During 2021’s metaverse mania — the runaway use of the latest spatial buzzword — one voice of reason has been VC and essayist Matthew Ball (we’re also big fans of Avi Bar-Zeev’s insights). Among other things, Ball wrote the seminal and extensive Metaverse Primer.
Ball holds that the metaverse won’t be Facebook nor Roblox nor any one walled garden, though these could exist within the metaverse. It’s much broader, sort of like the web. In fact, the web is a model for the networked interoperability that the metaverse could possess, and build upon.
Putting his money where his mouth is, Ball also established and manages the Roundhill Ball Metaverse Index. This exchange-traded fund (ETF) aggregates equities for a diversified metaverse-themed stock index that anyone can invest in. It fittingly trades under the ticker META.
To break down his metaverse outlook and investment thesis, Ball was a recent guest on This Week in XR. A media partner of AR Insider, the show is hosted by Charlie Fink and Ted Schilowitz, and we’re featuring Ball’s episode for this week’s XR Talks (video and takeaways below).
Degrees of Transformation
First, the metaverse is not a new concept. And it will largely be built on existing technologies, says Ball. Like past tech evolutions (e.g., electricity, internet), it’s progressive and needs several pieces to converge over several years. It builds incrementally on everything that came before it.
What are those pieces? They include networking technologies, graphical processing, connectivity, distributed payment systems, game engines, hardware, and other components. Some of these things will be new, but most will evolve from existing technologies like the web, as noted.
In that sense, think of the metaverse as an evolution of the desktop web….just like the mobile web was. But that’s not to say the metaverse will be marginal in its transformation. Like the mobile web, new use cases and experiences will be built natively on a new set of capabilities.
In fact, the degree of transformation could be much greater than the evolution from desktop to mobile web because the metaverse adds dimension. The underlying capability won’t be portability and location awareness — the value drivers of the mobile web — but embodied experiences.
But the metaverse ideally won’t require VR headsets, says Ball. It’s much broader than VR, as tying it to one hardware class restricts its scale and significance. For example, there are about 16 million VR headsets in market while there are about 350 million Fortnite players.
Because the concept of the metaverse isn’t new — originating in Neil Stephensen’s Snow Crash in 1992 — an important question is why now? Why has the excitement level and buzz around the metaverse reached new highs in the second half of 2021? Ball points to four factors.
The first is that we’ve seen the virtual economy of digital content go from a $5 billion market to $50 billion in 2020. This includes in-app purchases like skins, tools & weapons, and apparel. Demand and user comfort levels for paying real dollars for virtual goods is now a thing.
The second factor is the growth in volume in MMOs. We’ve seen concurrent players in online games go from 8-12 people playing Call of Duty or MarioKart to 100s of people playing together in Battle Royales. Then of course we’ve reached millions that attend virtual concerts in Fortnite.
The third factor is the rise of NFTs and crypto-currency. This has provided an economic framework to standardize the value of digital goods in metaverse-like worlds. It also engenders peer-to-peer economies, as opposed to centralized digital goods sales from a game publisher.
Lastly, Covid has de-stigmatized the social activity of spending time in virtual worlds. This was a behavior that was somewhat disparaged by pre-Covid mainstream culture, but has become accepted and commonplace as we all spend our time in virtual environments to work and play.
We’ll pause there and cue the full video below, including several more insights from Ball and show hosts Fink and Schilowitz…