Facebook‘s decision to rename itself as Meta left many in Hollywood with a slightly mystified, “Huh, that’s sort of interesting” reaction. But regardless of Meta’s long-term success, the move signals a far broader shift in how we will find, consume, share, even define, entertainment in coming years. And that will matter a lot to the video business, and probably far sooner than many would like.
The long-signaled announcement by CEO Mark Zuckerberg on Thursday fueled endless gleeful takes on other, better names for the company. Personally, I lobbied for AltriaBook, invoking the rebranding by another notorious maker of toxic, addictive products we can’t quite kick. (SacklerBook was already taken.)
The Meta name is supposed to reflect the company’s huge commitment to building their version of a three-decade-old vision, an immersive and interconnected future called the Metaverse. Like so many things in the Meta/Face universe, they copied this idea, too, from a 1992 sci-fi novel called Snow Crash by Neal Stephenson.
More notable is a shift in Meta/Face financial reporting. The company said its Reality Labs unit will be carved out of its “Family of Apps” division, and show $10 billion in virtual-reality spending this year. That’s a big number.
And that big number comes amid a bunch of other big numbers. Analysts estimated the company has spent $30 billion on VR and Metaverse projects over the past five years. Going forward, they estimated the company will spend $12 billion annually on Reality Labs.
For perspective, that’s around 70% of Netflix’s mammoth video-programming budget. It dwarfs the content spending by some other Hollywood players, never mind their interactive investments.
And worse news for Hollywood, Meta/Face isn’t the only Silicon Valley giant spending billions on immersive technologies. Microsoft, Alphabet, Epic, Amazon, Intel, HTC, Steam, Nvidia, Roblox, Sony, Apple, and Qualcomm are all researching, buying, building and selling VR-related products and companies.
And though Zuckerberg recently extolled the horrifically named “enterprise Metaverse,” wearing a headset to work in a virtual office will, thankfully, be only part of the future these companies are building.
Apple — expected to debut its VR headsets in the next 18 months — bought a startup last year that broadcasts VR versions of live sports, giving consumers their choice of a seat anywhere in the venue, among much else.
Watching sports, movies, concerts, games, and other entertainment in digital spaces is becoming more common, thanks to co-viewing apps such as Scener, and built into apps from Amazon, Hulu and soon, Apple’s iOS operating system.
One of the most mature expressions of the Metaverse comes from Roblox, which went public this year after a decade of quiet but massive growth.
Roblox and competitors Minecraft and Fortnite "have emerged as the dominant ones collectively helping enable the building blocks of the ‘Metaverse,” LightShed Partners wrote in initiating Roblox coverage in May. “While we don’t know if or when we ever reach that mythical fully interconnected 3D world (or if we want to), one thing is clear: people will spend much more time in interactive space and brand new experiences, some of which we may not imagine today, will emerge under the leadership of these platforms. And, as in any major change in media, the category-defining platforms should become massively valuable companies.”
Meta/Face is trying to do some of the same thing. Meanwhile, Roblox just hosted an entire music festival, the Electric Daisy Carnival in Las Vegas.
It’s also moving into broadcast-quality video. Spin Master animated series Bakugan Geoghan Rising streamed an episode on Roblox in September, a week before appearing on Netflix. The Bakugan project caught the eye of a lot of children’s video executives. They, more than anyone in Hollywood, have to build where their youthful audiences are going, on platforms such as Roblox, which may not be where older audiences spend their time.
And that’s a key: where audiences of the future will be, and what they’ll be doing there. The last generation spent their time on mobile devices. As LightShed noted, the next generation likely will spend far more time in a communal virtual space, entertaining themselves in many ways.
Another key, as Stephenson noted on Friday when asked about the Meta about-face: “The revenue model — the way that the makers of the system make money — is more important than anything else because it drives the technical features.”
Stephenson’s 1992 vision of the Metaverse came out of frustrations with an interactive art project that struggled to make “various pieces of expensive hardware” work together.
“It was difficult and expensive and I began to ask myself what would have to happen to make this kind of 3D graphics technology as cheap and ubiquitous as television was at the time,” Stephenson said. “Some kind of mass-market application seemed to be the answer — the equivalent of I Love Lucy or The Ed Sullivan Show — an entertainment product that would actually cause millions of people to go out and buy this hardware and bring the price down.”
On one side of that equation, Meta/Face is selling what it used to call its Oculus Quest 2 VR headsets at what is almost certainly a subsidized price, trading short-term profits for long-term market share.
Zuckerberg knows that, big as Meta apps Facebook, Instagram, and What’s App are (some 3.5 billion combined users), he’s still at the mercy of walled gardens controlled by Apple and Alphabet. Having his own not-so-walled garden in the Metaverse, and (oh, boy!) control over even more kinds of user data, is crucial to Meta/Face’s long-term relevance.
Netflix is quietly working on the content side of the same challenge. Co-CEO Reed Hastings routinely talks about the company’s competition including Fortnite, from Epic Games, whose CEO, Tim Sweeney, has been one of the Metaverse’s most active proponents.
It’s also one reason why Netflix launched a games division this year with no expectation of profits, or even fees, anytime soon. Hastings knows his company needs to learn to tell stories in new ways, on new platforms, to remain relevant.
Stranger Things is cool. How much cooler will it be to participate in an immersive, interactive episode set in 1980s Hawkins and the Upside Down, then send a video mail to a colleague, and later join a friend from another state to bet on and watch a soccer match. You’d do all this after stopping by a video mall for a new digital outfit, then posting videos of your avatar wearing your Marvel X Manchester United jersey and celebrating a goal with a custom dance routine.
We’re not there yet, but the Meta/Face renaming is another indicator of the vast resources Silicon Valley is spending to build versions of the Metaverse future of entertainment and so much else. The question now is whether Hollywood companies will do more than note the news with some slight mystification, and go back to worrying about quarterly subscriber adds.
