Facebook, Roblox See the ‘Metaverse’ as Key to the Internet’s Next Phase The Wall Street Journal

Social-media giant’s Horizon Workrooms app reflects interest to invest in technology and content development for new range of online social experiences

A new tech-industry battle is taking shape over the “metaverse” as companies such as Facebook Inc. FB -0.09% and Roblox Corp. RBLX -2.53% work to shape a virtual realm that most consumers don’t yet know exists.

The metaverse concept, rooted in science-fiction novels such as “Snow Crash” and “Ready Player One,” encompasses an extensive online world transcending individual tech platforms, where people exist in immersive, shared virtual spaces. Through avatars, people would be able to try on items available in stores or attend concerts with friends, just as they would offline.

On Thursday, Facebook launched public testing of Horizon Workrooms, a free app used on its Oculus Quest 2 virtual-reality headset, that lets people enter virtual offices as avatars and participate in meetings while seeing their computer screen and keyboard. The concept is aimed at connecting people in hybrid-work and remote-work environments, the company said.

“In the future, working together will be one of the main ways people use the metaverse,” Chief Executive Mark Zuckerberg wrote in a Facebook post.

Enthusiasm for the concept has also helped supercharge valuations of companies such as Roblox—which went public in a direct listing in March—and “Fortnite” maker Epic Games Inc. as investors bet the popular videogame worlds will have an early foothold in the nascent online space.

Other major companies are also expressing interest: Nvidia Corp.’s Jensen Huang, Microsoft Corp.’s Satya Nadella and Match Group Inc.’s Shar Dubey are among CEOs who have talked recently about ways their companies are looking to participate in building or supporting elements of shared virtual worlds.

Facebook said that through Workrooms, users can join meetings in virtual reality or dial into a virtual room from a computer by video call, similar to Zoom or Google Meet. The move could support demand for its Oculus products, as interested companies or individuals would need to buy the roughly $300 headsets to get the full experience.

So far, consumers have been slow to adopt virtual-reality hardware, due in part to technological limitations as well as those around cost and comfort. Facebook last month announced a recall on the foam facial pads on its Quest 2 headsets after it received thousands of reports of the component causing skin irritation, including rashes, burning and hives.

Roblox CEO Dave Baszucki said earlier this week that the company sees its 15-year-old platform as a hub for virtual and immersive experiences where thousands of people can simultaneously attend concerts, school or staff meetings. He said the company has been investing heavily in technology and growing its workforce to support these experiences, but also in areas such as content moderation.

“It must be a civil and safe platform that welcomes 6-year-olds and at the same time welcomes 30-year-olds who are working together,” Mr. Baszucki told analysts on an earnings call when asked about the interest companies such as Facebook are taking in the metaverse.

‘It’s very clear that this is becoming a focal battleground for big tech.’— Matthew Ball, venture capitalist and former media executive

Roblox more than doubled its second-quarter revenue from a year earlier to $454.1 million—helped by growth in its user base—but posted steeper losses as it recorded higher costs including those tied to fees paid to developers, research and development and its technology infrastructure.

Much else about how people will connect to the metaverse is unclear, including how different companies’ virtual realms or platforms will interact. Enthusiasts envision people through their avatars moving seamlessly from one platform to another. For now, companies such as Facebook are largely focused on building proprietary virtual realms.

Mr. Zuckerberg has said Facebook’s investments in virtual and augmented reality will help support the evolution of the metaverse, which he sees as the successor to the mobile internet. He also described the process as a yearslong march that would require investments in technology protocols and devices, chips and software among other things.

“Within the metaverse, you’re going to be able to hang out, play games with friends, work, create and more,” he told analysts last month on an earnings call.

The greater level of immersion in virtual reality also raises issues over privacy. Facebook said Thursday that it would take steps to protect users’ data, noting that it wouldn’t use work conversations and materials to inform ads on Facebook.

Matthew Ball, a venture capitalist and former media executive, said he isn’t expecting there to be one clear winner in the metaverse. Instead, there is room for multiple companies to become leaders in the category, as was the case with the evolution of the internet through the 1990s and later the mobile internet. “It’s very clear that this is becoming a focal battleground for big tech,” he said.

Roblox’s business model is largely centered on users’ purchases of virtual currency that allows them to acquire in-game perks or items for their avatars. In May, the company hosted an immersive experience to celebrate the designer brand Gucci’s 100th anniversary and users could buy limited-edition items for their avatars. Roblox finance chief Michael Guthrie said the types of content on the company’s platform have broadened over time and, in some cases, developers are still figuring out how to generate revenue from their content.

Mr. Ball said companies are studying ways to make money from large virtual audiences via advertising and other means. However, analysts say that one of the biggest challenges through metaverse building is turning that engagement into profits, even as more people embrace the concept.