South Korea is raising the stakes in the metaverse, but will it be enough to save Meta’s vision?
South Korea is doubling down on its metaverse ambitions. The nation’s $200bn sovereign wealth fund is increasing its investment in Silicon Valley startups. The Korea Investment Corp (KIC) will focus especially on metaverse and artificial intelligence ventures.
The news comes just days after Facebook owner Meta suffered one of its bloodiest days ever on the stock market, casting doubt on the mixed-reality metaverse future envisioned by CEO Mark Zuckerberg.
The metaverse is described by GlobalData social media research as a “virtual world where users share experiences and interact in real-time within simulated scenarios”.
South Korea has skin in the game when it comes to the metaverse. The country’s Ministry of Science kicked off 2021 by announcing plans to invest $7.5bn into digital technologies in 2022, with almost 9% devoted to South Korea’s metaverse industry and cloud services.
The Ministry of Science subsequently launched a nationwide initiative with 17 of South Korea’s industry leaders in May 2021. The project aimed to establish ethical and cultural standards as well as to share insights about the technology underlining the metaverse.
KIC will now make further investments backing South Korea’s metaverse ambitions. Seoungho Jin, the new CEO of KIC, announced plans this week to scale the sovereign wealth fund’s alternative asset investments. Jin joined KIC last year, having previously worked at the nation’s finance ministry.
The new KIC CEO said he plans to boost the fund’s alternative assets from 17% of its portfolio last year to about 25% by 2025, according to the South China Morning Post. Jin did not provide additional details about KIC’s strategy, only saying that it will scale its headcount in Silicon Valley to capture the next wave of technology assets.
“Some investors say Silicon Valley is already saturated, which I have to concede is partly true, but it is still a source of global growth,” Jin said. “There are still plenty of good opportunities, if you chase them eagerly.”
Can South Korea save Meta’s metaverse?
South Korea is clearly taking the metaverse seriously. The news that KIC plans to up its investment in the nascent technology is also well-timed to breathe new life into a sector that suffered a big setback at the beginning of February.
Last week Meta presented its annual results. The Menlo Park-headquartered mammoth warned that it could miss out on $10bn in revenue in 2022 and revealed that its user base had fallen for the first time in its 18-year history.
As a result, Meta’s stock plummeted by 26.4%, erasing nearly $240bn from the company’s valuation in the largest one-day wipeout in US corporate history. The social media conglomerate that became a $1tn business in June 2021 now has a $620.79bn market cap.
The falling share price could be part of overall tech stock bloodbath triggered by the US Federal Reserve’s incoming measures against inflation. The plunge probably also results in part from recent whistleblower revelations from within Facebook with attendant political scrutiny. But Meta’s stock market woes also suggest that some investors believe its metaverse ambitions won’t succeed.
Phil Libin, the former boss of Evernote and now CEO of video conference company Mmhmm, recently told Business Insider that not only is Meta’s vision of one VR world “godawful” but that it’s also uninventive.
“It’s an old idea,” Libin said. “It’s uncreative, it’s been tried many, many times over the past four decades and it’s never worked.”
He also rejected metaverse proponents’ notion that the technology will be great once it has reached its full potential, saying that “great technology starts out being primitive, but it starts out being great immediately” and then just becomes more polished over time.
There’s no shortage of people sharing Libin’s views. In the last six months, an online mob consisting of industry stakeholders, journalists and commentators have ridiculed Zuckerberg’s metaverse push.
Iceland famously mocked the Zuck’s Meta presentation of the Meta rebrand in a viral video announcing the Icelandverse where people could enjoy “actual reality without silly-looking headsets.”
Pokémon Go developer Niantic’s CEO John Hanke referred to Meta’s metaverse as a “dystopian nightmare,” saying he’d much rather see solutions encouraging people to experience the real world. The fact that Meta lifted the term “metaverse” from the 1992 dystopian novel Snow Crash doesn’t help the company’s image problem.
Others, such as the Intelligencer writer Sarah Jones, have criticised Meta’s concept for its clunky look and lack of user-friendliness. Jones adds that its creepy floating-torso avatars are a poor substitute for regular Zoom meetings, and that the metaverse “looks like hell.”
Meta’s plans have certainly not been aided by reports of bullying and women experiencing sexual harassment on the company’s platform, which have forced Facebook to introduce new tools to prevent bad behaviour by ensuring people’s personal space isn’t violated.
Meta has not been alone in facing a wave of bad metaverse press. Making fun of metaverse fanatics has become an everyday activity in newsrooms across the world. Reporters have made a habit of ridiculing abandoned metaverse raves, predicting that the metaverse will suck for the LGBT community and inking think-pieces about how the new digital realm is just the long-ago failure Second Life all over again.
“What we have here is the latest round of hype that conveniently forgets that it’s the same AR/VR that everyone has been blathering on about for years,” GlobalData analysts wrote in a recent Comment Wire.
The question is if the people behind this tsunami of ridicule are right: should all who enter the metaverse abandon hope?
The metaverse isn’t dead yet
Poking fun of Zuckerberg’s deadpan presentations and Meta’s attempts to make its digital world a reality is entertaining, but does it really mark the end of the metaverse? To be honest, it’s hard to tell.
At the same time as tech wonks have fallen over each other to ridicule the metaverse, many voices have been raised in Meta’s defence. That said, a lot of these voices seemingly originate from boardrooms of companies that have a stake in the metaverse’s success.
Following Facebook’s rebrand to Meta, there seemed to be a growing trend among tech companies to describe themselves as metaverse businesses. These companies included digital world developers Improbable and Niantic.
Moreover, recent massive investments – such as Microsoft’s $68.7bn acquisition of World of Warcraft developer Activision Blizzard – have also clearly been motivated by executives’ desire for a foothold in the metaverse.
There have also been 115 venture financing and acquisition deals in the metaverse space since the start of 2021, according to GlobalData’s data.
And it’s not as if there are no benefits to the metaverse. Digital twins are one example of this fact. Disparate sectors like healthcare, energy and the automotive industry are successfully using digital models of real work factories and equipment to troubleshoot and forecast maintenance needs. But digital twins have one downside for chipmakers: they wouldn’t raise the demand for new semiconductors as a surge in the use of VR headsets would. For that to happen, they’d need the kind of digital world the Zuck hopes to bring about.
South Korea upping its investments will certainly breathe new life into the pro-metaverse movement, but it’s clear that there are still obstacles to overcome before Meta can make a profit from the VR world.
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