What's needed for the Metaverse?

Much ado about the Metaverse these days, with companies like Disney, Journey, Publicis, Telefonica and Creative Artists Agency (CAA) adding a Chief Metaverse Officer. Or is “the metaverse almost entirely hype and baloney right now. If you're worried about your company needing to jump in right this very minute to make your metaverse play, you can stop worrying” (Philip Rosedale of Linden Lab, who created Second Life)? This week I went through my notes and finalized Matthew Ball’s ‘The Metaverse: how it will revolutionize everything’ bookto answer a few basic questions:

1)????What is the Metaverse?

2)????When will it arrive?

3)????Which obstacles would block its arrival?

4)????Whether 1 Metaverse or several Metaverses?

5)????Why does gaming drive most of the progress?

6)????Will the Metaverse revolutionize everything?

7)????What do I make of all this?

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1)????What is the MetaVerse? Is it simply ‘a 3D place where people can work, play, and connect with others in immersive, online experiences’ (Meta), ?or is it ‘a massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence and with continuity of data, such as identity, history, entitlements, objects, communications, and payments” (Ball)? I prefer the latter definition because it fits the (dis)utopian vision that justifies the current hype, and also highlights the challenges in realizing the vision. However, as discussed in the obstacles, interoperability remains elusive, leading me to drop that from the definition and instead envisioning several competing ‘Metaverses’. That might not be as bad as Ball believes, given Sweeney’s warning that ‘if one central company gains control over the Metaverse, they will become more powerful than any government and become god on earth’. So my definition is ‘massively scaled networks of real-time rendered 3D visual worlds with a sense of presence and memory continuity’

2)????When will the Metaverse arrive? Estimates vary from ‘already here’ (Microsoft’s CEO Nadella), 2-3 years (Gates), 5-10 years (Zuckerberg and Ball) to ‘over the coming decades’ (Epic’s CEO Tim Sweeney and Nvidia’s CEO Jensen Huang). Right now, fewer than 1 in 14 people routinely engage with the virtual world - and these are almost exclusively games, have no meaningful interconnection, with only marginal influence on society (Ball). But even executives who think the metaverse remains far off in the future believe now is the time to publicly commit to making it a virtual reality. Meta, Epic Games and Nvidia want the leverage such metaverse provides to get around current $ gatekeepers Apple and Google. How big would it be? Ball estimates the Metaverse would generate a quarter of the digital growth and about 10% of real GDP growth over the next decade, it would amount to $3.65 trillion annually in 2032 (representing 10% of digital, while digital’s share of the economy grows from 20% to 25% and the world economy grows 2.5% annually).

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3)????What are the challenges for the Metaverse? I focus on 5: shared experiences require a synchronous virtual world, massive scale and persistence are tough to combine, innovation requires payback, hardware has to fit the user task, and interoperability requires private companies to adopt common standards.

a)????Shared experiences require a synchronous virtual world. In Second Life, “people sit together and collaboratively build a space together. If you do harm to somebody there, they're going to remember you because you live next door to them. You share the same neighbors, you go to the same stores, you hang out at the same place to listen to live music.” Such shared experiences require a synchronous virtual world, for which the internet was not designed. For instance, Netflix sends users batches of data and pushes content before it is needed to ensure the video plays despite a short delivery error. Video conferencing software sends you the packets you missed and speed up the playback to catch you up to being live – which works because the focus is on the speaker. In contrast, far more complex data is transmitted, needed more timely and from all users in a virtual world. While many consider the Metaverse to depend on innovations in devices, game engines or platforms, networking capabilities will define and constrain what is possible, when and for whom. Latency is the greatest networking obstacle to the Metaverse. We will need new cabling infrastructure, wireless standards hardware equipment and new protocols such as the Border Gateway Protocol.

b)????Massive scale and persistence are tough to combine: EVE online has been operating persistently (with an occasional downtime for troubleshooting and updates) since 2003 with hundreds of thousands of monthly users into a single, shared virtual world. Contrast this with the 20-30 minutes matches of 12 to 150 players in Fortnite, which has more visual complexity. Its 2020 ‘live’ Travis Scott’s concert was attended by more than 12.5 million people, but these were split across 250K copies, thus watching 250,000 versions of Scott of the event that didn’t even start at the same time. In World of Warcraft, each realm is capped to several hundred participants. If a virtual world goes offline, resets or shuts down, it is as if it never existed for the player. For instance, when Second Life upgraded its physics engines, a bug resulted in virtual horses sliding past their virtual feed, which caused them to starve and die. Such lack of ‘continuity of memory’ is less of a problem for games but is for education, work, healthcare and real estate to shift to the Metaverse. For example, we expect that digital twins should be frequently updates to reflect changes to their real-world counterpart and that virtual only real estate platforms would not forget about decorations added to a room. ?

