The metaverse -- at least as Mark Zuckerberg as perceived and is developing it -- has become a laughingstock.
This immersive virtual world, in which we are to interact through avatars, has been almost given up for dead due to the difficulties of Facebook, known since last October as Meta Platforms. (META)
Chief Executive Mark Zuckerberg has made the metaverse the next big thing in his social-media empire. A year in, these efforts have already cost the group $16 billion.
Calls for Meta to abandon the concept and harshly critical press articles are increasing.
But for other players in the sector like Mathieu Nouzareth, U.S. chief executive of the Sandbox, the metaverse is not dead.
In an interview, he argues that there are two -- and potentially multiple -- versions of the metaverse: the version represented by Meta and that of the small players, of which the Sandbox is part.
Currently, it's this alternative version that wins, even if it doesn't make a lot of noise, he says. He adds that Zuckerberg's metaverse vision is "doomed."
The Sandbox, which is owned by software and venture firm Animoca Brands, is a platform built on the ethereum blockchain. It enables users to buy, sell, trade and own digital assets in a virtual world. Banking and financial-services giant HSBC, the sports-equipment manufacturer Adidas, the luxury apparel-and-accessories brand Gucci and the consulting firm PWC are among its users.
The Sandbox is currently valued above $1 billion. It doesn't rule out raising additional capital in the coming months.
Nouzareth spoke with TheStreet about the metaverse and its prospects.
TheStreet: What Is the Metaverse?
Nouzareth: The metaverse is really a 3D space. Usually, you have an avatar representing yourself and you go there and you meet people, you meet friends, you make new friends, you can socialize, you can interact, you can play games, you can buy stuff. It's like the real world has been digitized and replicated inside of the metaverse.
TheStreet: Is the Metaverse Doomed?
Nouzareth: We are absolutely not doomed. There are competing visions of what the matter is. And [Meta's] vision of a metaverse is very much like this vision from this movie "Ready Player One" from Steven Spielberg from a few years ago.
And this vision of a metaverse controlled by one company -- this vision of the metaverse where you only experience it with virtual-reality goggles, and basically people live in favelas, and they are poor; they live terribly but [they] live an amazing life in the metaverse -- this vision for me is doomed.
[This] is exactly the opposite of the vision we are following in the Sandbox. Our vision of the metaverse is that it should be a multiplatform right. You can get the Sandbox on your Mac. You can play the Sandbox on PC, on mobile and maybe one day on virtual-reality goggles.
We think it's not going to replace reality. We think the metaverse should not shut us off from the real world. It is more like augmenting and maybe enhancing some part of it.
TheStreet: Please Elaborate on the Differences
Nouzareth: We're not going to live in this dystopian nightmare where we have one company controlling everything. So even at the Sandbox we have higher ambition; we're probably the biggest Web3 metaverse today, but we don't want to be the only one. And we are working very hard towards interoperability so that people can freely roam from one metaverse to another.
So I agree that a certain vision of the metaverse for me is doomed -- that's the one that is pushed by Big Tech. [The] version we push is really [a] much more ... nimble and interoperable metaverse. That's a multiple metaverse.
To give you another example. Meta is taking commission of close to 45% for their metaverse. We only take 5%; we give back 95% of the creators.
So this vision of the Web3 metaverse is much more a desirable future than a Web2 that centralizes, a metaverse which is controlled by one company and imposes their views and their business model to creators.
Meta's Metaverse Background From TheStreet
Zuckerberg's metaverse is known as Horizon Worlds. Last April, the company rolled out a test with creators that will let them sell virtual items and effects within their worlds.
Meta is planning to take an overall cut of as much as 47.5% on the sale of digital assets on Horizon Worlds.
The charge is composed of a 30% hardware-platform fee for sales made through Meta Quest Store, which sells apps and games meant for its virtual-reality headsets, and a further 17.5-percentage-point cut as for Horizon-platform fees.
The company has 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."
TheStreet: Is Zuckerberg a Problem for the Metaverse?
Nouzareth: I'm not going to say he is a problem, but [it's no secret] that Facebook may be reaching a plateau and he is betting, spending everything on the metaverse. ... I think he is probably impacting the whole metaverse industry, even though we don't have a lot in common with their division and what they're doing -- not the same platform, not the same vision and values.
TheStreet: How Will You Make That Difference Clear to Users?
Nouzareth: We need to show and tell people, 'look, you can come and play the Sandbox. And you can see by yourself and it's free.' We try also to bring a lot of amazing content, whether it's gaming, whether it's fashion, whether it's sports, music, entertainment, art.
TheStreet: What Is the Current State of the Metaverse and Sandbox?
Nouzareth: It wasn't as good as people said a few months ago, and it's not as bad as people say today.
People ask us: 'Are you impacted by the macroenvironment?' And the answer is, 'not really.' We still have a lot of partners, big brands begging at the door. They want to enter the metaverse, and they want to partner with us, and we've announced a bunch of deals recently. We have more to come. So we haven't seen any impact from brands and partners and celebrities. We haven't seen any impact as well for the users and the players.
Basically, everyone has a lot of macro headwinds -- the war in Ukraine and interest rates being high and inflation -- so I think it's difficult for everybody. But in our case, it's business as usual. We're not laying off people. We actually doubling down; we're recruiting more people. We're very actively recruiting.
TheStreet: Haven't You Been Hurt by the Crypto Winter?
Nouzareth: We're doing well. We haven't seen anything so far. Of course, we're a crypto company. We're also a metaverse and a gaming company, and no matter what happens, people still want to play games. They want to have fun [and be] entertained. So I think that's why we're probably less impacted than other crypto companies.
So we're recruiting in all parts of the world. We're recruiting more engineers, especially unity developers. We're recruiting narrative designers, product owners, project managers, finance, business. I mean, across all all positions in the company, we're very active. I have to say from a recruiting perspective, the environment is actually pretty good for us. We have access to very good candidates who have been laid off elsewhere. [So] it's a good time.
TheStreet: Are You Profitable?
Nouzareth: I wish I could answer. What I can tell you is we have what it takes to really double down.
We raised around, and it's public, $93 million last year. But $93 million is not enough. So let's put it this way: $93 million is not enough to have. So I'll leave it to you to draw your own conclusion.
