Meta’s Evolved VR and Gaming Strategy - The Metacast by Naavik

[Music] do you want to go to the metaverse to be yourself to see your world or do you want to go to the metaverse and hang out because you can be someone you're not and being a more fantastic sci-fi [Music] hi friends welcome to the metacast roundtable by navik and today we're joined by yeah another another new face on the episode um jost van dr yeah i like it let's go with it i forgot i didn't ask how to pronounce uh the investor how to pronounce the company you're an investor in it's all googly [ __ ] it's new brooklyn new brooklyn okay and you're also a book author that's amazing sex oh yeah i like words

we're also joined by aaron bush co-founder of navic hey there hey there happy to be here yeah so as when we have someone new on the on the podcast i always ask from a 30-second um small intro so if you could do that yes yeah sure think so my name is yost i am both an academic in that i teach at the business school at nyu i teach on the business of video games and i think that's a lot of fun to kind of figure out the intersection between creativity and commerce to put it that way and then i like to build things uh particularly data companies so i built data a data firm called super data a few years ago sold it to nielsen and since that i've been investing and advising a few other data companies and i like sort of putting the the rationalization around business models and revenue models so so that intersection is where i spend most of my time and i love

working with creative teams obviously i think it's really knowing full well that i can't make games for [ __ ] myself i always like to be a contributor or a supporter of that effort so so that's where i usually come in well your newsletter is great thanks appreciate that i've i realized i've always been pronouncing it as super used it was actually actually super yoast it's super yes it's a there's a story about that too but it's a you know the newsletter is really an extension of the classroom and the boardroom conversations i have because they tend to be about the same topic you know so you'll talk to like a big company and they've read the news too as as well as my students would have and they each have a different perspective and i try to kind of cater to both of them by writing it down on a weekly basis it's a lot of fun to do that i really enjoy i always chuckle with your play pass section at the end you like that's good it's good there's some sarcasm alerts there that i really enjoy yes that's that's my one vice

so if there's one game that you say this game i playing it's my favorite game what is that currently it's halo halo infinite it's uh the multiplayer is very fun it's very slick and you know i don't suck as much in this one as opposed to every other multiplayer game out there right now so and i've you know i've been and so i'm also move so the other thing to know it's like i'm moving next week and i have two kids and so moving with children is like it's like you're like a goddamn circus so so that means that for the foreseeable future i won't have dedicated set up like a big screen and a console so i'm just getting my hours in and i'm really enjoying halo right now is the grappling hook available now in halo the graphic is available okay that's one of the favorite features yeah i saw a video are you gonna try to play on uh game pass via browser while your you know pc tv or whatever you play on is is you know being being moved

i saw the news i read this morning i'm very excited so i have an office 10 minutes from my current place and you know i have my controllers here and i can log in uh do it that way but you know first person shooters really need to be played with a mouse and a keyboard uh i have both a mac and a pc in the office but i i want all of i want everything you know i've come to that age in my life i was like look i i don't want to have to negotiate all the tickets i needed to be invisible and work all the time so this whole cloud vision i'm 100 in i have stadia i have luna i have all of it i just want to live my life and so yes i'll be looking forward to doing that the pc interface on the campus i think you're the only person i've ever heard say they have luna so you're you're living on the bleeding edge somewhere that's funny you know i'm an omnivore like a you know equal opportunity offender i guess in cloud gaming it'll be interesting to discuss erin's topic about about meta um just before we move on it's time to

spread a little bit more love i know i mentioned in the past episode i just want to call out it's a happy lgbtqia plus pride month and also happy juneteenth the celebration was the past 19th of june if you don't know about the holiday research it it's really good to know about these things and i hope everyone enjoyed or is enjoying the celebrations um oh before i introduce my topic i want to do a little survey here so aaron what what's your favorite platform to play games on my favorite platform uh i would say right now i think i would prefer my ps5 ion um i like playing on the big screen and i like the exclusives and i think in this generation the controller uh kind of kind of takes it up a notch it's pretty pretty cool and how it rumbles in different ways okay okay uh yes with aaron it's the dedicated hardware like i um i tried so much

over the last couple years to have like one device to do all of it that sort of swish pocket knife mindset you have across the board so i'm the same with like watches now like i just have like a device that tells time at just one goddamn thing it's amazing like it just simplifies your life and so dedicated hardware at the end of the day you play for a couple hours it's just like calming there's no notifications coming in in the top right there's nobody yelling in your ear but you know whatever and so that dedicated focus i think really uh brings me back to the roots of console gaming and then i don't have a playstation 5 i have the xbox and it's yeah it's just amazing this generation is beautiful it's seamless if you hardwire that into a fiber optic net here in brooklyn it's you know latency is ultra low it's an amazing experience how about you maria well i made a finding this weekend where i was in my living room chilling i had

my ps5 ready with amazing games and i thought i just really want to play a mobile game and then i played mobile games for a few hours and i was very happy because of it it was happy well i'm happy for you maria i don't think there's any wrong answers in that question but i mean ps5 is pretty awesome i would think well let me let me ask it let me ask a question like so so during the pandemic i had a whole bunch of people in my network that were building their own pcs and not just you know grown men who work in i.t also like their kids right and so and that was sort of that became like this hobby project that people did at home did you did you build your own did you spend a lot of time and money just getting pc components again yeah there's like a building a pc did address you do that no i honestly just prefer mobile because i i rent and i have to move often and then you know having a pc is just not an easy setup i prefer to be able to snuggle

