Will mobile operators jump on the metaverse bandwagon?

Yanitsa Boyadzhieva
By Yanitsa Boyadzhieva

Feb 17, 2022

  • Lots of big names and organisations are developing metaverse strategies, including The Walt Disney Company, the Chinese government and, of course, Meta (FKA Facebook) 
  • In the telco community, Asia-Pacific is home to a number of next-generation digital reality efforts by major mobile operators
  • But there doesn’t appear to be a global telco rush towards the metaverse and that’s not surprising, say industry analysts, and with good reason

Hardly a day goes by now without another significant commitment to metaverse developments: The latest name in the frame is The Walt Disney Company, which, according to Reuters, has appointed Mike White, current SVP of Consumer Experiences and Platforms at Disney’s Media and Entertainment Distribution unit, to lead its metaverse strategy as the entertainment giant adds to the plethora of big-name companies striving to create a whole new world in the digital realm.

White is tipped to become the company’s SVP of Next Generation Storytelling and Consumer Experiences, working with the Disney’s creative teams to define how consumers experience its metaverse. Such a move makes sense for a giant digital content producer such as Disney, but is there an argument as strong for telcos to assign people, R&D funds and other resources towards metaverse-related projects?

Disney’s approach was outlined during an earnings call in November 2021, when the company’s CEO, Bob Chapek, unveiled plans to open a new chapter in its storytelling journey by connecting the physical and the digital worlds “even more closely, allowing for storytelling without boundaries in our own Disney metaverse”. He also noted there was a “limitless potential” for the company in its next century.

The metaverse concept is already a big deal in the major Asia-Pacific markets. For example, The China Global Television Network reported a metaverse industry committee in China has added 17 corporate members, bringing the tally to 112 in total. The new additions are said to include Inly Media, Beijing Topnew Info&Tech and Beijing Quanshi World Online Network Information, among others.

In addition, the China Mobile Communications Association’s Metaverse Industry Committee was launched in October 2021 to assess the national industrial policy and strategy for metaverse developments in mobile communications. Its members include China Mobile and China Unicom, according to the Global Times, so telcos are getting in on the act in China.

Reuters cited figures by data technology service company Tianyancha, which showed more than 1,000 Chinese companies have filed applications for some 10,000 trademarks related to metaverse. These include digital platform giants Alibaba and Tencent.

And, of course, there is Meta, the company still often referred to currently (but likely not for long) as Facebook. 

The company, which famously transformed in October 2021, has unveiled it spent approximately $10 billion in 2021 on its Reality Labs division, which is tasked with creating AR and VR-related hardware, software and content. And it plans to spend more in the next few years.

And just this week, Meta’s founder and CEO Mark Zuckerberg provided an update on his Facebook page regarding the company’s values and cultural operating system. Moving fast, increasing “the velocity of our highest priority initiatives by methodically removing barriers that get in the way,” living in the future with the aim to “build the future of distributed work that we want, where opportunity isn’t limited by geography” and naming staff “metamates” were among the highlighted focal points encouraged by Meta’s boss.

With so many companies, whether from the worlds of social media, media/entertainment or even centralised/regional government, investing in metaverse developments, the question for mobile operators is... should we be joining them? 

Early telco entrants to the metaverse

Some already have, and it appears the Asia-Pacific region is the hotbed of telecom players’ activity related to the metaverse.

South Korean operator SK Telecom was among the pioneers in bringing such a concept to fruition. It launched its Ifland digital platform in July 2021 and has already gained more than 1 million monthly active users (MAUs). (See SK Telecom boasts early metaverse success as it targets major sales growth.)

Local media Yonhap News Agency reported that SKT’s main domestic rival, KT Corp., has also been actively exploring the digital realm. Its moves reportedly include establishing a “Metaverse One Team” in June 2021 with nine other participants, including mixed reality content company Dilussion, video technology provider WYSIWYG Studios and The Korean VR AR Industry Association. 

More recently, the operator was tipped to have landed a partnership with Shinhan Bank to develop 23 projects related to artificial intelligence (AI), metaverse, non-fungible tokens (NFTs) and others.

Meanwhile, in Japan, NTT DOCOMO touted “metaverse features” by developing avatars in a 3D virtual setting, mirroring movements and expressions in users situated in the real world, the Japan Broadcasting Corporation reported last month.