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c)????Innovation requires payback: part of Roblox’s success is the huge R&D spending: 30% of all its revenues, spanning improvements in developer tools and software, server architecture to synchronize high concurrency simulations, machine learning to detect harassment, rendering for VR and motion capture. These investments enable developers to produce more compelling virtual worlds, which attracts more users and thus benefits all. But who is paying for this virtual flywheel? The 30% payment standard pioneered by Nintendo has expanded to all in-game purchases, subscription and updates for Playstation, Steam, Apple and Google. Epic Games CEO Sweeney tweeted that ‘Apple has outlawed the metaverse’, because it stifles investment in the metaverse, especially from the integrated virtual world platforms that are pioneering it, and is encouraging ad-based business models. Consider a teacher such as the wonderful marketing prof THT adding interactive experiences to his $100 video-based class and hoping to both enrich his students and himself. Adding interactivity would lead Apple to classify his work as an interactive app, requiring THT to support in-app payments. He now needs to charge $143 to cover Apple’s fee. At $200, Apple receives $60 for the new lesson while THT’s take home has increased by only $40 and the students have to fork out an extra $100. Has their educational experience really doubled in quality? Likewise, for every ?even though their eduation experience is unlikely to have doubled in quality. Finally, for every $100 value Roblox creates in iOS revenue, Apple takes home $30 without risking anything, developers take $28 and Roblox loses 30% due to its ongoing investments. Likely, Apple does not want a Metaverse of integrated virtual world platforms but many isolated virtual worlds connected through Apple’s App store and use of Apple’s standards and services. Blockchains offer a way around such gatekeeper for developers, as they turn Google’s infamous ‘Don’t be evil’ into ‘Can’t be evil’ (Chris Dixon). For all of their promises though, blockchains remain expensive and slow. There are real-world fees associated with crypto, and the average value of a real asset in the metaverse is less than in the real world. Content creators need some level of price stability and to take out their virtual money to pay their mortgage or rent.

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D)???Hardware should fit the user task: as Ball admits ‘real-time 3D rendering is not the best way to perform many tasks or experience all forms of content’. 21st century history is littered with failed hardware devices, from Google Glass to its Cardboard project and Amazon’s Fire Phone. As to Meta’s Oculus Quest 2, more than twice the resolution is required for VR to overcome pixilation issues and become a mainstream device (Palmer Luckey, an Oculus founder), they don’t cover a user’s full line of sight and only allow about 18 people to play together. Even with our current VR headsets allowing us to move around physically and touch each other’s avatars virtually, there is no evidence that they actually increase individual or team performance (only perceived presence). So while research found that physical meetings are better than videoconferencing for creativity, we don’t know whether real-time 3D virtual meetings hit such creativity benchmark.

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E)????Interoperability requires adopting common standards: the user should be able to take virtual content, such as an avatar or backpack from one virtual world to another where it can be changed, sold, or remixed with other goods (Ball). Likewise, prof THT should be able to take his virtual immersive education from one platform to another. This requires adopting a standard (such as the Internet Protocol Suite) and common standards for files (eg JPEG for images and MP3 for audio) which are voluntarily embraced by every computer network globally. In contrast, today’s virtual worlds are intended to be closed experiences with controlled economies, not interoperable. For a virtual Nike shoe to be understood in a virtual Adidas outlet, the latter would have to admit information on these shoes from Nike, operate a system that understands this information and then run code to operate the shoes accordingly. Currently, private companies have little incentive to spend their limited resources on such standards.

