.

The Metaverse, in its current state, lacks the ability to generate user-created content effectively. High-quality VR content requires substantial investment, often necessitating Facebook to cover these costs. It’s likely that the company is not achieving a gross profit margin of 30% on its applications and might even be incurring losses on each Oculus headset sold.

The technology for producing VR videos or images is still in its infancy. Consuming media in the Metaverse is akin to viewing a TV show on a smaller, lower-quality screen. Users cannot even customize their avatars significantly, resulting in a sea of indistinguishable characters. Once the novelty fades, the experience can feel overwhelming and tedious.

Many of the social applications built by Facebook leave much to be desired. For instance, Horizon Venues resembles a dull gathering space rather than a vibrant social environment.

The Reality of Horizon Venues

The lack of screenshot capabilities inside Horizon Venues leads to a misleading representation of what the experience actually entails. Most avatars appear robotic and generic, and the audio is often a jumbled mix of foreign conversations, which only adds to the disorienting atmosphere.

Walking into a venue may simply lead to watching a low-resolution video on a poorly designed screen, which feels like watching a show on a worse TV. My hesitance to explore Horizon Workplaces stems from not knowing anyone who uses it, which is another significant barrier.

It’s perplexing to consider how Facebook has invested billions into this endeavor while failing to generate equivalent returns. While social interactions in VR could certainly be engaging, Facebook lacks natural advantages in this space, compounded by the disadvantages of its brand reputation.

Unlike the original Facebook, which thrived on a minimal server setup and organic growth, Meta has to expend vast resources to attract a mere handful of users who may leave feeling disenchanted. Furthermore, using VR headsets often leads to discomfort after prolonged periods, making it less accessible than traditional social media platforms.

The Value Proposition of VR

Currently, Facebook derives about $18 monthly from U.S. users, who undertake most of the labor. In contrast, the Metaverse requires Facebook to exert considerable effort, yielding perhaps only $5 every few months—if it’s fortunate. I have yet to make any purchases, with the headset itself being a gift.

While there is potential within the Metaverse, it does not align with Facebook’s business model, which fails to capitalize on surplus labor to yield substantial profits.

Examining Marx's Theories in the Metaverse

From a Marxist perspective, wealth is not created in a vacuum. As Marx stated, the value of goods stems from "congealed quantities of homogeneous human labour." This description aptly characterizes Facebook's wealth, derived from capturing vast amounts of user-generated content.

Facebook's financial success has stemmed from its ability to harness surplus labor from users, effectively mining social capital from celebrities, corporations, and the general public. Individuals invest considerable time sharing updates on Facebook, Instagram, and WhatsApp, providing valuable content for the platform.

Unlike Facebook, which turned social capital into gold, Oculus simply represents a typical retail environment. It offers a collection of intriguing products but lacks the immense value expected by Facebook's investors.

There is a viable business within VR, yet it operates like any standard enterprise, producing moderate returns through sales. While there is potential for profit, it is nowhere near the extraordinary margins Facebook once enjoyed through user-generated content.

The Path Forward for VR

I acknowledge that there is a business model for VR, and it is undeniably engaging. My children enjoy it immensely, and even our dog reacts as if we are possessed—an experience ripe with potential for profitability or sheer hilarity. However, this reality does not equate to Facebook's core business interests.

For Facebook, the current landscape of the Metaverse appears to be a significant misstep.

Testability of Predictions

In the realm of technology forecasts, the potential for error is high, so I aim to formulate a hypothesis that remains falsifiable. My assertion is this: Facebook has profited by leveraging user surplus labor, while Meta is unlikely to achieve similar success since it does not tap into that labor and functions more like a trading entity.

This hypothesis could be disproved if Facebook manages to capture labor within the Metaverse. For instance, if virtual meetings or events gain traction, or if advancements in consumer tech enable remarkable 360-degree content. However, it is more plausible that the rewards would go to the companies innovating in these areas rather than Facebook.

Moreover, if VR surges in popularity and leads to an influx of app development, Facebook might see a substantial income from its 30% share. Yet, the Quest headset is unlikely to become the flagship device of this domain—an opportunity that might instead be seized by Apple.

Lastly, the Metaverse could theoretically yield significant profits through virtual assets or NFTs, yet many individuals are already successfully creating these with simple tools, making it difficult to justify the expense of VR as anything but a liability. Coupled with its heavy regulation, Facebook appears to be facing a challenge akin to operating a Ponzi scheme.

Thus, within my own reasoning, I outline how I could be mistaken. Time will tell.