Overview of the Metaverse
On the 28th of October 2021, Mark Zuckerberg decided to undertake one of the most daring rebranding operations the market has ever seen by taking his company to a completely new online environment known as the metaverse.
The change was so drastic that he decided to rename the company itself Meta Platforms, Inc., hence abandoning the famous Facebook name which we are all familiar with.
On the 28th of October 2021, Mark Zuckerberg decided to undertake one of the most daring rebranding operations the market has ever seen by taking his company to a completely new online environment known as the metaverse.
The change was so drastic that he decided to rename the company itself Meta Platforms, Inc., hence abandoning the famous Facebook name which we are all familiar with.
Price of the ETF on Metaverse. Source: Investing.com
But let’s take a step back and get a better understanding at what the metaverse is.
According to Investopedia, “The metaverse is a digital reality that combines aspects of social media, online gaming, augmented reality (AR), virtual reality (VR), and cryptocurrencies to allow users to interact virtually. Augmented reality overlays visual elements, sound, and other sensory input onto real-world settings to enhance the user experience.”
«What is the point of the metaverse? Does it even serve a purpose? » one may ask.
The short answer is yes, the metaverse serves several purposes ranging from networking (in a more engaging way), to doing business (just like some celebrities are starting to do, thanks to the presence of NFT marketplaces) or just shopping in AR/VR.
Relevance of metaverse in Asia
Whenever we mention social media or the IoT in general, we must keep in mind a very simple, yet overlooked fact: most of its users are not westerners, but Asian.
Given this statement, we quickly realize that if we want to consider the expansion opportunities given by the multiverse, it should come natural to look eastbound.
In particular, let’s take a closer look at China: with a population of more than 1.3 billion people, 68% of which actively use social media, this may represent the single biggest market for the future multiverse, and companies are not willing to give it up without a fight.
But who are the players contending this market, and what actions are they taking to secure it?
Asian players of the metaverse industry
Comparison with Western counterparties
There are quite a few differences between these companies and their western counterparts, differences surely cannot be ignored. First and foremost, while for western-based companies share the objective of creating a collaborative environment with many business taking part in the same online reality, Asian companies are fighting for the supremacy in the sector.
Unsurprisingly, tech giant Tencent has the edge, as its customer base perfectly coincides with the potential customer base of a metaverse reality: young people who enjoy spending time, and very often a hefty amount of money, in the online world.
Tencent Holdings LTD
Tencent Holdings Ltd (腾讯) is a Chinese multinational technology conglomerate founded by a group of Chinese entrepreneurs in 1998 with funds provided by venture capitalists. It launched its first product, QQ, in 1999 and its income is derived solely from advertising and premium users of QQ. From 2008 on, the company has seen rapid profit growth thanks to the sale of virtual goods and licensing of online games. Today, the company operates in different segments (value-added services, FinTech and business services, online advertising, and others), offering services that include communication, information, e-commerce, instant messaging services, and others, making it the world’s largest video game vendor and among one of the most financially valuable companies. Its instant messaging and social networking platform WeChat became one of the unsubstitutable apps in the everyday life of Chinese people, thanks to the unique ecosystem of applications (online gaming, mobile payments, etc.). Furthermore, it is one of the largest investment holding companies, with a portfolio of listed and non-listed companies, as it started to invest in other corporations from 2011.
Black Shark
Black Shark Technologies is a cutting-edge gaming technology company founded in 2017 in China. It now focuses on creating a full gaming eco-system based on hardware, software and service. The company does so through high-end hardware, software and accessories, in particular by producing flagship gaming smartphones. Ultimately, they aim to provide an unrepeatable gaming experience to its global fanbase and to create the best gaming world with global gamers. The company was financed by Xiaomi, which invested heavily in it by 2018.
Tencent's acquisition of Black Shark
After Facebook announced the change in the company name to Meta Platforms, the “metaverse” became a buzzword. In China, the best-positioned company to gain benefit from the metaverse is Tencent Holding Ltd, which announced, in January 2022, its intent to acquire Black Shark. While Meta can count on the Oculus platform for its virtual reality headset unit, Tencent planned to fill this gap through this acquisition.
