Meta Platforms recently began testing tools to showcase and sell digital assets on Instagram. The new feature will be available initially to a handful of creators who are selling digital collectibles like art, images, videos, music or even trading cards as non-fungible tokens (NFT).
The new feature will enable creators and collectors to connect their digital wallets with Instagram and choose the collectibles they want to share.
In order to provide this feature, Meta is connecting with open blockchains like
Ethereum and Polygon and will later connect with Flow and Solana as well. The third-party wallets that are currently compatible with this feature include Rainbow, MetaMask and Trust Wallet.
Meta has planned to introduce virtual coins, tokens and lending services to its social media apps as the company is trying to diversify away from relying heavily on advertising revenues. Instead, it plans on developing the company primarily in the Metaverse.
Meta's primary income source is advertising revenues from its social media sites — Facebook and Instagram.
However, Meta's ad-based business model is under persistent threat due to the ongoing Russia-Ukraine war and increasing scrutiny by governments worldwide. It is worth mentioning that government bodies globally have been piling pressure on the company to change its business policies through legislation and ultimatums.
In the year-to-date period, shares of Meta, which currently carries a Zacks Rank #3 (Hold), have slumped 43.9% compared with the Zacks
Internet – Software industry's and the Zacks Computer and Technology sector's decline of 47.1% and 26%, respectively.
You can see
. the complete list of today's Zacks #1 Rank (Strong Buy) stocks here Meta Looking To Create Commercial Activity in AR
Meta has also begun testing tools to sell digital assets and services in the virtual reality platform — Horizon Worlds, an early iteration of the Metaverse. This is a massive step for Mark Zuckerberg's bold ambitions to create the Metaverse, as it will allow the development of commercial activity in the alternate reality independent of the real world. Metaverse, upon completion, is expected to generate hundreds of billions of dollars in digital commerce and support millions of jobs and new projects for creators and developers.
According to Reuters, just like in Instagram, the tools will be available initially to a handful of creators who are creating virtual classes, games and fashion accessories within the company's own alternate reality platform accessible via VR headsets.
The tools, once available, will enable creators to sell their accessories or offer paid services in an alternate reality, thus creating a new income source. Meta is trying out its "creator bonus" program for a small set of Horizon Worlds users in the United States. Through this initiative, the company will pay participants each month for testing Meta's new features in the Metaverse.
Meta has announced in a recent post that the company would not charge any amount for sharing and selling NFTs on Instagram. This recent move comes after the company faced serious backlash from the NFT community when Meta’s plans to charge up to 47.5% for each transaction became public. The charge will include a hardware platform fee of 30% via its Meta Quest store and a 17.5% cut on Horizon Worlds. These massive charges will leave very little profit margin for developers from their own content.
As a result, this led to a huge backlash from developers as several pointed out that the NFT marketplace, OpenSea, only charges a 2.5% cut on each transaction while LookRare charges 2%.
Meta is competing with other big tech giants and new virtual world players committed to building the Metaverse where land, buildings, avatars and even names can be bought and sold as NFTs or blockchain-based virtual assets. The NFT market grew exponentially last year, fetching hundreds of thousands of dollars for NFT creators. Thus, Meta, along with other big tech giants, are competing against each other for market share in the NFT space.
Other Big Players in Metaverse
Meta has been beaten by
Twitter ( TWTR Quick Quote TWTR - Free Report) as the first social media giant to enter the NFT marketplace. Twitter has launched a tool before Meta that allows users to showcase and sell NFTs on its platform.
NFT creators and collectors can use the platform to connect their crypto wallets and receive payments directly through Twitter. They can also take tips in cryptocurrencies like Bitcoin and Ethereum or through crypto wallet apps. How Twitter charges creators for their NFT transactions will greatly impact Meta’s performance in the NFT trading space.
Meta’s other social media peer,
Snap ( SNAP Quick Quote SNAP - Free Report) , is trying to win market share in the virtual world as well. Snapchat is the most preferred social media platform among millennials and Gen-Z.
The real value of the company is not in its social media profile but in the AR features that attract users and content creators to its platform. Snap acquired the neurotech company, NextMind, a Paris-based startup that develops non-invasive brain-computer interface technology using electronic devices. The buyout is expected to help Snap realize its long-term AR goals and enter the Metaverse.
Microsoft ( MSFT Quick Quote MSFT - Free Report) is looking to explore the NFT space, which has been experiencing massive growth since the beginning of 2021.
Microsoft's M12 venture fund recently invested in NFT startup Palm NFT Studio. The company has raised a total of $27 million that will be utilized to develop projects on the Palm Protocol, an energy-efficient Ethereum sidechain.