under the covers at night and just play on my mobile and have it really close to my face so i can see all the details and with this lead so i brought today just looking at the initial game launch results for diablo immortal i brought up a topic a couple weekends ago where i was talking about how pay to win it was i thought so i thought i should do a redemption story and bring the amazing results that the game has had today and then i'm also going to talk about a small you know we compare the revenue of diablo mortal but i want to talk about a small mobile game that i'm really enjoying it's a casual racing game and i'll just skim over it pretty quickly because um i don't know aaron yes have you played off-road unchained i have not no no okay enlighten us well i'll start with uh i'll start with diablo immortal first um for this redemption this redemption story so it has been coined as the biggest launch in the franchise history but it's the lowest rated blizzard game

by players on metacritic apparently this hasn't really affected the performance though because it's amazing so in the first week of the game launch they had around 7.3 million downloads on mobile it generated approximately 14.5 million on mobile to irs and android the united states accounted for 45 of the total revenue followed by south korea and japan and then in the second week of the game launch they reached over 24 million in revenue and to do a bit of comparison for for scale so the revenue for download of diablo mortals around two point twenty dollars um if you look at gentian impact mobile that is 3.45 uh dollars if we look at apex legends mobile 0.34 so diablo is doing very well

what do you think unexpected i mean i think it's i think it's predictable to some extent because it's a huge ip and i think they did a good job with the game and getting people into it it's like you know it's a very much a diablo game um that you can play for many hours before a lot of the you know the the paid need really starts to hit my my take is that like i think it's it's definitely a good watch launch it's definitely apples to oranges though comparing it with like a premium game launch um but my take is actually like i don't know if it's like a good enough or like sustainable enough launch and there's actually a chance that blizzard wanted it to be better because if you're if you're a company of activision blizzard size and you make you know eight ten billion dollars in annual revenue you need a launch like this um or game like this so it'll be a staple of its portfolio for many years to have a like a clear path towards many

hundreds of millions if not like a billion dollars and and annual revenue and for context um you know call of duty mobile also an unfair comparison but you know it's just the other big similar-ish kind of franchise launch an activision blizzard they make maybe like a quarter billion dollars a year so diablo could be um on that track but it'll need those revenue figures to hold and if you look at sensor tower data um you know i just i was looking yesterday and the downloads have kind of fallen off a cliff and to some degree that's obviously expected that happens with every game launch but it happened really fast so now get you know maybe 60 70k downloads per day and that's probably going to fall some more so i'm curious to see where it normalizes um and it'll obviously start getting more expensive to do customer acquisition too once the diablo fan base is kind of tapped out which they might be you know about at this point um and then the second thing the like the daily revenue has also fallen

maybe in half from its peak so far from maybe a million dollars a day to a bit over half a million per day and maybe that data is often sensor tower we'll we'll need to update it i'm not i'm not positive but you know that still is very good like that's uh that's never most games would love that's maybe like 180 million dollar annual run rate or so but i still don't know if that's good enough for activision um blizzard and kind of the last thing i'll i'll say is you know what could push both of those numbers up um is a successful launch in china where games like this often do well and you know it was developed by neddies partially with that in mind i'm sure but you know the launch was just announced that the chinese launch was indefinitely delayed uh right before it was supposed to happen um and i also read that diablo's like immortals like social accounts in china were silenced recently so i don't know what's going on um i don't have any

special expertise or insight into that but you know it is a potential concern for just like a further global rollout to kind of hit some of the goals that they were aiming for but so yeah no surprise that it was big but i still sort of have questions about where it'll ultimately sit compared to the really high expectations that a company of this scale would have on this game yeah i agree with you on a lot of this tm i'd say that the one thing that was entirely predictable was the fact that pc gamers you know and fans of the franchise would take a huge [ __ ] on this it's the you know observation that you have these dedicated franchise fans and they of course will find a lot of this to be outrageous like well it's not their usual format and the monetization mechanics are different you know it's sort of made for a global audience so so there are some distinct changes that happen when you release a franchise that is supposed to cater to hundreds of millions of users across

mobile and other platforms at the same time and so they're naturally going to then of course express this through metacritic where you see a very low score it's like well but it's a really good game it's just trying to cater to a larger audience it's a little bit like um the same thing that you notice when uh like i don't know much about american football as an immigrant but i've learned that american football used to be sort of like this blue collar thing and then it became this very expensive game right and so the nature of the game as it's trying to uh cater to a mainstream audience changes and the fan base often finds that sort of like a you know a bastardization of the whole effort and so diablo fans went the same way of course those were really sort of like you have that dark lore it's like this sort of really deep engagement that these people have had for this whole time and then to put it in a mobile context or make it mobile accessible and and globally interesting