Tencent reported that Black Shark will completely change its business model from the production of gaming-oriented mobile phones and accessories to AR/VR headsets after the acquisition. The deal is valued between RMB 2.6 and 2.7 billion ($410 to $425 million) which is far below the $2 billion paid by Meta to acquire Oculus back in 2014. However, Black Shark would require further investment as now it is operating in a different segment and it doesn’t make a headset yet. The reason behind this choice is the expertise developed by Black Shark in adapting games for high-end mobile experiences through the collaboration with Qualcomm chips, crucial for virtual reality and metaverse applications. Along with its own software and platform expertise gained by its leading position as a video game distributor, Tencent could approach the metaverse opportunity through multiple pathways.
According to Bloomberg’s analyst, a Tencent centered metaverse would look like this:
"You design your 3D avatar on the QQ chat app and use it in live-stream calls with colleagues on Tencent Meeting. After work, your avatar pops into a game of PUBG Mobile and wins a ticket to a virtual concert on Kugou Music. Seeing conflicting schedules, you then sell the ticket on WeChat in exchange for a new haircut for your avatar the next morning".
China Regulation
The leap between Meta and Tencent could take a while to be closed, as the Chinese government’s scrutiny of online content and data security may complicate things. Indeed Facebook has attempted several times in the precedent years to bring its services to China, the world’s biggest smartphone market. A state-backed think tank thinks China should be ready to set up tech and ethical standards for the metaverse and deal with the challenges it brings in areas like anti-money laundering and IP protections.
Stefano Graziosi
Alessandro Chen
According to Investopedia, “The metaverse is a digital reality that combines aspects of social media, online gaming, augmented reality (AR), virtual reality (VR), and cryptocurrencies to allow users to interact virtually. Augmented reality overlays visual elements, sound, and other sensory input onto real-world settings to enhance the user experience.”
«What is the point of the metaverse? Does it even serve a purpose? » one may ask.
The short answer is yes, the metaverse serves several purposes ranging from networking (in a more engaging way), to doing business (just like some celebrities are starting to do, thanks to the presence of NFT marketplaces) or just shopping in AR/VR.
Relevance of metaverse in Asia
Whenever we mention social media or the IoT in general, we must keep in mind a very simple, yet overlooked fact: most of its users are not westerners, but Asian.
Given this statement, we quickly realize that if we want to consider the expansion opportunities given by the multiverse, it should come natural to look eastbound.
In particular, let’s take a closer look at China: with a population of more than 1.3 billion people, 68% of which actively use social media, this may represent the single biggest market for the future multiverse, and companies are not willing to give it up without a fight.
But who are the players contending this market, and what actions are they taking to secure it?
Asian players of the metaverse industry
- Tencent: in this very moment, Tencent Holding is China's leading contender for global metaverse dominance. With irreplaceable apps like WeChat, Kogou Music, and Tencent Meetings, as well as sizable stakes in other global metaverse players like Fortnite creator Epic Games, Activision Blizzard, Ubisoft, Roblox, and even SnapChat, the media conglomerate already owns a sizable chunk of cyberspace real estate. Tencent has recently gone on a cybernetic rampage, recruiting new creators for immersive games, investing in every game producer in its area of view, and filing approximately 100 metaverse trademarks. It is the most advanced competitor on this list since it has a star-studded lineup of portfolio firms or collaborators ready to contribute to each piece of the metaverse jigsaw. They include world-class games developers (Epic Games), user-generated content platforms (Roblox), social networking platforms (Soul, WeChat), 3D simulation developers (Avakin Life), and a world-class cloud computing firm (Tencent Cloud).
- Huawei: mostly renown in the European market for its cellphones and consumer electronics, the telecommunications behemoth is looking at the metaverse for new growth opportunities after a turbulent 3 years of US sanctions.
Huawei made a step toward that future last November when it released the Starlight Tower app, an immersive augmented-reality game. The program works similarly to Pokemon Go, in that it turns the user's surroundings into an immersive augmented reality experience. Huawei debuted a demonstration of the underlying 3D-mapping technology, known as Cyberverse, in Beijing's Shougang Park during the 2022 Beijing winter Olympics in January. Analysts believe that this technology will form the foundation of any future Huawei metaverse offering.
The company's leadership in 5G-related technology, as well as thousands of patents in VR, processors, and operating systems, will be particularly beneficial to its metaverse goals.
- Alibaba:
When it comes to Alibaba, we can see signs of the tech giant’s metaverse ambitions since 2016, when it invested $790 million in the augmented-reality upstart Magic Leap. Since then, the business has invested more than $1 billion in startups focused on augmented reality and virtual reality.
