Metaverse 2.0

What's said about the next version of the internet, and what isn't

Jul 25, 2024

Holding onto a sense of skepticism for technology has served me well over the years, and this week was no exception.

Following the widespread outage of major systems due to a faulty software update, hundreds of millions rediscovered what it means when somewhere in the belly of our global infrastructure a zero is supposed to be a one, but isn’t.

These moments of technological failure are nothing short of people waking up out of the Matrix. Confronted with days-long wait times during a peak travel period, we are rendered rudderless and robbed of our agency. Like most, I watched a slew of friends reporting on their stalled situations from airports around the world.

I’m grateful, of course, that I wasn’t scheduled to go anywhere in this specific week, especially after coming off several weeks of flying all over. And it was an obvious reminder to renew my driver’s license.

But man, I would have loved to have one of those handwritten boarding passes.

Probably next time.

On to this week’s update.

BIG READ: Metaverse 2.0

With the release of a tome-sized update to his book The Metaverse: Building the Spatial Internet, Matthew Ball expands the scope of his initial construct to both trace more historical detail behind the current momentum and add several novel technologies. The question that remains is: has the metaverse shifted, or evolved?

The second edition of Matthew Ball’s book The Metaverse is a notable improvement. Not because the first issue sucked. On the contrary. But because this week’s release allows us to draw a trend line between the initial enthusiasm for the metaverse concept and now. And certainly, things have come a long way already. [ICYMI: I previously wrote a full book review of the first edition here.]

Both the metaverse and the conversation about it have expanded in size and scope. The second edition counts 410 pages, not including the index and footnotes, compared to 316 for the first. Ball has expanded several key sections that were previously more nascent and has added a range of charts and graphs to make his point. Now, two years since its initial publication, the world has changed and with it our expectations, wants, and dreams of what’s next.

What I liked is that Ball could have written some populist follow-up and ride the wave of excitement all the way to the bank. Instead, he’s chosen to do the monastic work of laying out his vision in minute detail, both as an invitation for broader dialogue and as evidence of how far away the future still is. The second edition expands on Ball’s encyclopedic knowledge, which allows him to credibly trace his prognostications from historic developments.

What Ball has wrought

Perhaps the greatest achievement of Ball’s writing is having triggered a widespread conversation about how different people imagine the future. Since his first essays went live in 2020, a host of academic and professional writing has followed suit.

For the occasion, I did a brief analysis of the growing body of literature on the metaverse, revealing a few key characteristics.

For one, it is a wildly popular topic. Ball invited a wave of books on the metaverse. By my count, between 2022 and 2024, at least 74 individual book titles appeared, of which 46 in 2023 alone. Totaling some 19,796 pages from 139 authors and editors, most available books focus on the business and technological aspects of the metaverse, and how it creates new opportunities and possibilities. Moreover, the bulk of books written on the metaverse are distinctly positive.

Looking at academic literature, we find a similar pattern. A search for peer-reviewed journal articles with the term ‘metaverse’ in the title gives 4,022 results. For most of the past two decades, there have been maybe a handful of releases annually, except in 2009 and 2010 when the early success of Second Life reaching a peak of 1.1 million monthly active users in 2007 invited further inquiry.

By far the most articles (3,032) were in English. Japanese was the second-most common language (104), followed by Chinese (62), and, surprisingly, Turkish (60). While English is a dominant language within academic discourse broadly, it also has implications for the broader cultural perspective used to imagine the next iteration of the internet.

The same goes for publishers. Among the different book titles, Springer and Wiley are the two most active publishers with 24 and 11 titles, respectively. Among academic papers, the Institute of Electrical and Electronics Engineers (IEEE) is, by far, the dominant publisher with 538 articles.

Combined, the available amounts of writing and thinking on the subject are promising but also raises the question of whether the existing conversation between all these people and publications is skewed.

And that brings me to my biggest hangup with Ball’s second edition: it puts me on a road to economic singularity, where individual technological developments are all necessarily compatible and unified into a shiny Voltron of progress and growth. That’s not historically correct nor do I think it needs to. The metaverse can evolve and emerge without having strong roots in every tech category available, and likely will.

The implication that all these developments are somehow necessary, coordinated, and synchronized towards a shared goal is ahistorical. Ball doesn’t argue this, of course. However, the association of a growing collection of different technological developments under the metaverse moniker adds unnecessary complexity. What would a minimum viable metaverse look like? And, why should all these conglomerates and engineers be the ones deciding on its architecture?

The broader emphasis on business and technology as the dominant lenses through which we may look at the metaverse means that other considerations are left for later. If history provides any indication, then perhaps we should lead with the socio-economic implications of what is believed to be the next version of the internet.

