What is Metaverse and What it Means for Investors?
On October 28th, 2021, Mark Zuckerberg shocked the world by announcing he was changing the name of his brand from Facebook to Meta. Since then, Meta has become a buzzword that seems to struggle to be defined. Is the metaverse a product of Zuckerberg's imagination? Is it the future of the internet? Or does it already exist in some fashion and is waiting to be turned into something fresh and usable?
Defining Metaverse
The metaverse does not refer to one specific technology. However, it is a mix of virtual and augmented reality and video and the future of how we interact. The combination of the technologies helps connect people in the digital universe. The overall vision for the metaverse is to enable people to work and play from different locations and bring them together into a virtual area.
Metaverse originates from the combination of two words, meta, and verse. Meta is the Greek prefix meaning 「beyond,」 and verse comes from the word universe.
Before we go any deeper, let's describe the metaverse in a way you already are familiar with: The Matrix. The Matrix is a famous movie series that leads the character Neo trapped in a simulated reality. Many hardcore sci-fi fans find similarities between The Matrix and futuristic dystopian books 「Neuromancer」 and 「Snow Crash.」 These books were written years before the first film came out in 1999.
They pit reality against virtual reality dataspace. In particular, 「Snow Crash」 allows the characters to access this virtual world using goggles and terminals, similar to the Oculus Facebook put out in 2012.
In many ways, the metaverse already exists. Video games called Massively Multiplayer Online Games, or MMOs, have been around for a while. Individual users can log in, interact and play together in this massive online world.
These worlds aren't connected, meaning there are many thousands of metaverses in existence. MMOs are different from the metaverse that Zuckerberg hopes to create. Borrowing from this long-existent idea, Zuckerberg wants to create the next version of the internet. A version where everyone is together experiencing the internet in a virtual format.
「We've gone from desktop to web to mobile; from text to photos to video. But this isn't the end of the line,」 writes Zuckerberg in a recent letter to his employees. 「The next platform will be even more immersive and embodied internet where you're in the experience, not just looking at it. We call this the metaverse, and it will touch every product we build.」
What Industry Leaders Think About the Metaverse
As of now, the metaverse is a work in progress and being developed with hope within the tech industry that the advancements will continue to make it our everyday new reality. Metaverse is not just about creating the software, but also gaining wide acceptance. The future of the metaverse will require other industry leaders to jump in and help collaborate to bring together a brand-new internet that has everything we love.
According to Zuckerberg, the metaverse isn't just content you watch, like a 3D version of YouTube. Instead, you're fully immersed in it. Apple CEO Tim Cook said: "We just call it (the metaverse) augmented reality (AR)." Roblox CEO Dave Baszucki believes: 「The meta-universe includes at least the following elements: identity, friends, immersion, low latency, diversity, and everywhere. Economic system and civilization.」
Many big tech companies like Microsoft ( NASDAQ: MSFT), Nvidia, and Huawei, amongst others, are already looking for their piece of the new internet and establishing their brands to help develop it. As these companies become invested, look for the metaverse to grow and become a space for competition among brands.
More industry participants will be engineering the "metaverse," resulting in more sub-sectors. The "metaverse" that appears in front of us will become more and more diverse in the future.
Metaverse Stocks and the Upcoming Watchlist
The exciting part of the metaverse is that it's not one specific product owned by one company. It will likely be a collaboration of many companies and products, and as such, there are multiple stocks you can consider if you want to invest in the future of metaverse. According to Nasdaq and The Motley Fool contributor John Ballard, the metaverse could double in value by 2025, reaching a staggering $400 billion. Let's look at just a handful of different companies looking to bring this all together.
Meta Platforms Inc. ( NASDAQ: FB), formerly known as Facebook Inc., currently owns Instagram, WhatsApp, and Oculus. Having already invested in the VR space, Zuckerberg looks past his social media empire at the next big thing.
Earlier in 2021, Nvidia ( NASDAQ: NVDA), a leading manufacturer of advanced graphics processing units (GPU) for PCs and gaming revealed Omniverse and launched for Enterprise 3D production teams. The Omniverse is the world's first collaboration and simulation platform that allows virtual developers to create and share digital worlds, which could be a significant step in helping create the metaverse.
The gaming company Roblox ( NYSE RBLX) had a head start building metaverse. According to New York Times, they may have the most expansive vision of the metaverse. In 2020, Roblox hosted a virtual concert for Lil' Nas X that was viewed by over 30 million people.
A video game software development company, Unity (NYSE: U), is another company looking to make a splash in the metaverse. Blockbuster movies and video games across many platforms, including mobile, game consoles, PCs, and VR, use their software. Just a few months ago, Unity purchased Weta Digital in a staggering move that cost $1.625 billion. Millions of users' content created using this software could be the next cornerstone of the metaverse.
Apple ( NASDAQ: AAPL) planning to work on Metaverse is no longer a speculation. During the first quarter of 2022 earnings calls, Apple CEO, Tim Cook has said that they see a lot of potential in Metaverse and are investing accordingly to explore the environment. They are expected to launch their first Mixed Reality AR product this year. However, according to Bloomberg, they are not venturing into the Metaverse with their headset product just yet.
Previously, Apple has developed a chip designed to reach M1 computer power with 8K resolution. Meta's release of new and upgraded Oculus products should not have a problem entering the metaverse.
When Is It the Right Time for Investors?
You might be thinking today is the perfect time to invest. It should be a safe bet if this is truly the start of the new internet. Not so fast! Look at the last 10-20 years within the tech world. We've seen mega giants rise and fall. Some are still with us, like Google, and many have died, like AOL. Metaverse is so new that it's impossible to tell where it's leading and who will lead the charge. It might turn out to be a dud for Meta, but a new dark horse company comes in and revolutionizes the industry.
The entire enterprise won't be an overnight success, and we're likely to see a slower adaptation that could take a decade or more. Products like Google's glasses might've been ahead of the times, but a similar product in the future could make the metaverse more accessible. It will be interesting to see where the future of gaming ends up and how adaptable they will be in the metaverse.
It's easy to be bullish on a great idea, but it may be too soon for the metaverse. The best thing you can do is keep an eye on the tech industry and study what they are doing.
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