you know naturally they alienate that that hardcore fan base and they have a hard time with it but it's the you know but that's sort of that's between the creatives and the consumers but i think that the third party there is the publisher right and if you look at the share price for activision it it moved zero but it like the launch of diablo mobile which was this long announced and delayed and then delayed again kind of big franchise it was supposed to be this big deal right and it's as it's going through all this turmoil internally with its own work culture with the acquisition from microsoft like it could really use a hard win like a solid win that says look we know we have trouble but look at this amazing stuff neither the the player base or the investors really valued any of this and so it's a little disappointing right this this should have carried the company more this could have carried the company more but it's the evidence isn't there so while i i'm sure that will make plenty of money i don't know that it's going to be the same success as call of

duty mobile which seems much more attuned to you know instant play when you're kind of outside which you know but exactly what mobile gamers would want from this and at the same time like this should have been a bigger deal for activision so it's you know it's a bit of a it's not a loss or it's not a it's not a disappointment in that sense but you know we've waited for a long time and and you know it's kind of a fizzle and not really a anything more than that for me so i don't know if that's too negative for you but that's that's first yeah we'll keep we'll keep an eye on it it might be interesting you know in a few months to to go back to the topic and see how it performed um a few months after after the launch yeah for me it's just a reminder as a game dev look at the data and sometimes there can be an uproar in the community and socials of you know paid to win and all of this but then if you look at the at the revenue just like we you know erin and oh oh gosh now i forget who was on the

episode uh but yeah the prediction was that it wouldn't really affect because mobile gamers are used to that kind of mechanics in in the game so yeah redemption redemption story to the topic that i i brought last time yeah and it was smart of them to announce diablo 4 or show more the gameplay basically right after diablo immortal launch to kind of give you know what you know the traditional diablo audience a bit more and i still think um i mean they can learn and improve they still have a big audience space to to work with and improve monetization methods china could even come in clutch at some point too and provide a second wind that is very meaningful i just have no idea what dynamics are really at play there um but one one question for you maria uh because i've been playing diablo mortal a bit more and just been thinking about the monetization methods and i'm curious like how it maybe has an effect on some of the

numbers here and so a couple things one um i still haven't spent a single dollar on this game and part of it is just because i'm slow to get through things because i play you know a lot of things i sort of put an insane amount of time into diablo and so i'm i'm almost wondering if like there is like a revenue lag from just how long it takes for a ton of players to actually get to the point where they would spend more money um so that's one and then second i it seems like and you outlined this pretty well that most of the monetization and diablo pretty much is just around like gems which then like kind of roll into other things um but i i i almost wonder if it's like a mistake that it's that it's only that really and it's not really anything more just closer to like the the the stuff that players would find most valuable which is like you know the cool gear or extra content things things

like that and so i'm i'm wondering if and that this is probably a byproduct of not like uh testing enough um out in the wild before they like push for a big global launch i would guess um or just the acknowledging they'll figure it out but anyways i'm wondering if they can adapt um and kind of add some more monetization mechanics there over time that kind of tap more into what people want because also like the the rpd like i actually thought it would be better than it than it has been and i'm blanking on what it is maybe you would know maria but i'm just kind of curious to get your thoughts on like 2.20 yeah to 220 um which isn't bad i just kind of thought it would be for a game that's pushing for such insane monetization uh that it would be um better than that but i'm curious for you if you after like you having played it more too if you just how you think about some of what i said about like is there a lag when monetization hits like in the numbers that we should be watching for and

should they like do more in their monetization mechanics to unlock more upside i agree with you i remember reading when the when it launched that they will introduce cosmetics in the future so i believe that will come to the game and i think that will make a difference probably because you want to look cool it's a show it's a big show-off game it's very pvp and you encounter other players you know that was why i was playing on the weekend in the cozy um living room and it was just cool like other people would cross my path i'd follow them around look at their character look at their powers and i think there's uh spandex to be gained there i do think that they are doing a good job with trying to get me to convert for the first time you know they present i've been holding off to see how far will they push it just to learn i like to learn how their games try to

push the conversion so i've been holding off and they have been presenting me with tastier offers over time so it does seem like they're at least trying to optimize if you don't convert yeah i'm curious like what is what is starting to grab your attention more to like convert you for the first time cosmetics that's my persona if i can look cool you know i'm not cool in real life so if i can look cool in the game i'll spend i'll spend money on it you're very cool maria thank you you could be cool so self-deprecating so sorry english is the english humor i'm sorry no it's just like you know because you're honest you're just exciting podcast you're very cool no but it's it's true though it's like the the aesthetics and the uh the vanity items that those are i'm a sucker for those two like i can't help myself that's that's the reason to grind and that's the reason to put to take your wallet out every time and i know i'm just conscious of the time so i'll quickly move on to the

off-road unchained so this is published by red bull media and it was developed by a studio called cuasima who provide gamedev they've been providing services since 2004 and also developed angry birds friends so it's like a casual racing game you can play it with one hand so i was actually stuck in the queue to get into england at the airport for border force for maybe an hour or so and i just play i could play this game with one hand and still be paying attention enough to walk the queue and not step on people and you know i think this is amazing as this is what a casual mobile game is meant to do and you know i was looking at the performance of the game and its launch and i was looking at the performance of the other very popular game uh from the same series called dirt bike unchanged so you know might have a ceiling of maybe two million absolute revenue potentially so you know i i'm also curious if listeners are interested in

