As you unwrap your Meta Quest this Christmas, you’ll be a step closer to the future. The question is, though: What does that future look like and when will it arrive?
Virtual and augmented reality (VR and AR, respectively) is here to stay but what sort of place it will have in our daily lives is still up for discussion and discovery.
“The future can take a long time,” said Benedict Evans, the renowned technology analyst at a recent Meta ‘Pioneers’ event, in partnership with Campaign, hosted by the magazine’s UK editor in chief, Gideon Spanier and Leigh Thomas, Meta’s VP, global clients and categories for EMEA.
Evans cited a number of examples of how big game-changing tech ideas take years, even decades, to take hold and reach the holy grail status of universal usage (see the car or smartphones as examples).
“A lot of people in technology spend time thinking about what might happen in 2025 or 2030 about the metaverse, Web3, quantum, plant-based meats and satellites and so on,” said Evans. “Meanwhile, actual technology companies are deploying ideas from ten years ago such as cloud and machine learning. The rest of the economy is being overturned by ideas from 1995 or 2000 – ideas like maybe people will buy stuff off the internet.”
1. Move aside for the metaverse
Evans wrestled with three definitions of what the metaverse is and what it might become.
There’s a specific definition that VR and AR could become the next universal device after smartphones, essentially an adaptation of current headset technology, or perhaps a pair of glasses. “If that happens, it feels like a big deal,” he said.
A broader concept is “a generalised 3D world that we all spend lots of time in. One system as opposed to lots of different applications”.
Then there is the marketing definition which Evans described as “anything cool I can think about in the next ten years. VR is growing, and we have credible consumer devices, but it’s still early”. Google Trends data for Meta Quest (formerly Oculus Quest) shows a spike every Christmas and suggests that 10-15m units have been sold. “That’s not nothing,” said Evans, “but compared to Roblox it’s still early. It’s not billions of people yet but it’s going up.”
The crux here is whether VR is the next smartphone or the next games console. “Ten years of Moore’s Law and engineering took us from a black and white Nokia to the iPhone, a universal device that five billion people have,” said Evans. “On the other hand, we applied 20 or 30 years of engineering to games consoles, and we get a device that most people don’t care about.” There are around 175m games consoles installed, compared with five billion smartphones.
Evans warned against the “deterministic thesis” that says “this is amazing so it must be part of the future. This was true of the internet and smartphones but also true of things such as drones and 3D printing. It turned out there wasn’t really a consumer use case for drones or 3D printing.”
He added: “If the metaverse is the future, what part of the future is it? Is it like open source [software] which is essential plumbing throughout the tech industry? That can take a very long time. When people talked about the internet in the early 2000s it wasn’t clear it would be one device. BlackBerry unit sales carried on growing for three or four years after the iPhone launch.”
Thomas explained how much discussion about the metaverse dominates her daily conversations. She said: “When I hear Mark [Zuckerberg] talk about it, he sees it as a 5-10 year roadmap when there’ll be an embodied internet, a different type of technology from anything we have today. And yet, pretty much every call I get these days is can you comment on what the metaverse is, and what’s my metaverse strategy.”
Ultimately, though, she’s a “technology optimist” and added: “I cannot help but be very excited about AR and VR. I’m very excited about the possibilities for education and enterprise.”
2. Digital transformation: not just a consulting buzz phrase
Evans used the car industry to illustrate the phases of adoption. “The first 50 years of the car industry was: what’s a car, what’s a car company, who has a car and how does this work? The second 50 years was what happens when everyone has a car? And most of those answers didn’t come from the car industry. That’s what brought us Walmart, McDonald’s and suburbia.
“We’re at a similar point now with technology. The last 50 years have been: what’s a computer and why would I have one? And now we’re at a point where we ask what happens when everybody has a computer.”
And his key message for marketers on the back of this, is: “If one thinks of the internet as a fundamentally new channel, are you good at this channel? Do you see things as easily and obviously in this channel as you did in the old channel? It’s just retailing or marketing in a new channel.”
