The metaverse, a virtual universe of interconnected worlds, has billion-dollar potential as a forum for commerce, entertainment, and social contact. The fact that ‘new internet’ operators want to place a high value on ‘content creators’ is divisive for the nascent revenue model.
The metaverse doesn’t really exist yet, but it’s under construction. Gaming platforms like Roblox
and Epic Games’ Fortnite are some of the big players in that sector. Just how big the appetite for the metaverse is, this week was shown again from the $1 billion that both entertainment company Sony and the investor behind toymaker Lego are putting into Epic Games to build a virtual universe for kids. The social medium Facebook has already become Meta Platforms.
horizon worlds | metasearch 2
Billions of dollars are being spent to create the ‘new Internet’. One day this should be worth billions in revenue. Bloomberg Intelligence sees an $800 billion market opportunity in 2024 for the metaverse, which includes video games and the sale of headsets and consoles. What the revenue model will look like for platforms is the subject of heated debate. This follows from an explanation by Meta Platforms about its still very young virtual worlds platform, Horizon Worlds.
The legless avatars of Horizon Worlds have already created about 10,000 worlds.
Horizon Worlds is currently only open to adults in Canada and the US. You need a Meta headset, the Quest. Soon this could be possible with smartphones and later with game consoles. The Verge site reported in February that Horizon Worlds has 300,000 monthly users. A pittance compared to the reach of Meta, which sees a whopping 3.6 billion people each month.
But CEO Mark Zuckerberg is a big believer in the potential. “We want masses of great worlds. That’s why we need a lot of creators who can make this their profession,” his avatar version said during a group discussion at Horizon Worlds. Because in addition to chatting and hanging out, users can create digital environments, ‘worlds,’ and offer digital goods and services The legless avatars of Horizon Worlds have created some 10,000 worlds and a creator group on Facebook has more than 20,000 members.
Mark Zuckerberg on monetization in Horizon Worlds
Virtual worlds cost money. Think of servers and heavy computers that consume a lot of energy and need regular updates and security. Users and creators also want all kinds of features and demand interventions against misconduct. Advertising then seems like a logical source of income. But for now, only the Wendy’s hamburger chain has created its own commercial world.
In addition to Roblox and Horizon Worlds, there are many more virtual worlds with markets for user creations. To stay with the biggest players: Microsoft-owned Minecraft has more than 140 million monthly users and gives creators “more than 50 percent” of its sales. Second Life isn’t one of the biggest players, but it’s a pioneer with a loyal audience. The commission on the market is 10 percent.
Recently, Epic Games, the company behind the Fortnite game, and the Lego Group announced a virtual world for “kids of all ages.” It is not yet known under what conditions the creators start working there
So Horizon looks at creators, who sell virtual things in their worlds, like exclusive access or items like digital jewelry and sporting goods. On those transactions, Meta earns money through commissions. The price is complex. Thirty percent will go to Meta Quest, the company’s virtual reality platform. Of the rest, another 25 percent will be cut for the Horizon Worlds metaverse platform. The result is that Meta receives 47.5 percent of the revenue. By comparison, Apple, which is being criticized by Meta, among others, for its commission on the iOS app store, retains 30 percent.
According to Meta, revenue sharing with creators is competitive. On Roblox, where mainly young creators are active, the platform averages just over 70 percent. It has 200 million monthly active users. In December of last year, 1.7 million users earned robux, which is Roblox’s proprietary currency convertible to regular money. As of 2018, the developers have earned around $761.3 million. Still, Roblox makes a loss. In the last quarter of last year, the loss was $143.3 million compared to $58.7 million a year earlier.
In competitive virtual environments like The Sandbox and Decentraland, digital swaths of land and goods are traded as non-fungible tokens (NFTs). These are digital records that refer to objects and are kept on a network of computers, a chain of blocks. Because records are unique, they can also change hands in markets outside of those virtual environments, unlike Roblox or Horizon creations. They are limited to their environment.
NFT fans point out that the leading marketplace OpenSea charges a commission of no more than 2.5 percent, just like the Decentraland marketplace. The Sandbox is at 5 percent. So why use big companies that cost the creator much more? The reactions on social networks did not lie. “There is no way for creators to choose a platform that takes almost half of their revenue when they can do the same work elsewhere and capture almost all of the value. End of conversation,” reads Twitter.
It is notable that companies like Roblox, where CEO David Baszucki is a strong supporter of the metaverse, are wary of NFTs.
It is notable that companies like Roblox, where CEO David Baszucki is a strong supporter of the metaverse, are wary of NFTs. Perhaps because they believe that it is a trend that is undermining their business model and they still do not feel that their users demand NFT.
It’s also not the case that the creators of Roblox are switching en masse to blockchain worlds like Decentraland. The functionalities and scale of the large platforms are strong weapons in the competition. Ultimately, it may be the regulators who demand that the big platforms be fair in allocating revenue.
- Meta Platforms allows a handful of creators to sell virtual goods on Horizon Worlds, a platform for virtual worlds. It is a first step. The intention is that many more people can make a living in the metaverse.
- Creators must give 47.5 percent of their income to Meta.
- Meta states that this percentage is competitive. On Roblox, the commission goes up to 70 percent.
- Blockchain worlds powered by crypto tokens have much lower percentages.