us talking about these games that have very low revenue um it's more talking about something that is nice and addictive to play but doesn't really lead to performance in the end yeah i'm curious because i know you work at hutch which does a lot of racing games is there anything like from this game that is inspiring to you that you think like you could learn from and like apply to your own work in some way to level up get smarter i think racing is the kind of game genre where it's fun but it's very difficult to find a meta and a balance that will lead to good performance and sustainable performance over time and this is what you can see from this game like i'm completely hooked on the game i play it in the morning during breakfast i play it in the night before i go to sleep i play it when i take breaks because i it's just so much fun

and yet i haven't paid and looking at the launch data seems like not many people are paying as well i guess fun but it's not hard enough to make me pay money for it yeah and there's also some details in terms of the progression and the general monetization and ux of the game i won't go into it it's interesting yeah i mean the racing game genre in general like it's it has like a an easy pickup sense to it right but i don't think a lot of there's i don't think there's a lot of examples of mobile racing games that are particularly convincing so it sounds like i haven't played this particular one but it sounds what you're describing is a really sort of it's very casual very accessible but it has a lot of fun elements to it in the same way that uh you know you would pick up i don't know some other sort of casual game on an iphone uh but here's the question for you is it then you kind of get into the mechanics so it's easy to learn but difficult to

master where you uh you know to get the three-star rating you have to kind of try a bunch of times to really knock it out of the park just like you do with angry birds or with super mario run or is there is there some other mechanic there it i think if you were very very competitive there are ways to optimize but the game doesn't push it push you to do it or maybe i haven't reached the higher competitive leagues to even feel like i have to like the game makes me feel awesome [Music] pretty much all the time yeah oh yeah sorry yeah this is how you know how i live my life so last last point i had this shower thought and i want to want to pass you i'm starting to think that building the perfect mobile game is similar to building a profile in a dating app i'll let that settle in oh boy can you explain like i have no idea what's even comments on

that so i've only had two mobile games that have have me completely hooked and the way that i found them is that you have to i had to try a lot of mobile games and that's the beauty of mobile you can install and uninstall very quickly and just try different things and there's always something new to try that's free to play and so you can do that you can do that a lot and because there is so much availability out there you need a mobile game that will capture you with the visuals from the start because you haven't settled into the mechanics yet and so that's the first time that you meet that that game you want to be impressed by it um to stick a little bit longer and then you want it to be once you get past that stage you want it to be interesting and easy to pick up and gently takes you into getting to know the game further over time and not just like overwhelm you with this is everything in the game i want to be

taken step by step and so it's like a dating app where you have to swipe a lot of profiles you look at a person and then all of their photos and then you describe a little bit about them and then you get to know them better isn't it a great shower thought come on so this is a a very self-incriminating question because i i've never used dating apps so so i have to imagine what that's like and then any actual first-hand knowledge is an immediate crime for me but there's i do see that logic where like what pulls you in right it's like deep complex gameplay or is it like oh this is cool and i feel nice or i'm achieving something i am i i would go with the um i would make a comparison with arcades more than anything else where you have to figure out within like 20 seconds what the like how do i play this goddamn thing because i'm in this place with lots of machines yelling at me play me play me and if i don't get immediately what the point is then i'll just move on to the next machine and so

you do have to have that hook right away right which i imagine and this is the the part that's slippery i imagine that once you find someone's profiles like oh interesting they also like peanut butter or they're also really into you know the air balloons and so now we have something in common that we can talk about and then we can explore the relationship further same thing with the games like here's a mechanic or here's a feature here's something that i haven't seen before so to that extent yes but you know so often like if i remember like even a game could be like machine zone like i see a it was a game of war it's just like these are so complex like every time i immediately you see really cool games and then you start them and it's basically sort of like a farmville with armies and you have to like set up your barracks and then you have to like get points over here to get your soldiers and then you have to transfer them and then you have to transact and upgrade like i'm tired i just wanted to shoot things you know i just wanted to break something and move on with my life so i do

i think that you're right i think also there's a lot of bad game design where they do it the other way around and that tends to turn off immediately so but you know a dating app is that's a really specific metaphor it's just a specific comparison well i think maybe the conversation actually segues nicely into aaron's topic because this kind of mobile discoverability first impression that hooks you to spend a little bit more time on it might be seen in these vr gaming worlds so aaron yeah if you want to bring a topic yeah so i want to talk about meta and please excuse my longer than usual preamble but there's a lot of there's a lot of context that's really interesting here um so i want to talk about you know meta what's changed at its reality labs over the past few months and then um we can discuss like what's new with the company's gaming initiative so we covered meta and its metaverse ambitions in previous episodes but um my goal here is to cover some new ground and maybe offer some more nuance so um let's zoom

back earlier this year meta made a string of noteworthy announcements it dropped plans to build its own ar vr operating system it stopped designing its own in-house custom chips for its headsets um and as was previously discussed here the company was very much ridiculed for its 47.5 take right when horizon the company's social vr um like app platform where users can create worlds and hang out got off the ground so you know these all sound like very different topics but i actually think there's a central takeaway that runs through it all here and it's actually best described by looking at the horizon take rate criticism and so a 47.5 take rate um is pretty ludicrous and that's been discussed but um here's the detail that i think has been under discussed it actually is two take rights um so there's a 30 take rate for uh the oculus now mediquest platform

