Say hello to the metaverse
What the metaverse is, why you should care, and who is playing.
This is part 1 of an ongoing series on the metaverse. Part 1 details what it is, why it is important, how far away we are from a fully realized metaverse, and who the biggest corporate players right now are. The next part shall tackle how the blockchain is enabling the metaverse and how this approach is different to the ones discussed below.
People have always wanted more. Be richer, more influential and have their physical appearance conform to the mental image of their ideal self. Fortunately or unfortunately, (depending on your glass + water viewpoints), life deals you a hand and you play it. What if that were not the case anymore? What if you could be all you wanted to be?
COVID has drastically altered how we approach work. Stuck indoors for days on end with interactions limited to faceless voices and depthless faces on screens. It is evident to many around the globe now that this is not a sustainable method of social interaction when it comes to maintaining mental health1. What if we could work in a 3D reality simulation that mimics in-person interaction much more closely?
These are a few of the promises the Metaverse offers. It is the promise of a digital world, as “real” as the one we currently inhabit.
So what is it and where did it come from?
Whence the Metaverse?
Snow Crash is a science fiction novel by Neal Stephenson, released in 1992. Neal Stephenson is a great fucking writer. Check all his works out, he’s amazing.
Snow Crash details a world where the Fed’s incessant money printing has led to hyperinflation of the dollar (shifts nervously and looks at the inflation rate). It is a world dominated by rampant capitalism, private organizations, mercenary armies and individuals command de-facto empires. And relevant to our discussion, is Snow Crash’s vision of the internet.
Imagine an MMO like Second Life, but it doesn’t just have pre-rendered quests or limitations on what you can do. It is a world where you freely interact with other people, do things together, live, work, play and show off in that world.
It is definitely not utopia though. Classism, discrimination and elitist clubs are as big a part of the metaverse as in the real world. Neal Stephenson’s isn’t a particularly upbeat brand of fiction.
Anyway, that is the inspiration. Another example is Ready Player One. Just the world in Ready Player One - that’s a good interpretation of the metaverse.
But is that all the metaverse is? A virtual reality game that people step in and play on? That is a simplistic view of what it could be. Let’s try to step back and think of what the metaverse looks like it is going to be - the next step in human digital experience. Defining it is as hard as concisely defining what the internet is -
the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a network of networks that consists of private, public, academic, business, and government networks of local to global scope, linked by a broad array of electronic, wireless, and optical networking technologies.2
Vague and bullshitty - I don’t disagree. Let’s break that down.
The majority of the world’s digital experience is currently characterized by:
Screen limited interaction. VR devices are taking off and are undergoing massive improvements but they’re not mainstream yet.
Shared experiences where the depth of both PVE (player vs environment) and PVP (player versus player) interactions are limited by the current state of human machine interaction. Examples:
Message boards (reddit and 4chan)
video games ( Destiny 2 etc.)
voice and video chats
media streams
Wireless data transmission bandwidths that place significant load on the depth of graphical quality of actions that can be done in a social setting.
The metaverse is less of a destination and more of a state that is characterized by significant advances against the limitations listed above. The depth of human interactions with machines will become significantly more immersive, allowing a broader set of actions to be undertaken in this more immersive digital experience.
So essentially - the metaverse is characterized by:
A shared digital space
Sensory immersion - a true sense of space involving aural, visual and haptic stimuli that temporarily replaces reality.
The option of enabling persistence of identity and assets3, i.e. if you decide to be a Ron Perlman lookalike named “Rockhard” in the metaverse (good choice), that identity choice should be able to persist across multiple login locations or access points.
Its own economy, always online and always there, connected to the real world economy.
Tons of things for people to do(shop, work, socialize, fight and play)
Hey MisterFigs, I hear you yell. Isn’t this what we already have in the internet right now with blockchain and well, everything else? I would agree. The metaverse is a fancy term to signify taking the entire internet and making it 3D, vastly changing the way we interact with it. What this will mean for the future of work, play and earning is extremely hard to predict with any kind of confidence. I like to think that Tim Berners Lee would have had no way of knowing that what he was building would help people sit on their ass and have groceries delivered to them in minutes.
Why should I care?
Put simply, the metaverse will change everything, about as much as the advent of personal computing changed everything in the last 30 years. Consistent improvements in the following fields will converge:
Computing power
Internet connectivity and speeds : both device to device and device to server.
Human machine interactions becoming more 3D than 2D (VR, AR etc.)
The tools available for coders and developers to bring their world visions to life
The metaverse will not be a single step change in how society functions. It will creep up on us and before we know it, we would be interacting with machined reality in a radically closer fashion.
You might not have to ever go to work again. You’d plop your VR headset on and it would instantly be like you’re in your office meeting room, looking all dressed up and presentable when you’re loafing around in your pajamas. You would not really be limited to voice and video chats while talking to friends or colleagues. You’d be able to ‘touch’ them and interact with them in a space that can be configured as you wish. The signs are all beginning to crop up around us.
What would it take to build a metaverse?
