It is Not Just A Game But A Metaverse
The metaverse is a container that can hold everything?
Executives from Google, Amazon, and Facebook, in addition to reading books on organizational management, also have an old science fiction novel on their bookshelves – “Snow Crash”. This book published 29 years ago, was like a prophecy. In 2000, Google founder Sergey Brin said, “This novel foretold what was coming.” And one year later, Google Earth was launched. What’s interesting is that “Snow Crash” described a real-time earth map model. Once the science fiction becomes a reality, the book will slowly be forgotten. But until now, “Snow Crash” is still affecting the nerves of Silicon Valley, because the “Metaverse” mentioned in it is still a universe that is far from being shaped.
In this novel, humans live in a virtual three-dimensional space through “avatars” (digital surrogates), and the author refers to that man-made space as “Metaverse”. Metaverse is born from the real world, parallel to the real world, and always online, just like the “Oasis” in “Ready Player One”. It has a fully functioning economy, where data, digital items, content, and intellectual property can flow, and users and companies can create content and goods to make Metaverse more prosperous. Although Metaverse still carries a strong science fiction color, recently, a group of companies have taken advantage of the concept of “metaverse” and boarded the high-valuation express train. Many VR/AR companies have announced financing of more than 100 million yuan; and Roblox, a gaming platform company that went public this month, has a current market value of over $40 billion, which is 10 times higher than its valuation a year ago and is considered the “first stock of metaverse”; even a dating app called Soul claims to be a “social metaverse linked by Soul for Gen Z”. What magic does the concept of Metaverse have to make the market willing to be generous? Is this an unexplored new western frontier, or a buzzword created by the capital market?
Is Metaverse worth so much money?
Reasons why the capital market is vying for Metaverse, according to Zhuang Minghao, vice president of 36Kr China, include the fact that the era of mobile Internet is already past; technologies involved in Metaverse, including VR/AR and brain-computer interfaces, are becoming increasingly mature; finally, games like Fortnite monetize optimistically. He also mentioned that “half of the cases involving the consumer Internet are game-related”. For now, games are the carrier that can best embody the concept of Metaverse. Taking Roblox, the “first stock of Metaverse”, as an example, it is a platform that combines game development and game creation. As of 2020, Roblox has 31 million daily active users and 150 million monthly active users. By comparison, Steam, another gaming platform, had an average monthly activity of 120 million last year.
To enter Roblox, players need to first create a digital surrogate that represents themselves, using it to roam tropical islands, haunted castles, and other maps, playing first-person shooters, puzzles, action survival, role-playing, and more inside. “Players can discover new games endlessly because independent developers have created as many as 20 million new games for the platform each year,” The New York Times wrote. The reason why “Roblox wants to build Metaverse” is written in its prospectus because Roblox creates a concrete “body” for players and can create an economy inside that virtual world. For example, a high school student named Alex Balfanz and his friends developed an online game called “Jailbreak” using Roblox’s game engine and software tools in his last year of high school and put it on the Roblox platform. The game itself is free, but the vehicles and weapons required to “escape from jail” in the game need to be purchased with virtual currency “Robux” on the platform. Just a few months after the game was released, Balfanz had earned the four-year tuition at Duke University (about $300,000). Transactions in virtual space have even supported his real-life.
The metaverse Roblox envisions is that developers create games to gain Robux, users can buy Robux to facilitate game upgrades and iterations on Roblox, and Robux can be exchanged for real-life currencies that developers need. “If you think it’s a gaming company, it’s definitely overvalued,” said Alex, co-founder of fund analysis firm SuYuan YuXin, who suggested another perspective. If Roblox is seen as a world, the time that many players spend in it is worth more than the current $40 billion valuation in the future, “not to mention when VR glasses are worn.”
Last year, foreign analyst Not Boring analyzed that Tencent is very likely to become the leader of the Metaverse. Tencent owns 40% of Epic, which is without a doubt a representative manufacturer in the domestic Metaverse field. In addition, Tencent holds a 12% stake in Snapchat, and together they have a comprehensive hardware system covering everything. Snapchat’s camera kit, expression tool Bitmoji, and other products under Snap have already made it to the top of the AR field, giving Tencent’s Metaverse a solid foundation. Tencent’s super app WeChat, which is one of its core assets, is also a miniature version of the Metaverse because Chinese consumers use WeChat for almost everything: sending messages, reading news, digital shopping, work communication, offline payments, and so on. Even though none of these companies can be considered true Metaverses according to the current definition, they all have some of the characteristics necessary for the Metaverse and are prototypes. Nonetheless, the market is still willing to generously invest in them.
Capital begins to encircle the land
The reason why the “Metaverse” fascinates capital is that it opens up the virtual world as a “new frontier.” The limited resources in the real world will intensify competition, while the emergence and improvement of another world undoubtedly provide people with more opportunities to create new value and enjoy new work. Perhaps we will develop new consumption habits, consume more virtual goods, and at the same time gain more virtual assets. The economic system in the real world will also be changed. “A change in the virtual financial system in a virtual world may cause a huge wave in the real world. This was unimaginable 10 years ago,” said Alex, co-founder of Suyuan Yuxin, a fund analysis institution. “The highly connected real world is rapidly being virtualized, while the virtual world is rapidly being realiZed.” It is these opportunities that attract capital to encircle the land.
The concept of the Metaverse has been around for a long time and is not a novelty, but the fact that it is being revived now may indicate that the variables for building the Metaverse are slowly maturing. Neil Stephenson, the author of “Snow Crash,” told the media in 2017 that he had never seen the future clearly and that the book was “made up.” But looking at the rapid development of the Internet and technology today, perhaps his fiction can become a reality.