In a previous article, I reported on the issues Facebook (Meta) is facing – currently betting house on its Meta service, based on a software platform that will create a virtual reality (VR) networked environment.
I mentioned that I was critical about this business model and that I don’t see, at least in the foreseeable future, a platform (based on virtual reality) that would transform the Internet or mobile networks into virtual reality environments . I also mention that I see interesting markets for VR in certain sectors.
By far the most lucrative of these markets is games.
Here, virtual reality is already well entrenched, and there is no doubt that new developments in virtual reality and augmented reality (AR) will drive this market forward. And yes, the trend here is also very much towards network gaming platforms.
Over the past few years, it has become clear that the big digital media companies are aiming to become the dominant players, unfortunately at the expense of the many smaller (local) players in this market. Microsoft has clearly claimed this market, as have Apple, Google, Amazon and Meta (Facebook). They all make big investments.
These companies will follow a similar business model to Netflix and will offer many online games based on low monthly fees. The battle unfolding is much the same as what we’ve seen unfold in the video streaming market.
The games market is bigger than the total video market – TV, streaming and music combined, so the stakes are very high. It is estimated that the market currently generates nearly US$200 billion (A$279 billion) per year.
But beyond Facebook, none of the other players envision these gaming platforms replacing or overtaking bigger and broader internet or mobile platforms. If Facebook continues its Meta business, it will mean it becomes a key player in the gaming market, but I don’t see that as a good fit with its current social media platform.
Moreover, Facebook is not a leader in this market. Nintendo and Sony have long dominated the market – both also prominent players in the online gaming market – and Facebook’s digital media competitors are also moving into this market.
The bigger players are quickly buying out the smaller players, so there’s no doubt that it will be the big digital media companies that will dominate this market, and the local operator market will be crushed – as we’ve seen on the others digital media markets (video entertainment and music).
So the battle is on. However, smaller game studios have the advantage of innovation and creativity, and they can still play a vital role in the market. Nevertheless, the market will be difficult for everyone. Those still operating in the standalone market will find it difficult to survive (with the possible exception of a few niche players) as this market will continue to survive, albeit as little brothers to the big online game companies.
A final word on Facebook. Yes, it will become a major player in this market, and its Meta investments will lead to new products and services. The question, however, will be: what will this mean for the old Facebook service? Facebook is dominant (outside of China) in social media, but in the online gaming market, it’s hard to see that Facebook will be the dominant player.