Tuesday Apr 23, 2024

286. What CoStar's Acquisition of Matterport Means for Real Estate Photographers | #mttr #csgp

How CoStar Acquiring Matterport Affects Real Estate Photographers that Offer Matterport

Commentary and analysis by:

Dan Smigrod
Founder and Managing Editor
We Get Around Network and WGAN-TV
Atlanta, Georgia

If you are like most of the 18,000+ monthly readers of the We Get Around Network Forum — a real estate photographer that offers Matterport to help sell, lease or rent residential and commercial real estate — you are likely wondering if the news Monday (April 22, 2024) that Matterport has entered into a definitive agreement to be acquired by CoStar Group is good news for you.

Congratulations. You won the lottery.

For real estate photographers that offer Matterport, the symbiotic relationship - like bees and flowers - of Matterport and CoStar will result in:

1. Increased demand for Matterport digital twins from CoStar clients not presently using Matterport
2. Increased demand for Matterport digital twins from CoStar clients using Matterport
3. Increase demand for Matterport digital twins from non-CoStar clients
4. Higher Add On prices for Matterport digital twins as we know them today
5. leverage Matterport’s spatial data
6. More demand for professional images, video and aerial services
7. More demand for related digital marketing services such as 3D/360/2D virtual staging
8. More Matterport Partners offering integrations for residential and commercial real estate
9. Matterport seamless integrations among Matterport, CoStar brands and enterprise clients

CoStar excels at creating, acquiring and growing property marketplaces for selling, leasing, renting and managing residential and commercial real estate. And, as a result of being a very big client of Matterport for nearly 10 years — CoStar’s research shows that its marketplace listings with Matterport digital twins increases time spent viewing listings.

That likely translates to:

1. Sellers using Matterport virtual tours get more offers, sooner resulting in more money
2. Real Estate agents and brokers win more and bigger premium listings
3. Buyers, lessors and renters have more confidence making decisions

We Get Around Network Forum readers likely have used these talking points for years to help sell Matterport as an Add On for marketing and managing properties.

According to the CoStar media release on Monday, “CoStar Group operates some of the most effective and widely recognized real estate information solutions and online property marketplaces in the world including Apartments.comLoopNetCoStar, and Homes.com, all of which feature Matterport’s 3D virtual tours. CoStar Group was one of the first adopters of Matterport’s technology, and currently has almost 300,000 Matterport digital twins available in the CoStar information product and online property marketplaces. Advertisers on CoStar Group marketplaces clearly recognize the value of Matterport virtual tours. In March 2024, there were over 7.4 million views of Matterport 3D Tours on Apartments.com, with consumers spending 20% more time viewing an apartment listing when Matterports were available. CoStar Group intends to utilize Matterports in a similar fashion on Homes.com to further enhance the most comprehensive agent, seller and buyer friendly residential portal on the market.”

CoStar — a company that did 16 times gross revenue ($2.46 billion) versus Matterport’s gross revenue ($157.7 million) in 2023 — has the scale to aggressively market Matterport digital twins.

Costar will likely, aggressively:

1. feature Matterport — and Matterport AI powered features — in all its marketplace listings
2. offer Matterport as an Add On
3. Include in its marketing bundles, Matterport’s Capture Services or the all-in-one offering from its VHT Studios subsidiary
4. Advertise in the 2025 Super Bowl its Homes.com and Apartments.com marketplaces highlighting listings with Matterport digital twins.
5. Sell Matterport to its enterprise clients leverage the Matterport SDK for seamless integrations
6. Consider a pricing model such as free Matterport digital twin with your [CoStar platform] listing. (The photographer still gets paid.) For clarification, think about how razor blade companies make money on selling blades and photocopier companies making money selling toner or ink cartridges.
7. Seek innovative ways to add value to Matterport clients

While Matterport pumped the brakes in the last 12 months — laying off 30 percent of its workforce to achieve profitability in 2024 —CoStar will remove the brakes and step on the Matterport gas pedal.

For example, CoStar will increase Matterport hiring for:

1. Research and Development
2. AI and Machine Learning
3. Property Intelligence product development
4. Autonomous capture (drones, robots)
5. SDK integrations among CoStar clients using CoStar brands (marketplaces) with Matterport
6. Marketing and Sales
7. Matterport SDK Partner Program (Please see my related We Get Around Network Forum topic: How Matterport Can Succeed Faster with a $25 Million Fund for SDK Partners)

According to CoStar Founder and CEO Andy Florance – as quoted in the CoStar media release Monday – “CoStar Group intends to support and invest in research and development opportunities to further develop Matterport’s spatial technology, including the application of AI and machine learning to extract information from the 3D spatial data library as well as using generative artificial intelligence to imagine and reimagine physical spaces.”

While I had predicted that Hexagon (Will Matterport be Acquired by Hexagon?) or Google (Why Google Will Acquire Matterport?) would likely acquire Matterport, my initial impression is that Matterport being acquired by CoStar for property marketing and intelligence is a great fit.

During the Matterport 2023 Earnings Call, Matterport Chief Financial Officer JD Fay said, “residential real estate represented approximately 50% of subscription revenue in Q4.” I imagine that property marketing for commercial real estate and travel and hospitality represent significant subscription revenue of the remaining 50 percent of subscription revenue.

These verticals are also sweet spots among CoStar Group brands and for real estate photographers offering Matterport.

Additionally, CoStar has — and likely will — continue to acquire marketplaces in other countries. Matterport operates globally and in multiple languages. So, the symbiotic relationship extends to these international marketplaces as well.

While the We Get Around Network community has expressed both excitement and concerns about the pending acquisition, it’s clear to me that real estate photographers that offer Matterport to help sell, lease, rent and manage residential and commercial real estate are all winners.

Among the comments: “You should all post on your local news feeds and Facebook profiles that the reason CoStar [plans to] acquired Matterport is because 3D tours really work,” said We Get Around Network Forum Member @GETMYVR

For real estate photographers that are using different 3D/360 platforms, the CoStar acquisition of Matterport will grow the market share of other hosting platforms too. I also anticipate that CoStar will enable other 3D and 360 hosting platforms to seamlessly publish to CoStar brands.

Costar + Matterport = A rising tide lifts all boats. The more listings to sell, lease, rent or manage properties that include a Matterport digital twin, the more those selling, leasing, and renting will ask agents if they will include a Matterport virtual tour in their listing and the agent, broker or property manager will need to say yes to get the business.

And, another digital twin hosting platform may check that box: either because the platform offers benefits that Matterport does not offer or their virtual tour is “good enough” for the agent to win listings.
I am old enough to remember when MLS real estate listings were just text.

Today, all listings include photos and some listings have digital twins. That gap will narrow with the help from CoStar: the soon-to-be new 800 pound gorilla in our digital twin space.

Plus, if buyer agents disappear as a result of the recent NAR lawsuits, digital twins become that more important for digital property marketing.

As a result of the CoStar definitive agreement to acquire Matterport — and the NAR lawsuits — table stakes for residential and commercial real estate listings may soon include photos and digital twins.

That said, real estate photographers will need to be patient. It could take until the end of 2024 for the CoStar acquisition of Matterport to actually happen; and then potentially years to seamlessly integrate Matterport team and technology with the various CoStar brands.

I can’t wait for the future to arrive. How about you?

What are your thoughts about how the planned CoStar acquisition of Matterport will affect you?

Please post your thoughts in the We Get Around Network Forumwww.WeGetAroundNetwork.com

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