Meta Announces User Content Marketplace for Horizon -- Probably Prematurely & With a Weirdly Non-Competitive Revenue Cut

Meta, a latecomer to metaverse platform development, just announced the launch of a marketplace for user creators in Horizon Worlds, and you can see the potential problems right in the immediate details:

[A] “handful” of Horizon creators will be able to sell virtual items and effects in the worlds they create for others to explore. The idea is that creators can sell everything from access to a VIP section of their world to virtual items like jewelry or a special basketball, according to Meaghan Fitzgerald, the product marketing director for Horizon...

Meta will be taking a cut of what creators sell, though exactly what that take can be is a bit complex. For Horizon purchases, Meta is taking a 25 percent cut of the percentage that’s left after a platform fee. For platforms with a 30 percent fee, like Meta’s own Quest Store for VR titles, the creator will be left with a little over half of the sale price (the math there being that Meta is taking 25 percent of 70 percent).

Emphasis mine, as it bears emphasis. It's good that Meta is giving (some) users access to monetization -- by definition, a core feature to a metaverse platform --  but this initial roll-out comes with some obvious challenges:

Horizon has only been in open beta for a few months and has a small active user base. A successful marketplace requires a highly active user community that's already well established in place, avidly consuming content and highly motivated to create content for others. Putting price tags on content before people have even decided whether they like the platform to invest continued time and energy doesn't usually (ever?) work out. Rec Room, by contrast, rolled out its pilot monetization program last year, but only after it was attracting millions of active users (as compared to Meta's likely tens of thousands).

With a roughly 50-50 revenue split between company and user, Horizon is offering creators a better deal than ROBLOX (which splits it at about 70/30)* and is about on par with Core's revenue share. Which on the surface, may look competitive. But seeing as this is Meta, it seems like a huge missed opportunity. At the moment, Meta is selling its Quest headsets at a loss, likely losing hundreds of dollars with each sale. If they're so dedicated to gaining market share, even if that means losing billions of dollars in the process, shouldn't they be giving user creators 90% or even all the revenue from their creations?

*Update, 4/13: Speaking of ROBLOX, compare and contrast: 1600 Second Life Community Creators Make $10,000+ Per Year From Their Virtual Content -- Despite Working On A Much Larger Platform, Far Fewer Creators On ROBLOX Make That Rate.

Comments

[Adeon Writer]

Don't forget that Facebook complained about Apple's 30% cut, only for them to take 50% on their own platform.

[Martin K.]

Another problem is technical: you cannot buy virtual clothings/avatars and wear them everywhere in Horizon Worlds.

When you buy services or access to experiences, it's often natural that those are limited to a specific virtual world (e.g. access to a comedy show or a training course for the in-game creative tools). For some virtual goods, it's natural that you can use them only in your own worlds (e.g. furniture, buildings, landscapes, etc.).

But for virtual clothings, games like Second Life, Roblox, and VRChat have shown how important it is to be able to wear them anywhere instead of just in specific worlds.

Thus, the success of Horizon's marketplace might be very limited in the near term. However, Meta has to start somewhere to overcome the chicken-and-egg problem of not attracting more creators because there are not enough consumers, and not attracting more consumers because there are not enough creators.

[Martin K.]

By the way, since no one comments on the typo "unluck" instead of "unlock" in the screen shot, I will.

I'm probably too old-school, but when someone asks me to read something with typos in any professional context, I always think to myself: why should I bother reading this, when the author didn't even bother to check for typos?

Apparently, Meta doesn't care and considers this a good example of how to sell stuff (see here: https://about.fb.com/news/2022/04/testing-creator-monetization-horizon-worlds/ ).

But this typo might show more than carelessness: one of my pet theories is that Horizon Worlds is specifically targeting adult users who are irrational enough to spend a lot of money on overpriced virtual goods. And maybe this group of users feels more welcome when they see that no one on the platform cares about typos.

This pet theory might be a long shot, but Zuckerberg is on record thinking about integrating NFTs in his metaverse ( https://youtu.be/El19o1Ib-HE?t=1284 ) and Horizon Worlds is putting a lot of effort into targeting diverse users - as long as they have a U.S. or Canadian credit card.

If you are more interested in the topic of crypto affecting vulnerable families already, I suggest to read no one less than Paul Krugman: https://www.nytimes.com/2022/01/27/opinion/cryptocurrency-subprime-vulnerable.html

[Glossy]

The Second Life Metaverse has an online marketplace with over 3 million items for sale and they only take 15% of the price from the creators for the platform.