There are multiple hurdles to cross before we get to an end state metaverse. However, these are a few important steps that need to be solved for along the way:
Massive amounts of user generated content to populate the metaverse space
Bandwidth improvements to enable larger percentages of the world to experience and drive the metaverse
Computing options that are able to support varied use cases and resolutions - digital metaverse experiences would demand varying levels of computing strength to access
Human-machine interactions that can take seamlessly help us make sense of this expanded internet - VR and AR are still not strong and fast enough to render and display images that rival reality. This will be a limiting requirement if the metaverse wants to make the jump from a gimmick to a serious new avenue for societal functions.
Easy ways for users to on and off-ramp currency from the metaverse - The interplay between cryptocurrencies and straightforward fiat currency transactions will be an interesting dynamic to watch here.
A standardized set of rules to build, display and monetize content - This ties into the first point. Make it as easy, frictionless and lucrative for creators. - Each company is trying to ensure its protocols are the standardized set of rules (minimize spend on reconfiguration of business and tech strategy). This will be a bigger dogfight than when TCP/IP was standardized.
Compressing available compute and process power into user friendly modules. Ideally, we would be able to compress supercomputers into eyeglasses. - advances being made right now but the UX for the near future still appears clunky.
A robust database that can confirm ownership, trades etc. in a manner that is resistant to hacks and malicious attacks - Blockchains like Ethereum are the strongest contender here.
No company is really trying to build a metaverse all by itself. The number one reason is that you can not really create an empty metaverse and then populate it with people, much like an empty internet did not jump out of nowhere and got populated with users. It is an asymmetric function of users congregating around a few services, and expansions being made accordingly by the “invisible hand of the market (DAU+USD for short)”.
User generated content is the way everyone is trying to solve for this problem. The way to win at UGC is to create a simple and scalable model of revenue generations for creators. This cannot start in any meaningful fashion unless you already have a massive amount of active users with compatible network effects. This limits the number of players who can realistically have the first crack at defining what the metaverse will look like.
So who’s doing it?
This is not as clear as one would expect. Epic, Roblox and Facebook are undoubtedly striving to be the first with an integrated digital offering that qualifies to be called the metaverse. All of them are at various stages in their journeys. We will summarize their positions here.
Facebook
Mark Zuckerberg is one of the greatest CEO’s of our age. His ability to maneuver what was once a college networking site into a social media behemoth that is worth 1 trillion USD is truly incredible. Here is what he said about the metaverse.
It just touches a lot of the biggest themes that we’re working on. Think about things like community and creators as one, or digital commerce as a second, or building out the next set of computing platforms, like virtual and augmented reality, to give people that sense of presence. I think all of these different initiatives that we have at Facebook today will basically ladder up together to contribute to helping to build this metaverse vision.
Linking the source right here: https://www.theverge.com/22588022/mark-zuckerberg-facebook-ceo-metaverse-interview
Go through it. It’s a fun interview.
The business case for why Facebook wants to own the metaverse is quite simple. Facebook as a company, as evinced by its acquisitions of both Instagram and Whatsapp, has always wanted to be at the center of social connection on the internet. When you have a captive group of users that bring more and more of their networks on to your platform, you can increase the total minutes spent by users looking at their platform.
More time = more ads = more revenue.
However, the digital business landscape is becoming significantly more content driven. Apps like TikTok and OnlyFans (until recently) have become behemoths, de-fricitionalizing the process of creating user generated content. Facebook is essentially betting that the metaverse is going to be the next space where the majority of our interactions happen.
This means that users would spend a lot more time in the metaverse than they would spend on their phones.
More time = more ads = more revenue.
However, Facebook’s primary results here have been in form of the Oculus hardware they’ve developed. The content offering is simultaneously big enough for lack of user interest to be a problem, and poor quality enough for that to be a reason for lack of user interest.
https://screenrant.com/oculus-quest-unknown-awesome-things-can-do-with-vr-headset/
I go through this list and nothing seems exciting enough for me to want to buy an Oculus.
Wrestle in VR
Play games in VR
De-stress in renderings of natural environments
Attend sports games virtually
Gamify fitness in VR
Maybe that is the problem with the metaverse. It has been promised in many science fiction novels, but until the tech is good enough for us to experience it seamlessly, it will seem like a graveyard where speculative VC funds go to die. But like Henry Ford said, “If I’d asked the customer what they wanted, they’d have said faster horses” (paraphrased).
Epic Games
Fortnite, the runaway gaming sensation of the last few years, has been at the center of metaverse discussions for a while now. Personally, I sat up and took notice when I saw this video of Travis Scott’s concert in Fortnite. 12.3 million people had attended it. Just think about that for a second. This is a video game, with millions of concurrent visitors participating in a real time event.
Let’s understand what this video and its predecessors represent:
Millions of people concurrently experiencing a shared event. A step forward in digital socializing.
A new way of content creation and social consumption
A marker for how far we have come from the days of Quake and Doom lobbies in LAN parties.
Potentially unlimited avenues for marketing and advertising
This isn’t exactly the metaverse though. This is closer to an in-game event than an actual shared experience. It is the Fortnite game creating a “level” that players experience at the same time.