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4)??Whether 1 Metaverse or several Metaverses? From the above, we know the Metaverse has to support a large number of users experiencing the same event at the same time, without making substantial concessions in user functionality, world interactivity, persistence, and rendering quality. Because it will require the development of new standards, the adoption of new devices and hardware, it will likely alter the balance of power between technology companies, developers and users. If the Metaverse “is primarily operated by a single company, it can not be the Metaverse” (former Oculus VR CTO john Carmack), while Facebook conforms there can be only one Metaverse, just as there is ‘the internet’. In contract, Microsoft and Roblox talk about Metaverses or at least ‘metagalaxies’; a collection of virtual worlds that all operate under a single authority – just like most companies have a Facebook page. For instance, Roblox’s Craig Donato defines the metaverse as ‘a place where people do things with other people but in a digital space. I think that’s a different thing for different companies’. ?

For all the impact of Second Life, it was the success of Minecraft and Roblox that brought virtual world platforms to all our attention. Both are visually rudimentary (low fidelity graphics) but my kids grew up with them – more than 150 million play Minecraft and 225 million play Roblox each month. Indeed, while one company may dominate the metaverse, it is more likely that it will be produced through the partial integration of many competing virtual world platforms.

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5)????Why does most of the progress come from entertainment, which was among the last to embrace the internet (eg the Streaming Wars came 25 years after the public demonstration of streaming video)? Because graphics-based simulations are key to virtual worlds and to games, while the governments and universities that pioneered the internet had little use for them. The gaming market is both large and technologically demanding, which is why eg Nvidia embraced it to develop graphics-based computing. Online games have demanded synchronous and continuous networking connecting since the late 1990s, requiring predictive AI, with Steam, Xbox and Playstation supporting real-time audio chat since the mid 2000s. Moreover, games companies know how to create a place we would actually want to spend time in. However, Ball also warns that many of our current internet issues are likely to endure or increase, from misinformation and harassment, poor data security and privacy to algorithmic bias and general unhappiness as a result of online engagement. He sees a key opportunity for government to step in with regulatory action: force Apple and Google to unbundle identity, APIs, software distributions and entitlements from their hardware and operating systems, increase developer margins and consumer prices, enable new business models and eliminate those that focus developers on physical goods and advertising rather than virtual experiences and consumer spending. on digital goods

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6)????Will the Metaverse revolutionize everything? Despite elaborating on all the above challenges, Matthew Ball is confident the Metaverse will revolutionize everything and that ‘by the end of the decade, we’ll agree the Metaverse has arrived and will be worth many trillions’. He makes the historical analogy with the internet, referring to how the Protocol Wars were settled by economics: everybody benefitted from adopting common standards. However, he also points out how the Metaverse already fundamentally differs from the internet. “The internet’s nonprofit nature and early history originates from the government research labs and universities’ ambitions to build a network of networks, and few in the for-profit sector understood its commercial potential. Instead, the Metaverse is being pioneered and built by private businesses for the explicit purpose of commerce, data collection, advertising, and the sale of virtual products. Because iTunes came 2 decades after the internet protocol suite was established, it was impractical for Apple to reject standards such as MP3. In contrast, games were designed to run on a fixed and offline piece of software. They are also optimized for fun, not to maximize transactions, so publishers tend to fix prices, sellable goods and exchange rates and don’t allow users to cach out into real world currency. Matthew believes that there will be MetaVerse Economics because users will demand it for substantial investment. While many hope for regulatory action against Apple and Google that forces them to unbundle, a winning VR or AR headset or low latency cloud computing, Matthew sees all necessary technologies improving and generational change, with nearly everyone born today being a gamer.

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7)????What do I make of all this? I like how Metaverse considerations uncover potential and issues with today’s technology, and working towards the vision of massively scaled networks of real-time rendered 3D visual worlds with a sense of presence and memory continuity. However, I do not share Matthew’s optimism the noted obstacles will be overcome by the end of the decade. 25 years is my prediction for when we can all agree the Metaverse has arrived and is worth trillions, which requires a large boost to both supply and demand. I simply don’t see why I would spend more than a few hours a week in the Metaverse. Does this simply show I am an old person who ‘doesn’t get it’? I polled my two favorite 12 year olds. The first spends hours a day on devices from Switch to iPad to PC and only about an hour a week (in the RecRoom) on the Oculus Quest 2. The second says he does not want to move around (as avatars do in VR) but sit on the couch when he is playing videogames – if he wants to move, he’ll play outside. My 16 year old game designer notes ‘only finance people appear to champion the Metaverse – my designers and I like to think in VR and 3D, but the story and fun of the game is way more important’. So it seems premature to call the Metaverse ‘the Future of the Internet’ that ‘will revolutionize everything’. What do you think?