Insight

Gaming Industry Update

Read more about M&A trends and activity in this sector

Roderick (Roddy) Moon

Roderick (Roddy) Moon

Managing Director, KPMG Corporate Finance LLC

+1 917-270-2828

Meta Is Making A Massive Bet On The Metaverse

High Yield - Average New Issue Yields


Source: LCD Interactive High Yield Report, Monthly & Quarterly Volume tab

Meta: From A Few Entrepreneurs In A Dorm Room To The Apollo Program Or Bust

Silicon Valley’s apocryphal founding story is two entrepreneurs in a garage. Steve Jobs and Steve Wozniak built the Apple I out of their garage, selling the product without a monitor, keyboard, or casing in 1976. Mark Zuckerberg founded Facebook with a few of his friends out of his college dorm room in 2004. In 2022 that same Mark Zuckerberg, now the CEO of Meta, is employing approximately 17,000 people and is spending more than $15.5 billion annually in a brazen attempt to outflank his Silicon Valley competitors Apple and Google and create the next major computing platform. Over the next ten years Meta is planning on spending as much as the Apollo Program to actualize their vision of the metaverse. This remarkable relationship was noted by Chamath Palihapitiya, the Founder and CEO of Social Capital in episode 102 of the All In Podcast.

Is Meta’s massive bet on the metaverse strategic gamesmanship or a gross misstep? Well, that depends on how imminent and how large the metaverse opportunity is. Last month Meta announced a 13% reduction in force, as they focus on a few high priority projects, including AI, ads, and their metaverse vision. There is a fair chance, though, that Meta and other major technology platforms missed the forerunner to the metaverse that has been hiding in plain sight within the worlds of gaming and gamers.


Multi Year Spending Programs Of Major Technological Innovations From Private And Public Endeavors

Twitter Executive Advisory: A Strategic Plan With An Unstoppable Flywheel

Twitter’s Mission: Free The Metaverse

Now to address Musk’s question “What should Twitter do next”? Lofty goals such as a $171 billion valuation in five years necessitates an equally soaring product roadmap. One  approach that Twitter could take is executing upon a dual track strategic plan. Track A would double down onto key problems that Twitter needs to solve to grow the current app, while  also opening those modules up to create building blocks for the metaverse. If Twitter were to develop a best-in-class proof of identity leveraging existing and novel payment rails, they  could spread their identity standard across not only the internet (much like Google, Facebook, and Apple log-ins) but the pending metaverse. At the moment, a key obstacle to bringing  anyone’s vision of the metaverse to reality is the lack of an interoperable, cross-platform unique identifier. Twitter, with it’s hundreds of millions of user's scale, and freedom from any  existing operating system ecosystem, could step into this gap. Also, this moves Twitter closer to a natural strategic partnership with Meta, which is also striving to break free of the Apple  and Google power position over the mobile internet. Below is one potential strategic roadmap for Twitter that matches the level of aspirations Musk’s other endeavors including Tesla,  SpaceX, and Neuralink. Track B would execute on Musk’s disclosed grand super app strategy following Tencent’s model, including video, payments, gaming, and a vibrant app  ecosystem.


 


 

We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below. Footnotes and sources are noted in the deck.


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