Epic Games, the company behind Fortnite, wants to build the metaverse. Recently, Epic bought SketchFab, the largest 3d content sites in the world. What did they do after buying it?
Making the bottom paid tier of Sketchfab free, and bumping all paid users into higher-capability accounts. And, reducing Sketchfab’s marketplace fees to 12% so creators make more from their art and designs. 4
Epic wants to democratize 3D asset creation - user generated content is cheap, easy to scale and has a flywheel effect. Fortnite has progressed significantly beyond that Travis Scott concert, with players now allowed to create and sell various emotes, skins and assets in game. It has become an auxiliary marketing arena for many prominent IP’s like Disney, Marvel, DC, Lionsgate etc.
According to Epic Games CEO, this means that there are now three ways to create in Unreal: the standard “coding” engine itself, the more simplified and “visual” Twinmotion, and Fortnite Creative Mode for those with no experience in programming and design. Over time, each option is likely to become more capable, easier to use and integrated.
However, Fortnite alone will not be enough to make the Metaverse. As any company that has a huge amount of revenue coming from a single game, Epic would love to safeguard its income streams against the vagaries of the video game market. This is where their massively popular game engine, Unreal Engine comes in.5
Unreal Engine is used by hundreds of game studios to design and create video games. This brings in a standardized mechanism for developers to create content with, secure in the ability to to share profiles and assets across experiences.
Decentraland
https://decentraland.org/
It claims to be the first virtual world owned by its users. It is an experiment in scarce digital real estate, with a limited parcel of “land” being sold to people. Users are then free to build whatever experience they want inside Decentraland.
Decentraland is the fastest-growing crypto-based virtual world. It was created in 2016 by a group of developers in Argentina, and its UX is largely based on Second Life and Minecraft, one of the most popular multiplayer games in the world.
What distinguishes Decentraland from predecessor virtual worlds is that all of the spaces (called LAND in the game) except for roads and plazas can be bought, sold and developed by the users of the game. Ownership of those virtual properties is documented on the Ethereum blockchain to make them easily transferable and to prevent fraud. Landowners control what content is published on their parcels of land, which is identified by a set of cartesian coordinates (x,y).
Content can range from static 3D scenes to interactive systems such as games, casinos, art galleries, and whatever else developers can imagine and dream up. There is a vibrant community of 3D animators, artists, and developers to execute on these virtual spaces, creating new ways for people (as avatars) to socialize and interact with one another. 6
Sotheby’s recently bought a plot of “LAND” and closed their first digital NFT show inside Decentraland. 7
This is more like it. A vast canvas of digital space, with spaces auctioned off to individual users to develop and display experiences as they see fit. Decentraland is built on top of the Ethereum blockchain and essentially everything in that world is an NFT. Land, buildings, spaces, assets. You can buy and trade virtual assets like clothing, you can go and play craps in one of the casinos, where a croupier is paid to show up and help you play the games!
Roblox
Roblox Corporation’s market cap is $49 billion as of today. It is the creator of Roblox, a video game ecosystem.
It allows users to program games and play games created by other users. Created by David Baszucki and Erik Cassel platform hosts user-created games of multiple genres. Roblox is free-to-play, with in-game purchases available through a virtual currency called "Robux". 8
It has 43 million daily active users as of Q2 2021.9 Roblox has a very simple business model.
A business model that is centered around incentivizing developers to create more games that draw in more users, Roblox Corp. has made no secrets about its desire to create the metaverse. Here’s what they think are the eight main components of the metaverse they envisage
Roblox has created a fertile mini-economy with many developers and game + content creators becoming rich off of the explosion in usage. User generated content is the simplest way to provide depth of content that will attract users. Though they face troubles with moderation and complaints regarding online harassment, Roblox is poised to be one of the big players in this upcoming space.
I’ll sign off with a particularly insightful excerpt attempting to answer the question “Who will own the metaverse?” (from the Zuckerberg interview I linked above).
I think it’ll be good if companies build stuff that can work together and go across lines rather than just being locked into a specific platform. But I do think that, just like you have the W3C that helps set standards around a bunch of the important internet protocols and how people build the web, I think there will need to be some of that here, too, for defining how developers and creators can build experiences that allow someone to take their avatar and their digital goods and their friends, and be able to teleport seamlessly between all these different experiences.
Let that be the segue to the next article. It’s late and I’ve been typing for a while. Talk soon!
https://tmb.apaopen.org/pub/nonverbal-overload/release/
https://en.wikipedia.org/wiki/Internet
https://www.matthewball.vc/the-metaverse-primer
https://www.forbes.com/sites/johnkoetsier/2021/07/21/fueling-the-metaverse-epic-games-buys-biggest-3d-model-platform-sketchfab/
https://www.matthewball.vc/all/themetaverse
https://republic.co/blog/real-estate/investing-in-decentraland-in-2021
https://decentraland.org/blog/announcements/sotheby-s-opens-a-virtual-gallery-in-decentraland/
https://en.wikipedia.org/wiki/Roblox
https://www.statista.com/statistics/1192573/daily-active-users-global-roblox/