Meta & The Metaverse: Stay the Course

By Mike Fischer, Senior Analyst, Interactive Media

Meta, Facebook, and Mark Zuckerberg are not easy to love. Users hate them for selling our data and spreading misinformation, investors hate them for destroying shareholder value, and those working on building metaverses are exasperated that they seem to be doing everything wrong. But for better or worse, I’m still cheering for their success.


Before I make my case, let explain my perspective. I’ve been in the video game business since the 8-Bit cartridge console days, and I’ve watched many over-hyped trends come and go. These experiences made me skeptical, even cynical, about the latest fads and trends in games. I’ve seen many fortunes squandered because outsiders underestimated how challenging it is to build a successful business in video games. Changing the taxonomy to “interactive media” or “metaverse” doesn’t change the fact that making superb games is hard. I am nevertheless a wholehearted enthusiast about the future of the metaverse.

During my years in the video game industry, I’ve witnessed the evolution of our digital/online social interactions. When I was CEO of Square-Enix America, I received wedding invitations from couples who met while playing Final Fantasy Online and developed an offline relationship that led to real-world marriage. It showed me how these online encounters were real, meaningful relationships that enhanced and enriched people’s real-world lives.

After Square-Enix, I worked at Epic Games during the development of Fortnite, and while no one could have predicted the scale of Fortnite’s success in those early days, there was a strong passion at Epic for creating the metaverse. When early VR platforms failed to gain traction, Epic pivoted to leveraging Fortnite as their strategic driver. I knew it was on the right path when I interviewed young players who admitted they were tired of the gameplay, but still logged on every day because that’s where they “met” their friends.

Throughout the boom-and-bust cycle of the video game business, I’ve noticed a few common trends. Over time, games become:

  • more realistic and immersive,
  • more social,
  • more global,
  • more diverse and genre-breaking, and
  • the experience more emotional.

All these trends converge in a massively scaled, persistent virtual environment where people from around the world can meet and interact with one another. In other words, a metaverse.

Zuckerberg’s Metaverse

Mark Zuckerberg has his own vision of the metaverse and is investing enormous resources to build it. This project has not made him many friends. Investors, employees, and users are all calling for him to shut down the project and put his focus back on defending the legacy Facebook business against threats from TikTok, Apple, and the general decline of relevance. What these complainers don’t realize is that by building the metaverse, Meta is also building a solid foundation for the next twenty years of audience and revenue growth.

If Meta has any hope of staying competitive in the future, it must stay the course with its metaverse ambitions.

I say this because I’ve been in this situation before. I joined Microsoft as a gaming executive in its Media and Entertainment division in 2003, when the original Xbox games console was losing a fortune (in the billions). Everyone from shareholders to employees and the business media were calling for Bill Gates to shut down his pet project. People would stand up in company meetings and call for the leadership team to cancel Xbox, and I had colleagues face hostile confrontations from employees in other divisions who lost their group bonuses because Xbox kept missing its sales targets. In spite of the complaints, Bill stayed on target and doubled-down with a next-generation console, the Xbox 360, which turned around the division’s fortunes and paved the way for its future success.

A few years later, I had the chance to ask Bill Gates why he was so dedicated to the Xbox project. He admitted that in large part it was a defensive move to protect Microsoft from an attack by Sony on Microsoft’s consumer business. He went on to say that later the Xbox business became even more valuable as a competitive weapon to defend against Apple.

Today, the games business is even more critical to Microsoft, as it competes against both traditional rivals and new companies as diverse as Amazon and Netflix. Xbox has also become a strategic pillar of Microsoft’s cloud business, supporting consumer applications while Azure supports enterprises.  It should be no surprise that the biggest M&A deal in the Microsoft’s history is it’s $68 billion-dollar offer to buy games publisher Activision-Blizzard, dwarfing Meta’s investment in its metaverse business.

Risk & Reward

Its Oculus Quest 2 headset is a marvel of technology, delivering a world-changing virtual reality for less than the cost of a mid-range smartphone. These amazing devices get lighter, smaller, and more powerful every year. Sadly, the software driving the VR experiences for Oculus have mostly failed to meet expectations, just like the original Xbox. But it’s still early days. We’ve had over fifty years to learn how to make video games (Pong debuted in 1972), but it’s been only six years since the debut of the original Oculus headset. It will take time to figure out how to create an optimal user experience for those using the device. This is why I’m grateful that Meta is willing to invest billions of dollars a year until the metaverse can reach mainstream success.

Doing something new is always risky. The first television sets were crude devices and the programing was awful. Many generations of smart handheld devices failed before the iPhone (remember the Apple Newton device?). Amazon faced calls to abandon its cloud business and focus on retail. Even the internet itself was originally called a fad. To quote Gate’s law: “Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.”

Legitimate Concerns

I still have plenty of fears and concerns about the metaverse. I want it to be an open platform, with content anyone can build and contribute. I don’t want Meta, or any other company, monetizing my data in the metaverse or monitoring my private virtual activity. I want more companies to compete head-to-head with Zukerburg’s vision of the metaverse. And I want a new legal and regulatory framework to keep the whole ecosystem honest and fair.

But for the moment, we all depend on Mark Zuckerberg to keep his critics at bay and keep investing in the engineers, scientist, creators, and dreamers who are building the metaverse.