which is specific to meta's hardware and another 17.5 take rate for horizon which is um you know an app that can span platforms and live on non-metaquest devices too and what it really highlights especially when paired with the other announcements is that meta has had a strategy problem it's been trying to have its cake and eat it too meaning it's been trying to tackle extreme vertical integration on one hand hence putting a lot of capital around a bunch of metaquest device specific problems like the in-house custom chips and its own personal operating system and on the other hand it's trying to build software and apps that service the broader vr ecosystem including non-meta devices and it's really hard if not impossible to serve those two radically different approaches at the same time and you often see this in companies with seemingly endless capital they don't feel constraints so they take too long to focus and it's also you know just a byproduct of the fact that it's kind of

early in the maturity of the market to pick a path and stick to it there's just risk there so bottom line you know a focused strategy has been a big under discussed problem um with meta i think but enter the more recent news so meta's core business of social apps is seeing both revenue decelerate as idfa issues recession issues competitive issues all hit at once the costs for the social apps are increasing in order to better adapt the changing times which means that there's now profitability pressures on the business and sheryl sandberg the long time and talented ceo is now leaving and so this has led meta to announce that it's cutting spending in its reality labs by several billion dollars and as a result it's instituting a hiring freeze across the company cutting a bunch of projects delaying ar devices and very likely cutting back its scope and ambition among the more metaverse oriented projects in the near term so

in effect meta's issue was strategic focus but the hard times might actually be forcing that focus and now it's an open question of whether leadership can make the right decisions on what it decides to trim and what it decides to focus on and in my opinion and this is the the last thing i'll say before i hand it over um i think meta is wise to focus less on the extreme vertical integration side of things and more on building the critical infrastructure standards and software that serves the broader ecosystem that doesn't mean it's still like it can't still push forward the the hardware market and be its own number one customer especially early on but there's going to be a ton of value in building those open source standards social apps ugc functionality etc that underpin the entire vr movement no matter the hardware and if you think about it that's more or less what they did with social but with some actual hardware platform

presence this time around so uh enough of me my my my question to kick it off to both of you is um what do you think and then we can discuss games after this um i'm just curious what do you think meta should focus on when it comes to reality labs now that they have like much more real constraints to operate with and i'm curious whether you agree with me that you know not going on going crazy on the extreme vertical integration and kind of building more apps software standards for the the broader vr ecosystem uh is is the right call oh i have a few opinions but so the i like that the the layout you provided that's very helpful thank you it's um so i tend to i've i've brought a skeptical of every in all of this and and the reason i said it is because you know you point out correctly there's a lot of economic woes there's a sort of a weird timing for all this to emerge

i blame uh zuckerberg's sort of midlife crisis to come around and say like okay well we missed out on mobile we don't want to miss out on vr so let's go extra hard like you have no business here right there's like this this might not you might not be the leader for this but so you see decisions being made at a high end whereas yeah you have the budget um but increasingly it's going to be harder to justify these things and so the moment there is any kind of pressure on revenue innovation is the first thing usually to get cut or to get downsized and that should really be the lifeblood of the company right so so it's a twofold answer and there's like i'm not entirely sure that this is the leadership team that should be running it but also you know is this really the way you should be expanding your uh your your expenditure in innovation right now not decreasing it so for those two reasons i think it's uh you know there's a few question marks around it and then for what comes out of it itself it's you know so i

spent the last two days at this thing here in new york at the nft nyc and we could talk about that in a moment um because that's a whole other story but the metaverse and this promise of some meta layer of reality and how vr is going to play into it so many companies and people seem to have already made up their mind that this is an absolute reality that it's going to happen that it's going to be here that's going to be amazing and it's you know arguably that's true i don't know i don't really care if that's true what's interesting to me is that it's the same conversation we had 20 years ago about the you know information super highway and so this ongoing narrative of like new technology being always some kind of solution for things right that they call it the solutionism where like this new thing is gonna that's gonna change everything you know few people actually stopped asking if anybody wants to so i like genvid's efforts i know jacob well like where they try to find very

distinct use cases of putting lots of people together and like see what happens and then you have some actual results as opposed to we're going to build this enormous infrastructure and then if we build it they will come sort of that's the assumption seemingly and i what i'm missing is like really sort of like um you know a clear-cut example or series of examples where you can imagine your mother to jump into this with both feet right and it's just i'm not feeling that here and so it's a lot of moving of chairs but there's no real restaurant coming together here for me just yet i was gathering my thoughts as as you were walking walking us through it so i absolutely agree in terms of the lack of financial pressure potentially just not creating that focus and this is a good opportunity to you understand you have to cut costs and you have to make difficult decisions and prioritize i i personally believe that meta should

focus on their strengths and not trying to build out hardware to be honest i find that they're trying i find that by building the hardware they're trying to create this market to then put people into their products but if you look at the margins that you have in terms of hardware production how you plan and design r d and do you know factory production shipments i just feel that's just a very different business line to what what facebook you know prior to meta was very successful at doing so if i look at what what facebook strengths was bringing people together that knew each other connecting people that used to know bringing people together that have shared shared interests and create new friendships ad networks um content creation and connecting people with content that interests them i've

