November 18, 2021

Disney and Microsoft Join Meta in Rush to Build Metaverse

Not to be outdone by Facebook Meta’s historic strategic pivot, Disney and Microsoft released statements to reassure the public that they, too, would be a major player in the metaverse.

Is this PR blitz all smoke and mirrors, or something more substantive? I have a few thoughts.

Microsoft seems particularly determined not to be perceived as behind on this new tech trend. It’s worth remembering that Microsoft itself was slow to embrace the internet and, in its rush to catch up on early competitors like Netscape, engaged in practices that brought the company under crippling antitrust litigation.

Microsoft’s metaverse announcement during the company’s Ignite conference for IT professionals felt a little forced. New ways of sharing spreadsheets stretch all but the most liberal definition of the metaverse. Even Microsoft’s most visually-appealing example, animated avatars for Microsoft Teams, looked like a “me-too” version of Meta’s Horizon experience. Both companies’ cartoon-style virtual avatars are great for casual social experiences, but I doubt that people will be using them for serious business discussions. Would you want a performance review from a cartoon version of your manager?

We may be approaching “peak hype” for the metaverse, as indicated by CEO Satya Nadella’s statement: “If you take Halo as a game, it is a metaverse. Minecraft is a metaverse, and so is Flight Sim. In some sense, they are 2D today, but the question is, can you now take that to a full 3D world, and so we absolutely plan to do so.” At this point, I want to ask what Microsoft is doing that isn’t considered the metaverse.

Microsoft clearly rushed out its announcement, but I take the company seriously. The powerful combination of Microsoft’s Xbox games platform, Windows, and the Azure cloud platform give Microsoft a very powerful entry point into the metaverse ecosystem.

Disney’s announcement was lighter on details but had a compelling creative promise. CEO Bob Chapek said, “Our efforts to date are merely a prologue to a time when we’ll be able to connect the physical and digital worlds even more closely, allowing for storytelling without boundaries in our own Disney metaverse.” In an interview on CNBC, Chapek said he saw the internet as a “three-dimensional canvas” for new types of storytelling.

The company’s IP and theme parks make Disney uniquely suited to use the metaverse to expand and monetize both virtual and physical properties, as well as to engage in new forms of storytelling. A virtual visit to Disneyland, or a Pokémon-Go style interaction with Disney characters have global mainstream appeal. But it’s worth noting that Disney’s previous adventures at the crossroads of internet and technology have included a $563 million purchase of game developer Playdom in 2010 and a $500M acquisition of the YouTube-focused maker Studio in 2014, neither of which contribute anything to the company today. And Disney’s foray into the toys-meet-video games category with Disney Infinity was cancelled in 2016 with a $147M write off and hundreds of layoffs.

TDG Takeaways

  • The metaverse revolution is real. The convergence of hardware, software, and infrastructure technologies is empowering a new set of social experiences that will fundamentally change how people work, play, and communicate.
  • This revolution will not happen on a predictable path. Not all the required technologies are complete, and deployment and adoption will take time. The latter will be especially spotty, with some regions, markets, and experiences happening fast while others remain stuck behind legacy platforms.
  • Enterprise applications will bring in professional users, while entertainment applications will bring in younger users. If you call your mobile device a “cell” and talk about “surfing the internet,” you will not be the core target market…yet.
  • Virtual reality and augmented reality are not the only way to experience the metaverse. Immersive interactive experiences on a mass scale in a persistent virtual world are possible on computer and mobile monitors.
  • Unlike portrayed in Hollywood, there is not one big, universal metaverse, just as there is not one big universal social media network today. We will have different metaverse experiences for different needs. The only question is how much interoperability platform owners will allow (in a world where today most games don’t even work across multiple platforms).
  • The metaverse will create new opportunities to monetize content for agile participants, and competition for screen time for slow-moving players.
    Stick with TDG and stay ahead of the curve.
    Reminder: TDG Members can join Mike on Monday, November 22 to discuss the role of the metaverse in the future of the entertainment. To sign up, please contact Laura Allen


    Mike Fischer is a veteran of the video and gaming industries, having held executive positions at Microsoft, Amazon, Epic Games, and Square Enix. He is also a member of the faculty at the University of Southern California.

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