For example, Roblox, once the poster child for the metaverse, is now suffering from a pedophile problem, according to Bloomberg. The whole of available technologies is making especially younger generations deeply anxious, suggesting that we are on the eve of some much-needed regulatory overhaul to make these emerging digital spaces more manageable and less emotionally and financially avaricious. Ball can’t carry all those bags alone. But the broader existing literature suggests few have bothered.

If that’s of concern to you, you should absolutely go read it. The book offers a lot of detail and background on how the current conversation around technology is structured, without taking a position. Ball, the mack daddy of the metaverse, is generous with detail but modest with opinions. He does an excellent job of detailing the different cogs of the emerging machine. For more casual readers looking for a beach book, the second edition is likely a bit too rich. It is high in caloric content and refuses to administer advice.

But for the geeks, analysts, investors, academics, and those of us concerned with what should come next, Ball has managed to elevate his writing. It serves both as a guide to the future and a document of how our current thinking will shape what’s next. In the case of the metaverse, pregnant as it is with promise, it invites a conversation about our expectations, dreams, anxieties, and hopes. For better or verse.

NEWS

The FTC files a complaint against Xbox

The recent price increase for its Game Pass subscription is looking increasingly expensive. Following a predictable backlash from players and trade press in response to the new $19.99 price point, now the Federal Trade Commission issued a filing to the Court of Appeals stating the price change represented a “degraded product.”

In fairness, to get its deal across the finish line last year, Microsoft made the case it would provide access to interactive entertainment to everyone. In a 33-page filing to the CMA, Microsoft argued that including Call of Duty would not result in a subscription price increase. In its provisional findings, the CMA acknowledged that “the inclusion of Activision content in Game Pass ‘day and date’ will also benefit Xbox and PC gamers” because pre-merger Activision Blizzard had no plans to make its titles available.

Introducing more tiers—like every other digital entertainment service in existence—isn’t the “hallmark of a firm exercising market power post-merger,” as the FTC claims. As I wrote last week, according to a recent study on Game Pass pricing tiers, a greater variety, in fact, casual players generally benefit less from a single subscription offering than those that play more hours per month. Now that ‘forever games’ are an industry staple, not everyone is equally keen on playing the latest blockbuster release. The same is true of PC and mobile where a select few titles dominate the rankings week in, and week out. However, waiting with a price increase until after the upcoming Call of Duty release in August would have made more chronological sense from a marketing perspective.

It is nevertheless encouraging to observe how closely regulators are watching the video games market. Hopefully, soon, it will result in more effective policy changes for the mobile games market as well, but oh right we’re still waiting for that.

Mattel’s rumored acquisition

Earlier this week, Reuters reported on a takeover bid of toy maker Mattel by private equity firm L Catterton. It provides some additional perspective on the rankings I shared last week that showed Mattel generated around $90 million in licensing revenue across PC, console, and mobile for the twelve months ending mid-June.

The valuation of Mattel, as it transitions towards a more digital-focused business model, presents a complex challenge for both the company and potential investors. Traditional valuation metrics, which typically focus on current revenue, profit margins, and physical asset values, may not adequately capture Mattel’s future potential in the evolving digital entertainment landscape. The company's recent success with the Barbie movie and its growing presence in digital spaces, such as Roblox, suggest untapped potential that isn't reflected in its current stock price. This disconnect between traditional valuation methods and the company's future digital prospects creates tension in determining Mattel's true market value.

Adding to this complexity is the strategic value Mattel holds in the broader entertainment ecosystem. As the lines between toys, digital games, and media continue to blur, Mattel's extensive IP portfolio and brand recognition could be leveraged for significant growth in interactive entertainment. However, quantifying the future value of these intangible assets and the company's potential in digital spaces is challenging. This uncertainty is reflected in the disparity between Mattel CEO Ynon Kreiz's belief in the company's undervaluation and the market's current valuation, as well as in the speculative nature of potential acquisition talks. The situation underscores the need for a more quantitative approach to valuing companies like Mattel, one that considers both their traditional toy manufacturing business and their potential for digital transformation and growth. You know, like rankings.

PLAY/PASS

Play. The International Olympic Committee (IOC) unanimously voted to include esports in the 2025 games to be held in the Kingdom of Saudi Arabia. The IOC congratulated itself on a “historic vote” as evidence of “keeping up with the pace of the digital revolution.”

Pass. Paramount has decided to cancel its Halo series. This franchise deserves more.

UP NEXT

I’m headed upstate where I’ll be hammering out a few chapters of my own. But earnings season waits for no one.