i do believe that facebook or meta pursuing trying to build software and apps for this metaverse makes sense for them because that's that was their strength and they can be part of building what what comes next in in in technology so i would i would expect them to focus more on the software and apps and also trying to maximize the revenue generated is like being able to create ad networks into this metaverse i honestly i'm i'm a skeptic of vr in general you know i think there was some some do you own any of the devices do you have one i heard rumors that tencent might be exploring extended reality and we see niantic exploring ar and personally i am more of a believer in terms of extended reality or ar that overlaps our two realities i just you know maybe it's me and i can't take my my day-to-day and my preferences for

what the world likes i just don't see any future why i'd want to go home put this heavy headset on my head and just be alone interacting in a digital world i i just don't know if vr will ever hit mass market yeah i think that's uh that's kind of the big question so i am i am sympathetic to why uh meta would want to kind of push into new directions because they're basically tapped out on what they can do with social apps like just regulators won't let them like buy anything else which is a pretty big hindrance when you know there are just generationally new social apps that that pop up and so it makes sense that they would want to shift somewhere and i think i i mean i like that they're spending a lot of money to kind of innovate on hardware and things i think it is pulling forward the future a bit um but yeah i i think the big question with

vr specifically is you know is is the end game for vr going to be more like video game consoles where you know they sell like you know 100 million um at scale and i think you know right now vr it's probably more like 10 million so an order of magnitude less than what what the console market is right now um or is it going to be more like smartphones where you know smartphones are in every pocket you know they'll be vr in every household um and i yeah i think that's a big open question but it's it's kind of an important one for a company like meta that's so huge that's worth hundreds of billions of dollars to kind of tap into whatever the next enormous market is going to be i also sympathize with like them wanting to kind of accelerate the future by investing and in hardware and i'm kind of glad that

they cut back on their own custom chips and things like that um i kind of hope it ends up more to the point where it is maybe a bit more like the microsoft model um where you know they they kind of innovate on hardware and stuff initially to be their own number one customer to kind of force the market to move to adapt and just adopt the technology a bit sooner than it would have otherwise but ultimately end up you know the way microsoft software serves and they still create their own hardware but they serve a ton of different manufacturers and things i kind of hope that's what happens happens here and who knows what the heck is going to happen with um meta and ar i don't think there's no reason to to be optimistic because they haven't shown anything yet and they don't really have the same advantages that like an apple would but yeah i'm just really curious to see um where that's all going to go um and how they continue i do think as these constraints tighten we will start to see a bit more clarity and how they talk about the strategy in the upcoming quarters

which will be interesting to maybe pop back and discuss but maybe before um moving on to the to the final topic i kind of wanted to hit on the game side a little bit um i guess both with vr but even just facebook um more more generally um so so recently um meta bought a company called unit2games which is building like a social oriented ugc platform called krata and my guess was just that they would have tried to buy roblox if regulators you know would have led it but they couldn't so they bought basically like knockoff roblox um and then second you know uh yost mentioned you know they've been supporting uh what jinvid is doing with miles massive interactive live events um and most recently in like a community pac-man experience so uh kind of my question um for this and maybe we can move on is like is is what facebook is doing with games both in vr and on its platforms is

it substance or is it noise like do you think it's ever really going to matter um for this company and if it does matter like what actually is the path to it making a difference for this business versus just being a perpetual side plot big one so the creation of first party content which is really what they're trying to do for any platform long term is critical right for that same reason microsoft and sony they all have their own stuff apple continues to make terrible television shows but that's because they recognize that that's the what what they're great i love apple tv okay fine mixed reviews on apple tv but it's you know but they're not not top two it's not they they haven't hit their game of thrones moment just yet yeah yeah so in other words you know platforms or these these kind of companies like google like a facebook or meta and so on they

they rely for a large part on third party content providers right the same with a console or platform holder and gaming does so with game makers you see that everywhere else and then over time they recognize the need to build their own and invest in their own what they've learned in 2004-2005 was that you needed the zynga to come up with the cool games like farmville was the application that kept people on the canvas longer you could sell ads against it great everybody wins and then you just open it up you make it available you invite lots of people to make games and you create all the social connective tissue that makes it so that your timeline is now just everybody that your mom knows asking you to help with their farm and then of course you scale it back but you navigate it you manage that part of the process you don't make content yourself they kind of missed about a mobile and then caught up okay fine they kind of they they fix that what you see with this or this ar vr conversation around meta is that they're

very aggressively trying to own the space like it's sort of you know colonizing it before it's even before they've even arrived and that's a you know distinct i think manifestation of a platform that's very aware of the fact that if they're not first then they're going to be last right i mean if let's say google figures this out they're host because they would immediately lose their market value if if apple somehow beats them to this which they conceivably could right they have a better uh history when it comes to hardware design and consumer applications you know meta might be devalued significantly in a in a publicly traded context because people are like well you clearly don't know nothing about the future because this other company just took it from you so it's really this race this sort of space race but it's around vr it's sort of a virtual space race and that's i think what drives most of the decision making they should be investing in the same way that sony and nintendo do that in first party content that's really exciting

