On 29 October, Facebook CEO Mark Zuckerburg announced the company’s name change to Meta, and released a rousing video, pushing talk of the metaverse — this year’s hottest internet topic — to a new high. And right now, there are two opposing views about investments in the metaverse. One side feels that the metaverse is a bubble and the day is still far distant when it becomes reality; the other side feels that the metaverse is the next phase of the internet, that it is the future. I can share that the industry consensus is that the metaverse might be an upgraded version of the internet in about ten years, but at the moment, the hype about the metaverse in the investment and technology sectors is more of a bubble.
As rich as the real world
First, let us look at what the metaverse is. There is currently no standard industry definition, but from the origins of the word, we can at least identify what it should mean. No matter how industry players argue, the virtual universe in Steven Spielberg’s movie Ready Player One — the OASIS — is a metaverse in the true sense. This is something that the industry agrees on, and in fact, the concept of the metaverse itself only became a hot topic after Ready Player One was released.
...it has to be so fun that people throw themselves into it, body and soul.
The metaverse has three characteristics. First, it has to be large enough and be in continuous operation. It has to be able to accommodate massive numbers of people — the same number as the global population — to socialise and interact in this virtual space. No matter how realistic the metaverse is, as long as its capacity is limited to small numbers, or if it does not keep running smoothly as it should, there can be no socialising of any breadth or depth, and there would be no virtual world that could run parallel to the real world.
Second, the metaverse has to be rich in content in order to be a substitute for the real world. It does not have to be the same as the real world, but that reality must be rich enough for people to interact with other people and the environment in it for long periods, so that most of the time, users make more fresh discoveries when they stay in the metaverse than in the real world.
Third, the metaverse needs to provide strong immersive entertainment — in layman’s terms, it has to be so fun that people throw themselves into it, body and soul. Only if it is a sufficiently entertaining experience will users be willing to pay to support the costs of running the metaverse.
With these three characteristics satisfied, we come to a natural conclusion about the metaverse — its architecture cannot be completed by one company, but has to be opened up to massive multi-users. Only when these massive multi-users can participate in building the metaverse according to certain rules can the metaverse be rich enough.
A need for multi-builders and multi-users
There are two types of game platforms that allow massive multi-user participation. In the first category, users can only interact within the set context provided by the platform, like World of Warcraft. In the second category, users can create their own material in the virtual world and then interact with other players, like Roblox. Between the two types, only the latter has the potential to be developed into a metaverse, but not the former.
If a virtual world is to be as rich as the real world, its number of creators has to be at least equivalent to those creating the richness of the real world. And the real world is built up by billions of people in different roles. Technically, every single person is participating in building the world. If the virtual world is to be rich, then the rules for content creation have to be opened up to allow massive multi-users to participate in building it.
Once we understand this premise, our conclusion naturally becomes clear. Current technology cannot build the metaverse, because it cannot balance richness and high entertainment.
If the metaverse is to pursue maximum entertainment value based on the current market, that would lead to its richness being reduced to practically zero.
Given current technology, the entertainment value of games is a classic capital-intensive undertaking. A highly entertaining game like Red Dead Redemption 2 costs about US$400 million to develop, more than the all-time record US$250 million it took to produce Spectre in the Bond movie franchise. An ordinary gaming company could not take on such an investment, much less an individual. There are only a handful — probably fewer than ten — gaming companies in the world with the funds and manpower to develop such games.
If the metaverse is to pursue maximum entertainment value based on the current market, that would lead to its richness being reduced to practically zero. Such a metaverse would only be a combination of some highly entertaining connected games, and the metaverse that the user enters would not be another rich world; at most there would be a couple more fun classic games.
If content creation within the platform were left to users, like Roblox, the threshold for content creation would have to be lowered to the point where all individual developers can participate. With current technology, individual players can only develop simple little games that are a far cry from large-scale games in terms of playability, much less the cash flow of Honor of Kings.
So, with current technology, a lot of investments and commercial activity relating to the metaverse is mostly a bubble, and investors should enter with prudence.
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