Asian operators are not the only ones willing to invest time and money into the endeavour. US operator AT&T launched its own VR world dubbed AT&T Station in October 2021. It described the platform as “a ground-breaking experience spanning gaming, apparel and culture” in partnership with gaming and lifestyle organisation 100 Thieves. And, in just a few days’ time, it will let users enter the metaverse during the 2022 NBA All-Star Game on 20 February. Boosted by its AT&T Playmaker, fans can receive a 3D body scan to customise “their own unique avatar and then place themselves in any of the five custom All-Star themed AR playgrounds, like dunking in outer space or flexing the latest fit courtside,” the operator explained.

Will operators worldwide join the metaverse club? And, if so, is it wise to do so?

Despite the early success of SK Telecom and the efforts underway at other operators globally, those telcos seem to be the exception rather than the rule, and there’s perhaps good reason for that: Some industry analysts are sceptical about telco opportunities in the metaverse.

Phil Kendall, Director of Service Provider Group at Strategy Analytics, explained that the South Korean market is unique, as it has been “less exposed to ‘Western’ media giants and hyperscalers, so SKT and its rivals have been able to build stronger businesses in areas where your average European operator would struggle to generate scale.”

For instance, he noted, European operators generally turn to media companies to create compelling content to showcase 5G services, while those in South Korea have found profitable ways to do this themselves. “The same is also true of service development in the IoT [Internet of Things] market, where South Korea’s operators have a much more active innovation role and have been able to play in a larger part of the value chain.”

China and Japan are similar markets to South Korea in that matter, according to the analyst.

“These are three markets where the mobile operators have successfully positioned their brands as much broader consumer brands – operators across those markets have succeeded in a number of ‘adjacent’ areas ranging from instant messaging to e-commerce and mobile financial services to music and video streaming to IoT applications,” Kendall said.

And US operators, he noted, have more scale, but their challenge is that they operate in the home turf for major OTT (over-the-top) and hyperscaler brands. “I don’t think Verizon and AT&T’s acquisition of media assets points to operator scale working for them,” he argued.

Kendall believes most operators will collaborate with players developing AR, VR, metaverse devices and platforms rather than independently or collaboratively attempting to create their own metaverse, “in the same way they partner with Netflix, Disney+, Google Stadia, Apple Arcade et al to raise their profile,” the analyst noted.

He added that this strategy is partly about creating bundles that address the needs of target segments and delivering services to drive network traffic, thus requiring customers to migrate to faster networks and larger, more expensive data plans.

“I think many operators have got burned trying to be content providers or compete head-on with ‘OTT’ services. They lack a presence in social networking and have not achieved much of note in terms of evolving messaging beyond SMS,” with RCS (rich communication services) being a great example of where operator collaboration doesn’t always guarantee success, Kendall explained.

Lack of a standardised metaverse approach for the telco industry is another point to take into account. “Some operators collaborate in the Global XR Content Telco Alliance, mainly in areas such as sharing content or production expertise, but that is more about seeding the market with content that plugs into various XR [extended reality] platforms rather than building a universal platform,” noted Kendall. 

Principal Analyst at ABI Research, Michael Inouye, noted it would be difficult for mobile operators to compete against big tech players in the metaverse market. While SK Telecom, for instance, has already surpassed 1 million MAUs for its Ifland metaverse platform, this figure still lags behind big names like Facebook, which has almost 3.8 billion MAUs for its social media platform, he noted.

Another issue, Inouye said, is longevity of content services. He noted that telcos have often adopted services, supported them for a while, but then dropped them when they don’t meet expectations or hit targets, but that approach doesn’t suit the metaverse model.

“It really comes down to whether they are going to support the service long term,” something the analyst described as a main difference in customer trust compared to social networks, which people still use and support.

While people might accept a dropped video service, it’s different when you invest into a social platform which engages people. If operators were to offer an immersive digital service experience and then drop it, that would be very risky in terms of customer experience and social aspects, Inouye argued.

He doesn’t believe telcos can reach the scale of companies like Facebook, as their investment focus needs to be mainly elsewhere. The metaverse is more likely to benefit telcos by generating additional traffic on their networks and enable them to market 5G connectivity services focused on latency and high-bandwidth metrics.

Inouye also highlighted a challenge when it comes to ensuring consumer trust regarding the way their data is being used for advertising (and thus monetisation) purposes in the metaverse.

As we all know, privacy is very much an ongoing issue for big tech players, such as Facebook, and we’ll be exploring how this plays out in the real and the metaverse world.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV

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