that's really meaningful that has deep immersive experiences and then that be sort of have that be sort of like the high bar that everybody else gets compared to and right now i'm seeing none of it i mean again you know and this is not because uh i'm favorable to genvid but and i i should say mentioned full disclosure i'm connected to makers fund and they're an investor in genevieve but i also i've known jacob for years so it's a friendly thing just the same you know they are doing something new something different like a new space should afford new forms of interaction and and there are very few examples of that right and sort of it is facebook or is meta than the company that's going to come up with this or should they subsidize or help other companies do this so that's the broader question that i use to look at this but it's a really good it's a really good question like how this plays out i'm very curious to see i feel like it's a lot of noise to your question i i think it makes sense that facebook want to sorry meta wants to create a space where people come to hang

out be with each other create content that's what facebook was they built a platform where people would go and and create and socialize so i i think it makes a lot of sense that they're trying to create that not because that's how they're going to make money but because that's how they then make money with their additional services just like you know facebook makes money from from the ads so i think i think it makes sense as as a strategy and i believe they made the right move in acquiring believers unit two like the makers of um crater because i was reading the acquisition announcement and they were discussing how they're going to merge the two teams and try to build the next ugc so i i believe there might be something happening behind closed doors where they are trying to build the successor to krator that will create the base the baseline of the metaverse that would be that would be meta

one one question that i i have especially looking at the avatars and the design direction that they're taking is are they being too realistic are they doing enough user research and understanding the audience that wants to be in the in this space because do you want to go to the metaverse to be yourself to see your world or do you want to go to the metaverse and hang out because you can be someone you're not and being a more fantastic sci-fi just you don't see just fellow humans walking around in their normal clones my guess is both and it just depends on the context um and so like uh they they showcase like a like a really interesting like workplace tool where like you know instead of being on on zoom you can kind of be like in vr but kind of like in like a conference room with each other with your avatars and things and you can still like see your screen and you know have presentations and things like that

and that was kind of cool uh but you know like in like a business setting you wouldn't want to be like i don't know a unicorn or something well i don't know you you can maria if we ever go that way i'd be disappointed um if you didn't but um but of course in a bunch of other settings like yeah i mean the whole concept of identity and things like that like it doesn't have to be the same in digital worlds as it is in the physical world there's like a wider creative surface area that you can tap into my my my thought is just that like if if this company is serious about like really leading and helping pioneer whatever the metaverse is going to be um gaming is probably at the tip of the spear of like helping like figure out what like the early use cases are for like getting people in and interacting with each other and just doing things um and i told i think i agree with you that like first party content makes sense for probably for vr just to kind of kick start that ecosystem make more killer apps um but

otherwise yeah i think i agree with you maria that like it is like like social apps are ugc um generated and you know whatever they do and you know more metaverse things like it definitely should have a component i don't know how bullish i am on like the acquisition of unit two games i just i think it's like i mean they're buying like uh someone who's already kind of behind what has been built with roblox and and others um but again they have resources but it's again it goes back to that resourcing and focus question like where do you focus to get the most you know the most upside on your investment and i still like i don't think they figured it out but i kind of hope that they get smarter about it soon i love how you're doing great segues between each topic so i'm gonna do it in excellent segways yeah sorry yes we have you know five minutes left for your topic no that's

fine that's what it's i i wanna i wanna invoke uh nikki so so to your point there's a book called the proteus paradox and you know the 30-second summary goes like this this is a mmorpg social scientist who just collected reams of data on world of warcraft long time ago it was him and nikola duchino which i said quickly and they just look at lots of data lots of profiles that built these consumer profiles and the proteus paradox is like you know proteus this this god-like uh this uh this mythological character has the ability to turn and change himself into anything and everything and so the idea that we enter these metaverses is that oh and then i'm gonna see what it's like to have this wildly different experience as a white middle-aged you know dude i'm gonna know what it's like to be a young black girl or something like i'm gonna be able to have this wide range of experiences and his finding is that most people bring all of their real world

biases right with them into the virtual world and so you can have a whole social scientific conversation about that about what does that mean culturally and do we really understand each other better but mostly just from a business model perspective you say like well it's going to be more of the same [ __ ] right and so so the idea that it's going to be vastly different i challenge that constantly because it's it's it's it won't be it won't be that you know we're part of a much larger conversation and this is the point where i'll segue into my topic immediately um which is so often do we feel that there is a fair comparison to be made with the printing press right okay the printing press came out forever centuries ago and it sort of took away the power of reading and writing from the church in europe and now everybody could sort of learn to read but that had to happen people spent you know centuries learning to read like quiet reading in a corner was like this odd behavior that was very suspicious to people like what are you doing over there i'm reading yeah you're reading something inappropriate or it's some weird behavior as opposed to an oral

culture where like a podcast we talk and we interact we look at each other we riff off each other's ideas and so that transition is very meaningful but it also took a really long time we tend to kind of uh truncate all of what came before us is sort of like oh there's a 30 second wikipedia entry and now we know everything there is to know and here's the next thing here's 2.0 or reality 2.0 or here's the next word it's just like the printing press so the topic that i pushed forward today and it's um is an exhibition in dusseldorf i feel like about a month ago i was in munich i met a whole bunch of people there two that stand out were mr hans ulrich obrist who is this big deal art collector and curator who's putting together this exhibit who was basically fascinated by this idea of world building so he's been looking into video games as sort of the art form for the 21st century in the same way that movies were the art

