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The face of the tech world, Mark Zuckerberg, is getting attention for his massive bet on the Metaverse. Recently, a Meta shareholder called the company’s massive investment in Web3 technologies, largely defined by 3D immersive virtual worlds, “outsized and scary.”

During the company’s third-quarter 2022 earnings call, an analyst posed a question asking whether Meta’s experimentation with the Metaverse was bearing fruit in terms of user engagement, and whether the Metaverse opportunity was “as expected by the company.” development,” Zuckerberg said that while many may disagree with the investment, it will be an important stepping stone in building the future of technology.

“It would be a mistake if we didn’t focus on any of these areas, which are critical to the future … this is some of the most historic work we’re doing that people will look back on decades from now , talk about the importance of the work being done here,” said Founder, CEO and Chairman of Meta Platforms. Meta’s Reality Labs, which is developing the building blocks of virtual worlds, posted an operating loss of $3.7 billion in the third quarter, and The Wall Street Journal recently reported that Horizon Worlds, the company’s main virtual worlds product for consumers, has failed to deliver. Users are impressed.

It remains to be seen how far and wide-ranging Metaverse’s less popular attempt to build the Metaverse will be to the wider Metaverse and Web3 ecosystem, but the hype surrounding the entire concept has certainly waned over the past few months. Much of the hype cycle around web3 and the Metaverse over the past two years has come from capital invested in the space.

This capital is the result of a decade of easy monetary policy with a cost of capital of almost zero, implying a much higher appetite for risk. Salone Sehgal, founding general partner of Lumikai, a venture capital fund focused on games and interactive media, said that investors often seek newer platforms, newer technologies to invest in, in order for them to get any meaningful return.

“Over the past 12 months, many public market companies have come under pressure and cut allocations as the global cost of capital shifted and funds pulled capital from riskier bets, implying a fundamental shift in risk appetite . So the risk of building the metaverse, the risk of building the blockchain is now more visible, affecting appetite,” Sehgal said.

Praneet Singhal, director of 1Lattice (formerly PGA Labs), noted that investors have become increasingly sensitive to the risk of mass adoption in the Metaverse, especially after Meta lost half its value since transitioning to a new brand identity, followed by a rebrand. in case of mass layoffs.

“Investment in VR, AR and virtual worlds has also declined in recent quarters compared to last year, but some big deals are still in the works,” Singhal said.

The broader question, then, is, is the metaverse a fad or a long-term proposition? Analysts are divided on the issue. Deloitte pegs the Metaverse’s potential economic impact on India in 2035 at around $7.9-148 billion per year, or 1.3%-2.4% of total GDP. The rationale behind this estimate is the country’s young digital population more likely to experiment with virtual worlds, the large pool of skilled talent capable of contributing to the digital workforce of the Metaverse, and the favorable approach taken by businesses.

“Major Indian companies such as Infosys and Tech Mahindra have set up metaverse subsidiaries. Moreover, analysts at Deloitte said that India’s unique cultural assertions in terms of language, religion and entertainment can give its virtual worlds a unique flavor.

In fact, according to Devroop Dhar, co-founder and managing director of business and management consultancy Primus Partners India, India already hosts about 11 percent of the world’s skilled Web3 talent. According to Dhar, the concept of the Metaverse is “pretty sustainable,” and the rollout of 5G will only increase adoption of the technology.

“Today, everyone realizes that the Metaverse has some real use cases. In India, we’re seeing early adopters in this space. There are quite a few conglomerates using it in large employee engagement programs. We’re seeing food chains , jewelry brands and even the auto industry are subscribing to this concept. The discussion around the metaverse today is not about if we should but what we can do and how does it help? 5G is a very important milestone that will enable more of this function,” Dhar said.

Lumikai’s Sehgal is skeptical, though. Sure, conglomerates are embracing the Metaverse idea, but their ability to innovate quickly and attract enough talent to shape this futuristic technology is a bigger question.

“Many of these conglomerates are publicly listed. If the ROI on these investments is not very positive, I wouldn’t be surprised to see some of that capital rolled back and projects canceled within a few quarters or so. To make virtual worlds as persistent virtual worlds a reality, we need to solve interoperability, concurrency, and scalability issues that are years away. Meta is working on implementing any kind of basic Fidelity.

If you look at the quality of it, it looks like it was programmed and produced in 2010 rather than 2022,” Sehgal said. Also, the adoption of Web3 by Indian users is still low. The core user base has not outgrown the early spread early adopters and early adopters, despite considerable investment in consumer-facing experiences and playing games. Furthermore, Sehgal believes that gaming is popular in India simply because 95% of the gaming market is dominated by mobile games, And in many cases, mobile games are free.” Affordability, accessibility and accessibility of Web3 games are all current challenges. Investing in Web3 games also requires the use of tokens and the creation of wallets, which both require financial maturity and can be a financial barrier to playing,” Sehgal said.

Still, Kaavya Prasad, founder of Web3 enabler Lumos Labs, which is building its own metaverse, is optimistic. Prasad said the metaverse is here to stay, a concept that has been around since the ’90s through immersive games. The concept is just taking on different shapes and forms now.

“If you really look at the concept of virtual worlds/virtual worlds, around 2003, we had this game called Second Life, which is a precursor to the concept of virtual worlds today,” Dhar said in an almost similar fashion. Said. However, the right way to carve out space in such an emerging market should be to develop goal- or utility-driven metaverse platforms, at least initially.

“A goal- or utility-driven metaverse will start the trend toward mass adoption of metaverses. We are too early for the general-purpose metaverse that Meta is trying to build,” Prasad said. Numerous debates surrounding the metaverse continue, but only time will illuminate the future of the metaverse.

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