3. Beware the blockchain BS
“What is it that we’re actually trying to solve here,” asked Thomas regarding the noise around the complexities of Web3, blockchain and cryptocurrency.
Evans compared it to the “religious” zeal around the open source movement in the early days of the internet. “I can’t think of anything that has so much noise, polarisation and bullshit,” he said. “That whole movement said paying for software was evil and that all software will be free. Yet here we are 25 years later. Similarly, with crypto, it’s that commercial and central banks are evil. Filter out the politics and think of the capability.”
Thomas pushed Evans further, asking: “Can you unpack further this centralised/decentralised piece? How does blockchain affect all of this?”
Evans discussed the idea of Instagram being built on blockchain and how the transparency of transaction of this software could be transformative.
4. Taking the E out of ecommerce
We’re still talking about ecommerce but we shouldn’t be, believes Evans. It’s time to flip. While there has been a post-pandemic return to physical retail in the US, Evans asserts that US ecommerce is still 25% ahead of where it would have been if we hadn’t had the pandemic.
“UK ecommerce is at 40% penetration,” he said. “And when 40% of retail is online, you should stop talking about ecommerce and instead talk about physical retail as the legacy category. You need to think about what that means for anyone trying to build a brand, municipalities and their property taxes, or for commercial real estate. It raises a bunch of interesting conceptual questions.
“The pandemic crystallised the realisation that the internet is now probably the default for most people, for most brands.”
Thomas urged brands to focus on understanding their audience, saying: “Our biggest challenge is making sure you know where your consumer or customer action is. Are we actually asking the right questions and really keeping up with where our customers are?”
5. Waves of new competitors
“Meanwhile, as you have new channels, you have new gatekeepers. Amazon built a $31bn ad business in merchant media last year, which makes them the world’s third largest media owner, bigger than the global newspaper industry, bigger than YouTube and roughly the same size as Google Display.”
Like Amazon’s ad business, competitors to the traditional models are coming from all sides. “Shopify had $175bn in GMV last year, which makes it about 45% of the size of Amazon Marketplace,” explained Evans, adding that Apple’s “hilarious” proprietary privacy protocols make it a “power player in advertising”.
According to Evans, Shein, a Chinese online-only fast fashion brand, has overtaken Zara and H&M in Google search and, based on credit card data in the US, is now bigger than Zara and H&M combined, commanding close to a third of the US fast fashion market.
In terms of brand marketing, the two fundamental questions in retail used to be about logistics and discovery. “But now those two questions are part of the same one,” Evans said. “Those budgets have become interchangeable.” A physical store is now as much about brand-building as it is a sales vehicle.
6. “Uncertainty is always interesting”
That’s the one thing of which Evans is sure. He’s keeping a close eye on “the second wave of machine learning that’s been building in the past couple of months” expecting there to be a new way of “company creation and product creation that will be really interesting and probably terrifying as well”.
What the metaverse turns out to be, only time will tell but Evans concluded: “You can’t say that because the internet worked, this will work – but there’s an energy and sense of possibility.”
7. The quick fix: three takeaways for marketers
- Ensure you understand who your audience are, where they are, what they want, and how technology can help deliver it now, or in the near future
- Think in terms of online by default: ecommerce is the norm, physical retail the alternative
- The tech may change but the key challenges of your sector (TV, retail, automotive) may stay the same
Tech changed TV but the challenges remain the same
“Everything the internet did to music and newspapers is now happening to everyone else,” explained Benedict. “We’ve had the same kind of radical change in each industry, but it takes different amounts of time and happens in different ways.”
Newspaper ad revenue fell off a cliff in the mid 2000s, physical book store sales took longer to drop and US pay-TV subscriptions have been in a more gradual decline since 2010 as the streamers took hold.
In the UK, there has been a decline in live or recorded TV viewing for 16-34 year olds with a hefty rise in subscription streaming and YouTube. Broadcast VOD viewing numbers have remained stable in the past five years.
“The tech industry has changed all the parameters of TV business but all the questions about rights and distribution, the ad model, the executives and the relationships and what you pay the writers … these are TV questions not tech questions,” Evans added.