Wagner James Au / New World Notes

In preparation for my live audience Breakroom interview with Matthew Ball, I'm blogging his must-read, nine part metaverse primer over last Summer and this month.  My take on Part 1 (introduction to the framework) is here,  my coverage of Part 2 (hardware) is here, with Part 3 (networking) coverage here, Part 4 coverage (computing) here, Part 5 (virtual platforms) here, Part 6 (open standards) here, and Part 7 (payments) here.

Part 8 of Matthew Ball’s Metaverse Primer, “Content, Services, and Asset Businesses in the Metaverse” raises the most questions for me from the entire series. Overarching them all is the fundamental one: 

Does the Metaverse actually have a scalable, sustainable killer app beyond user-generated games and immersive socialization that already happens within Metaverse platforms?

Now I’d personally be happy if games and socialization is all (or mostly all) of what the Metaverse is used for — these are two great and fundamental aspects of the human experience, especially when they’re democratized! But in their zeal to make the Metaverse the Next Big Thing, the investor community is searching for more ways to make money from them.

For instance, as Matthew mentions, marketing/ancillary sales of major media/fashion brands:

The largest activations in Fortnite to date have been Marvel, followed by Star Wars and the NFL, and the NBA continues to lead in NFTs. These sorts of franchises have endured for decades specifically because they work everywhere and dominate our endless imaginations and fandoms. Brands like Gucci and Louis Vuitton are equally likely to thrive; humans constantly seek out opportunities for signaling and self-expression. 

But to take two of these: Fortnite’s Marvel and Star Wars activations in 2019 were huge, but Epic's revenue still somewhat decreased that year. As for real life fashion brands entering the Metaverse, this puts them in direct competition with grassroots virtual fashion brands, and I’m skeptical that the former can (or should) prevail. (Remember when Armani opened an official shop in Second Life, but was beat out by the local competition?)

How about the crossover of real life music stars? As Matthew notes:

Travis Scott’s virtual concert feels similar. Nearly 30 million people spent nine minutes fully immersed in his music. This included die-hard and casual fans, non-fans and people who didn’t even know he existed. There is no other experience on earth — including the Super Bowl half-time show — that can deliver this degree of reach and attention, COVID-19 or not.

Scott’s event was definitely huge and also excited me at the time. But mysteriously, pop music crossover events in Fortnite have been somewhat scarce since then — even during the pandemic lockdown! — suggesting the ROI isn’t great enough for either the content or platform side. I’m more inclined to think grassroots performers like this one who originate from the Metaverse will fare better in the long run. 

Maybe education will be a killer app, as Matthew suggests:

The Metaverse will also revolutionize categories which, for the most part, have avoided disruption throughout the internet era. Education is a great example. Technologists have long argued that in-person colleges and trade schools would be fundamentally reconfigured and displaced by remote learning. But if COVID has done anything for this movement, it has proven how truly awful Zoom-based learning and digital quizzes are, and how critical a sense of individual presence and rich socializing is to development.

Whether it’s 3D animated characters viewed through a 2D iPad screen or 360° virtual reality, the Metaverse will enable students to attend richly populated educational environments, with full agency and autonomy, as well as rich facial and body animations.

I’ve certainly written about several exciting examples of Metaverse-driven education already happening, especially during the pandemic, as here and also here. But they tend to be one-off examples from Metaverse-friendly educators. Scalability, especially when faced with school firewalls, and the paramount need to protect student safety and privacy in an online space, remain huge hurdles to adoption.

The likeliest killer apps for the Metaverse — at least in my read of Matthew’s Primer — are, somewhat ironically, content to serve the Metaverse itself. For one, graphics content:

A number of new businesses and business models have emerged to address this need. And they will grow in importance over the years to come. In 2019, Epic Games acquired Quixel, which produces ultra-realistic “MegaScans” of kilometer-sized, real-world mesas, fjords and other ‘real world’ environments, with detail down to the pebble. Quixel customers, which include movie studios, game publishers, and ad agencies, can then license these scans and therefore avoid needlessly designing their own sand dunes, mossy rocks, and waterfalls.

And for another, human resources to create social content in the Metaverse:

As the Metaverse grows, we will see the diversity and value of this work grow. This will lead to new labor/hiring platforms (TaskRabbit, Uber, Fivrr, and Upwork, but for the Metaverse!) as well as Metaverse “call centers” that enable more advanced outsourcing of hourly labor to foreign markets and a greater ability for higher skilled, salaried American employees to participate in the “high value” economy from outside the major cities. This will eventually alter how we allocate and monetize modern resources, from housing to transportation infrastructure. The ability to act on the global stage from Akron, or be a card dealer from Manilla, will change who we hire, for how much, and where we live.

Beyond gold farming in MMOs, we’ve seen many cottage industries like this emerge. An early studio creating Metaverse content hired out 3D developers based in Vietnam, while in 2006 or so, the infamous Anshe Chung opened up an entire studio in Wuhan, China, to manage her vast virtual real estate holdings in Second Life. If millions or even tens of millions of people in the developing world wind up making a decent living as entertainers to wealthy Metaverse users, that might not be the worst fate for them, or the platforms they earn a living on. (However, don’t be surprised when they unionize and go on strike.)

Pictured: IBM's Italian workers go on strike in IBM's corporate campus in Second Life (2007) 

Which may suggest the best (or least worst) answer to the killer app question: As long as the userbase for Metaverse platforms keep growing, so will the market to serve the userbases within them. Though I’m not sure how scintillating that answer will be on Wall Street.