As the latest addition to its lineup, Alibaba recently launched Ayayi, its first digitally created celebrity idol. Ayayi is an AI-powered avatar with an uncanny similarity to humans in every way, from her facial expressions to her body movement. Then it was the turn of its own "XR lab" (where XR stands for extended reality) in December, which then gave birth to Alibaba’s Zoom-like office tool, DingTalk, which just introduced new AR glasses to allow users to conduct virtual meetings.
Comparison with Western counterparties
There are quite a few differences between these companies and their western counterparts, differences surely cannot be ignored. First and foremost, while for western-based companies share the objective of creating a collaborative environment with many business taking part in the same online reality, Asian companies are fighting for the supremacy in the sector.
Unsurprisingly, tech giant Tencent has the edge, as its customer base perfectly coincides with the potential customer base of a metaverse reality: young people who enjoy spending time, and very often a hefty amount of money, in the online world.
Tencent Holdings LTD
Tencent Holdings Ltd (腾讯) is a Chinese multinational technology conglomerate founded by a group of Chinese entrepreneurs in 1998 with funds provided by venture capitalists. It launched its first product, QQ, in 1999 and its income is derived solely from advertising and premium users of QQ. From 2008 on, the company has seen rapid profit growth thanks to the sale of virtual goods and licensing of online games. Today, the company operates in different segments (value-added services, FinTech and business services, online advertising, and others), offering services that include communication, information, e-commerce, instant messaging services, and others, making it the world’s largest video game vendor and among one of the most financially valuable companies. Its instant messaging and social networking platform WeChat became one of the unsubstitutable apps in the everyday life of Chinese people, thanks to the unique ecosystem of applications (online gaming, mobile payments, etc.). Furthermore, it is one of the largest investment holding companies, with a portfolio of listed and non-listed companies, as it started to invest in other corporations from 2011.
Black Shark
Black Shark Technologies is a cutting-edge gaming technology company founded in 2017 in China. It now focuses on creating a full gaming eco-system based on hardware, software and service. The company does so through high-end hardware, software and accessories, in particular by producing flagship gaming smartphones. Ultimately, they aim to provide an unrepeatable gaming experience to its global fanbase and to create the best gaming world with global gamers. The company was financed by Xiaomi, which invested heavily in it by 2018.
Tencent's acquisition of Black Shark
After Facebook announced the change in the company name to Meta Platforms, the “metaverse” became a buzzword. In China, the best-positioned company to gain benefit from the metaverse is Tencent Holding Ltd, which announced, in January 2022, its intent to acquire Black Shark. While Meta can count on the Oculus platform for its virtual reality headset unit, Tencent planned to fill this gap through this acquisition.
Tencent reported that Black Shark will completely change its business model from the production of gaming-oriented mobile phones and accessories to AR/VR headsets after the acquisition. The deal is valued between RMB 2.6 and 2.7 billion ($410 to $425 million) which is far below the $2 billion paid by Meta to acquire Oculus back in 2014. However, Black Shark would require further investment as now it is operating in a different segment and it doesn’t make a headset yet. The reason behind this choice is the expertise developed by Black Shark in adapting games for high-end mobile experiences through the collaboration with Qualcomm chips, crucial for virtual reality and metaverse applications. Along with its own software and platform expertise gained by its leading position as a video game distributor, Tencent could approach the metaverse opportunity through multiple pathways.
According to Bloomberg’s analyst, a Tencent centered metaverse would look like this:
"You design your 3D avatar on the QQ chat app and use it in live-stream calls with colleagues on Tencent Meeting. After work, your avatar pops into a game of PUBG Mobile and wins a ticket to a virtual concert on Kugou Music. Seeing conflicting schedules, you then sell the ticket on WeChat in exchange for a new haircut for your avatar the next morning".
China Regulation
The leap between Meta and Tencent could take a while to be closed, as the Chinese government’s scrutiny of online content and data security may complicate things. Indeed Facebook has attempted several times in the precedent years to bring its services to China, the world’s biggest smartphone market. A state-backed think tank thinks China should be ready to set up tech and ethical standards for the metaverse and deal with the challenges it brings in areas like anti-money laundering and IP protections.
Stefano Graziosi
Alessandro Chen