Epic and Apple have advanced the Metaverse. Meta is in trouble.

It turns out that Epic Games, the company behind Fortnite, and Apple (Ticker: AAPL) have been showcasing capabilities that demonstrate how far ahead they are in terms of the technology they need to dominate the metaverse. The situation points to more disappointment for Meta Platforms (META) in its chances of succeeding in the upcoming months as a result of this development.

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One of the ultimate dreams of the metaverse is for billions of people to be able to play and socialize inside fully realized worlds populated with lifelike digital characters to create a virtual playground for them to play and socialize. However, there needs to be a self-sustaining ecosystem for developers and users so that a large audience can attract the best content creators and vice-versa, in order for the goal to be met.

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Epic Games recently announced several initiatives aimed at leveraging its position as a leader in the software platform space to generate this important virtuous feedback cycle.

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Unreal Editor for Fortnite, Creator Economy 2.0, and Fab are some of the new products that were introduced by the company. Game makers are now able to create, develop, and publish game experiences inside Fortnite, allowing them to reach over 500 million players with the help of Unreal Editor. The Creator Economy 2.0 is a payout system that Epic has established under which creators will be paid an additional 40% of the company's net revenue based on player engagement. In addition, Fab will launch a digital asset marketplace later on this year that will allow artists to sell 3-D models, animations, and music for a fee.

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With this product, small videogame developers have access to similar tools and features used by large videogame publishers which use Epic's Unreal game engine for making blockbuster games and are able to make a full-time living from it.

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I had the opportunity to play two of the games Epic employees created with Unreal Editor, and I was very impressed with them. There was a Call of Duty clone and another fantasy-style action game with flying dragons and wolves, and both were clones of Call of Duty. There were many aspects of both games that looked like they had been designed by a top-tier studio, including graphics, animation, and sound.

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There will be an instrumental role played by hardware and app stores in addition to game engine tools and player base. Trade Algo reported last weekend that Apple AAPL +0.58% was giving a demonstration to the top executives of its new $3,000 virtual and augmented reality headset ahead of an official announcement scheduled for June. It is possible that the high price of the device may limit sales, but it is likely to be aimed at encouraging developers to start building new apps before cheaper and higher volume models are launched in the future.

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The fact that the technology giant has reached this milestone means that it may be able to launch a device that is metaverse-ready very soon. On top of its incredible advantages in mobile operating systems and chip technology, it is likely that the iPhone is likely to gain a large share of the eventual market just as other Apple products have done in the past. Considering the fact that Apple has gained an enviable install base of 2 billion active devices, it is likely that the company will be able to manufacture the most power-efficient mobile processors for its iPhone, which will become useful in the upcoming headsets that will be available.

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What does this all mean for Meta META +0.42%? The situation is quite simply, a bad one. As much as CEO Mark Zuckerberg hopes that his company will be able to bring the metaverse to life through the billions of dollars it has invested in bringing this concept to life, Meta hasn't made much progress on the software and hardware fronts so far.

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With many users complaining about the lack of graphics fidelity in Horizon Worlds, its flagship metaverse application, engagement has fallen for the company, which has led to a falling number of users. The game engine tools in Meta are nowhere near as powerful as Epic's game engine tools or the size of Fortnite's player base is anything like Epic's.

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Meta is also stuck with using third-party chips from third-party suppliers such as Qualcomm QCOM +1.62% (QCOM), which are inferior to Apple's internal designs, which are very costly. It is now rumored that many of its Quest headsets are gathering dust inside customer closets as a result of the lack of killer apps on the market.

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Probably one of the biggest disappointments of the year has been Meta's Quest Pro. In October of last year, Meta released the advanced VR headset for professionals, which was priced at $1,500 and did not feature a lot of technological advancements. A price cut of $500 to $1,000 has been made to the product, which may suggest a lack of demand for the product. In response to a request for comment regarding the sales of Quest Pro, Meta didn't respond.

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Despite the fact that Meta may be sputtering, and that there are signs that companies are abandoning the vision like Disney DIS +1.10% reportedly shutting down its metaverse division, Epic Games CEO Tim Sweeney remains confident that the metaverse will succeed over the long term.

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As Sweeney explained during the company's product event last week, more than 600 million users are actively participating in virtual worlds through the likes of Roblox RBLX +1.30%, Minecraft, Fortnite, and others, and growth is predicted to reach billions by the end of the decade. Almost 40% of Fortnite's playtime now takes place in user-created experiences, according to Epic Games.

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Sweeney goes on to say that the metaverse is more about social entertainment and hanging out with your friends in virtual spaces, so he firmly believes that this upward trend will continue for quite some time.

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There is no doubt that the metaverse will take some time to grow and is many years away from mass adoption. The winners of the race are becoming clearer every day: Epic and Apple.