Big Tech builds on core strength for Metaverse play

Big Tech builds on core strength for Metaverse play

Gaming is a key focus as big tech players expand virtual content to attract consumers to metaverse platforms

Big tech companies are largely entering the metaverse by expanding on core products and business units instead of building entirely new ones – according to new research from CB Insights.  Semiconductor company Qualcomm is developing chips for top AR/VR hardware developers. Meta is using its social media platforms to experiment with AR advertising. Microsoft is stockpiling gaming content for exclusive release on its Xbox console. Gaming is a key focus as big tech players expand virtual content to attract consumers to metaverse platforms. Meta has acquired eight gaming start-ups since 2018. In 2022, MSFT announced it would buy gaming incumbent Activision Blizzard for $68.7B.

The report identifies that gaming will become increasingly competitive, with tech giants like Meta and Microsoft entering the fray. The metaverse will largely be consumer-facing, and virtual entertainment like gaming will be key in attracting users to tech giants’ platforms. Big tech companies will expand to own more of the metaverse value chain. Meta is attempting to build its own chips for AR/VR headsets, while Qualcomm is expanding beyond hardware to provide AR/VR software development tools. Big tech companies will face more regulatory pressure due to concerns regarding antitrust laws, cybersecurity, and data privacy. Early signs include FTC backlash to Meta’s VR acquisitions and Microsoft buying an AI-powered content monitoring platform.

What’s driving Big Tech activity in Metaverse

There’s a huge explosion in the number of global gamers. There are over 3 billion gamers globally. This presents a massive opportunity for big tech companies to develop new games, gaming infrastructures, and in-game revenue streams. The growing number of gamers worldwide indicates consumers are more comfortable with virtual entertainment than ever. This is a major boon for the metaverse, which will borrow heavily from games to provide virtual entertainment, virtual items, and close-knit online communities. As a result, big tech players are building and acquiring gaming products to access the steadily growing gaming market and develop their metaverse strategies.

The next generation of internet devices Smartphones powered the transition from desktop-based internet to mobile internet, is another major driving force. Some big tech companies are betting metaverse devices like AR/VR headsets will ignite a similar transition — and big tech will have to adapt. The transition to the mobile internet was both a moment of opportunity and disruption in the tech world. In 2006, PC-based Microsoft’s market cap was 4x larger than Apple’s. In 2007, Apple released the iPhone, and it now boasts the largest market cap in the world. Tech giants view AR/VR devices in a similar light. To ensure they don’t miss out on the next generation of internet devices, Qualcomm, Meta, Microsoft, Apple, and others are investing heavily in AR/VR devices.

Internet growth, 5G to power Metaverse adoption

The internet’s growing role in day-to-day life From remote work to online entertainment, humans are spending more time on devices and online than ever before. At its best, the metaverse will be a more natural and immersive way to engage with virtual experiences. With the role of the increasing role of internet in our lives, so does the demand for excellent internet infrastructure grows. Big tech players are developing cloud, edge, and 5G solutions to support a seamless internet experience. This will usher in the low-latency, high-compute infrastructure necessary to power the metaverse. The internet’s growing role in our day-to-day lives also means more metaverse opportunities, from virtual entertainment to remote work to online health visits.

Microsoft takes a gaming route

Microsoft is aggressively acquiring gaming studios to bring popular games in-house and, in many cases, offer them exclusively on Xbox. The most prominent MSFT gaming acquisition includes its pending $68.7B purchase of Activision Blizzard. Meta is also building a gaming empire. It has acquired four gaming companies – BigBox VR, Downpour Interactive, Ready at Dawn, and Sanzaru. Meta’s gaming strategy has largely depended on inorganic acquisition — especially within VR — as its Oculus platform enables access to performance metrics like game downloads, retention, and more.

Microsoft now owns a suite of internal game development platforms. This suite includes MSFT acquisitions, such as previously mentioned PlayFab and 3D design engine Simplygon. It also includes internally developed products, such Azure Cloud for server hosting and software development platform Visual Studios. Azure has been a particularly powerful tool for Microsoft gaming. In August 2022, game engine company Unity selected Microsoft to be its cloud provider, and the two companies are developing improved integrations to place Unity designs in Microsoft gaming platforms. Similarly, Sega not only uses Microsoft Azure, but the gaming company is also working with MSFT on new development environments.

Qualcomm banks on AR, VR & 5G

Qualcomm considers 5G key to the metaverse. Low latency of 5G will help to power gaming and XR (extended reality) experiences. The company is rapidly building, investing, and partnering in 5G to expand access to the low-latency networks necessary to power AR/VR and gaming experiences. It has also positioned itself as the go-to provider for chips in AR/VR devices. As a result, it will likely win new business as enterprises and consumer alike adopt immersive tech like AR/VR hardware. The company is strategically expanding its AR/VR business. Customers that tap the tech giant for hardware are also potential customers for its XR software development tools.

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