form for the 20th century and the novel was the art form for the 19th century and so on and so if you can crudely describe every 100 years by way of looking at one form of entertainment expression or media the games seem to make a pretty strong case right now i believe that so it's interesting then to kind of broaden in my mind just just to do the exercise to not just hear what mark zuckerberg has to say about all this but also look at like what do what do the artists out there do with this stuff you know the so the other person i met there was uh rafiq anadal this uh data artist it's the nicest guy and he makes these overwhelming you know installations of like deep data driven organic artworks you should check out some of the stuff he does and he's like this really just humble pious person i quizzed him a bit on unreal engine five it's like okay how big of a deal is this right so now that we have a much more powerful tool that allows us this high definition stuff like how does that impact your team how does it impact you

know digital artists like this massive shift it's going to change dramatically everything for the same reason that youtubers suddenly could make their own movies and you know digital platforms allow you to publish your own music where on these podcasts like it which is not to say it's a democratization of things but but it's much lower bears to entry and it's going to just ensure volume shift how we experience it how we express inside of and so on so that's kind of where i sit with this like the notion that we should think a little broader about not just what you know big tech has to say about this because i don't think that they're the most innovative ones but i but some of the um some of the artists that work that have exhibits on this uh world building exposition they look for instance to you know build a metaverse and say okay what body do i want to wear today and so you can have these experiences which is very different than what you'll expect from like a google like google's never making that [ __ ] right but i do think that

that's a conversation worth having because the the catchphrase in all this is like a a new space only achieves its true potential if it offers new behaviors inside of it and until then it's just more of the same and so i really wanted questions like is this going to be more the same is this going to be you know basically just a 3d version of the office like we're already getting wendy's food chain experiences like i don't [ __ ] want to make my own burritos like get out of here but that's what these corporations are making for so is that the most exciting like how do we get the ghost into the machine like what's the soul of the metaverse's i guess maybe the question to really put it bluntly and i'm curious what your thoughts are like like what is it that you've seen in any of its manifestations around the metaverse that really invoked you or that really moved you in a meaningful way in the same way that music does or movies or you know maybe you're not into classical music but there's a one piece that always makes you cry or whatever like what's an example of that and i have not found any

of it and that's that's kind of where my question sits go yeah it's a it's an interesting question um um i i guess i would say like it is more of like it is the corners of like ugc that i think like have like interesting potential and like you know the power of the the internet too is it's like about the democratization of creativity um and so you know like the big companies and such they can create the emerging platforms and tools that enable that democratization but you know the it's you know now the fact that everyone has a chance to be immersed in art as well as the opportunity to create it for others every single day um that is really interesting um and so you know what i don't even know what to technically classify as the metaverse or not but you know i mean i've seen like interesting um like projects you know just people kind of trolling but doing like interesting innovative things like in places like vr chat or

rec room or you know roblox and and and such or you know you could even look at like you know what nvidia is doing in their omniverse which is completely different but you know building more of like a real-time um collaboration way to work in like 3d environments and i don't know if any of that has like you know moved me to tears or humor the same way that like you know movies or like you know great tv shows have but you know you see the i think there are plenty of corners of the internet where you can start to see that creativity start to take off and start to develop and those communities form in around in interesting ways so i think it's there i think it's just very early that it hasn't you know a lot of that hasn't broken into the mainstream yet so we're kind of at the awkward phase where you know a lot of like the headlines that kind of hit the market you know it's about like x company partnering with roblox to you know do something strange that no

one asked for and you know maybe it's interesting i don't i don't know but it's not like the same kind of organic you know bottoms up like building something brand new and really interesting that is purely from passion that is going to move people but i think it'll happen it just takes time time to get there right maria you feel the same um [Music] i do agree that it will come but it will only come if we protect smaller companies that are exploring the fringes and not allow big companies to acquire them when they see something of interest and then bring them into their corporate corporate structure and start stifling that creativity into making more risk-free products and i believe that that's why fintech was able to advance so quickly fintech was the first i believe exploring blockchain and bringing that about and

we have all these digital banks and uh easy access and great ux and i i believe in grand prize that's because there's a lot of regulation and banks weren't able or weren't interested in taking on that risk and acquiring these these fintech companies and i just hope that we see that not only in games but in technology in general yeah i believe i believe it's still to come i'm really sorry but we have to we have to end the episode oh go for it okay all right no this is great thank you for having me it's a it's my first time so i'll take full responsibility for any mistakes and lack of homework no gosh you're great i hope you join us again yeah i i very much enjoyed this um yeah sorry i should have left more left more time so if you want to continue the discussion you can find us on navic's discord you can also subscribe to the free

navic digest which is a newsletter we recently made public the axi infinity part 2 essay that was first released on navic pro is now accessible to everyone so if you're interested in following the story go and take a read and if you enjoy it well we have a promo code in the show notes if you want to become a member of mavic pro yos thanks for joining us for the first time and thanks erin we'll see you next week [Music] you