Life lesson for today: there ain't no such thing as a free metaverse.
Meta Platforms (FB), Facebook's parent company, is looking to enable creators to monetize what they're building in Horizon Worlds, its Meta's social metaverse platform for Quest VR headsets.
New Horizons
The social media giant said Monday it is rolling out a test with a handful of creators that will let them sell virtual items and effects within their worlds.
Of course, Meta isn't exactly doing all this monetizing for laughs. The company is also looking to a few bucks out of this deal as well--and this could be a problem.
Meta is planning to take an overall cut of up to 47.5% on the sale of digital assets on Horizon Worlds.
The overall charge comprises of 30% hardware platform fee for sales made through Meta Quest Store, where it sells apps and games meant for its virtual reality headsets, and a further 17.5% cut as its Horizon platform fees,
A Meta spokesperson told TheStreet that "over time, as we expand Horizon Worlds to more platforms - other companies will charge their own platform fees and so that portion may not go to Meta."
Apple (AAPL) charges app developers 30%, which is interesting given how Meta CEO Mark Zuckerberg had complained about the computer giant's fees.
'Good Business Sense...'
“As we build for the metaverse, we’re focused on unlocking opportunities for creators to make money from their work,” Zuckerberg said. “The 30% fees that Apple takes on transactions make it harder to do that, so we’re updating our subscriptions product so now creators can earn more.”
The news of the fee structure was not well received on social media.
One person on Twitter posted a GIF of actor Leslie David Baker from "The Office" laughing at the news.
"Bruh, Amazon takes 15% and that feels like a ton," one poster said on Twitter. "Apple/Google have a stranglehold on smartphones, take 15-30% and were sued for it. 47.5% in a growing, open marketplace is disastrous. A less greedy competitor will easily take share."
"Hmmm ... a platform dies before it gets going ... good business sense," another person tweeted.
"Anyone who is charging 48% fees is ripping off its customers and should be avoided," one commenter said.
"Last November, Mark Zuckerberg chastised Apple for charging 30% fees for apps on the App Store, which is the same as the fees charged by Meta on its Quest Store," another person tweeted.
'A Concept Situation'
A Facebook spokesperson said "eventually we expect over time, as Horizon Worlds comes to more platforms, including mobile platforms, other companies will charge their own platform fees."
"On Meta Quest, we use the revenue generated by our Store to directly offset the cost of our Quest devices at retail," the spokesperson said. "Our approach is to grow the market for VR by shipping affordable devices, and this revenue is critical to maintaining an accessible headset retail price."
The Facebook spokesperson said "the economic value we’ve delivered to our developers via this growth is clear: we now have over 120 titles with $1 million or more in gross revenue on the Quest Store alone–an achievement that would have been unthinkable on any VR platform just a few years ago."
The metaverse marks a big roll of the dice for the company and RBC analyst Brad Erickson raised some concerns about Zuckerberg's plans.
Erickson said in a research note that he thinks "a virtual world revolving around mostly leisure-based consumer activities could be compelling one day, and if anyone were positioning themselves to colonize and capitalize best off of this opportunity, it’s very likely to be FB."
"That said, given the regulatory scrutiny FB’s been under for many years alongside what has arguably been a sometimes questionable public relations strategy in efforts to address those criticisms," said the analyst, who cut his price target to $240 from $245 a share.
"We wonder whether some type of presumptive metaverse would only continue to expand FB’s exposure to the usual negative perceptions of its platform (privacy/security, negative/hateful/illegal activity, mental health controls, etc)."
Erickson said the metaverse certainly has the potential to be "one of the most transformative investment themes we’ve heard of in a long time...but for the foreseeable future, we think it’ll be just that—a concept situation that’s likely further out than investors may currently appreciate."
