The Metaverse Expands
In the Metaverse era, all of the above challenges are likely to become more difficult or worse. This will make it more difficult for new platforms to emerge and for the Metaverse itself to be built.
We want the Metaverse to be as inclusive as possible. This involves interconnecting all the devices and platforms that we use today, including our car’s security camera and workplace productivity software. It also includes new technologies such as VR and AR headsets and projection cameras and screens, wearables and other innovative ones like VR and AR headsets, AR headsets, wearables and many more. Many of these hardware and experiences, as well as others, will benefit or require the use of proprietary standards. Facebook has invested heavily in XR to create its own operating system and fight against the gatekeeping of mobile operating systems. It also wants to avoid Snap using a standard it created. This creates a burden for developers and could lead to a vicious cycle where no platform has enough users and no platform has enough content.
We want to see many of the existing virtual experiences interconnect in new ways. The only thing a player has to share across Call of Duty and Fortnite, is their platform ID. This allows them to access online multiplayer. In the future, however, we will be able to move assets, items and achievements as well as currency, avatars, and other information (see Section #7). Many game publishers will still use their own engines, account systems, and accounts. They have many good reasons to do this (e.g. They have control over their tech pipeline, maximising their gross margins, and avoiding enabling other platforms. We don’t want publishers cut off from the interoperable Metaverse. They must invest in learning how another publisher’s engine works, then in porting their live-operated titles to them.
Moreover, billions have been spent on non-gaming rendering software and scans. The software used by the TV and film industries is Maya, Houdini and Pixar’s RenderMan. Blenderman is used for CGI assets, sets and characters. The engineering industry, on the other hand, focuses on a variety of locally-developed solutions as well as AutoCAD. Each of these products has its own file types, proprietary codescs, metadata systems and rules. It is likely that highly verticalized software will excel at meeting specialized vertical requirements, at least in the near future. Interconnection is therefore difficult. We want to use as many existing models and investments as possible, just like gaming publishers, to build the Metaverse.
Developers must be able to export their work from one platform, rendering engine, or engine to the next. Because the vast majority of Metaverse creations will be preserved and expanded upon, this is in contrast to many media products, such as movies, music albums and books, which are typically one-off P&Ls that generate a lot of revenue. Virtual experiences can be difficult to replicate — there is no’record’ or “copy and paste” option. This could lead to several negative outcomes for developers, particularly small developers. It can make it difficult to switch to platforms with better economics, functionality or growth potential. This would allow successful Metaverse platforms to rent-seek through policy changes and higher take rates, simply because a developer selected them years ago. Many of the developers of these platforms would be destroyed if they fail. We need to see developers thrive in order for the Metaverse to flourish. This means that it should be as simple to transfer a virtual immersive educational playground or AR playground from one platform or another as it is for a blog or newsletter to be moved.
A Metaverse economy is also hindered by the limited player data and identity. The issue of toxic gaming is also important. Activision may ban Player B from Call of Duty because of abusive or racist language. But Player B can continue to troll Epic Games’ Fortnite (or Twitter, or Facebook). Player B can also create a new PlayStation Network account or change to Xbox Live. While this may result in fragmentation of his or her achievements some of these achievements remain locked to one platform. Publishers don’t wish to make other games better and they are not inclined to share play data. However, toxic behavior is not good for any gaming company and it can have a negative impact on everyone. Although banks and other financial institutions used to not share credit data, eventually they discovered that credit scores were a benefit for all. The competitors Vrbo and Airbnb have partnered with a third party in order to stop guests who have a history of bad behavior from booking future stays. Without identities, a go-everywhere AI assistant is not possible.
Developers will benefit from better products and higher net revenues if Apple is forced to open its iOS platforms. Their apps will be more difficult to optimize and operate, and will require them to incur additional costs. It will not make sense to develop this service all internally, as it did with live gaming services.
It’s possible that the leaders of the Metaverse’s virtual platforms will be more powerful and lucrative than the mobile leaders. These ‘operating system’ will be more powerful than Android and iOS today and cover a wider range of physical environments. They also have greater control over both labor and the creative product. As an example, consider the fact that millions of people are employed through their iPhones and do their work via their iPhones. However, this doesn’t mean that they can literally (or practically) work within iOS. Your daughter can access Zoom to get to school, but not the school, when she goes through Zoom. When you create or edit images in iOS, they are just stored there and not tied to the device. It is a huge risk to use closed tools to create experience that is locked to (and only discovered by) a closed platform. This closed platform also runs a closed player network and bills for that. These expanded powers will require additional checks and interchange options.
The Metaverse will be more powerful and pervasive than any other. One central company will be able to control this and become a god on Earth. – Tim Sweeney (2016)
We will need new technologies and tools to grow the Metaverse. These tools will include rendering, compute and XR as well as tools, projection, volumetric compression and AI. The quality and capabilities of these tools will determine what is built and how many builders. These tools and technologies also have their own rates, which can lock developers in, as well as the ways they restrict consumer choice and create new innovations.
Emergent Interchange Solutions to the Metaverse
Economics is a natural way to find solutions as interchange needs grow. To help developers create interchangeable 3D data, Disney’s Pixar has open-sourced its Universal Scene Description file (USD). Nvidia’s Omniverse platform uses USD to seamlessly bring together assets from Maya and Houdini, Unreal or AutoCAD into a shared virtual environment. Epic’s Twinmotion platform allows you to import models from almost any BIM or CAD program such as Archicad and Revit. It will then use machine-learning and AI to upgrade and seamlessly integrate them whenever possible.
Cesium is an open platform that allows you to stream, analyze, and visualize 3D geospatial information using the 3D Tiles open standards. Upload your own data (e.g. Users can upload their own data (e.g. Any “developer”, e.g. This allows any “developer” (e.g.
Epic Games has also introduced Epic Online Services (EOS) in 2020. This product line acts as ‘Fortnite live service in a box’. EOS provides everything Microsoft PlayFab or Amazon GameLoft does, but without the need for a cloud-server solution. It also doesn’t require any developer to use any Epic products (game engines, stores, publishing services, including its Epic ID system). Although Valve’s Steamworks can be downloaded for free, it will lock player data and graphs to Steam and require all games to launch via the Steam store (which means that you have to pay Steam’s store fees for life). EOS allows more games to interoperate more easily and cheaper than other platforms, while still allowing them access to the platform’s vast social graphs. Even though console platforms had the largest social graphs in gaming, they are still not moving.
Another key interoperability solution for live services is Discord. Discord allows developers to connect directly to the platform and deploy best-in class audio and text communications to games. Developers also have access to Discord’s over 150MM active members. Both are essential components of online games today. The latter, however, is more popular than the Xbox, Nintendo, or PlayStation player networks.
Although Discord’s core features are still lacking, like game analytics and entitlements management, it is easy to see the company expanding into these areas over time. Even partial use of Discord’s platform can have benefits. Independent developers have the ability to establish player bases without having to use a game store like Steam. They can also reduce their dependence on backend providers such as Microsoft PlayFab. Developers can choose to use a store for their game, but they don’t have to rely on its player network or other communication services. Native integration of Discord into Xbox Live has been achieved. In 2021, Sony announced plans for the PlayStation Network to be integrated with Xbox Live. This will allow both platforms to have less control over socializing and player networks. Discord achieved its market power specifically due to the fact that there was no way for closed platforms to block it. They controlled the in-game chat, but users could use Discord apps to communicate or switch off the in-game sound. Discord can also run in background. This is not possible with billing and social graphs analytics, etc.
GGWP (Disclosure : a Makers portfolio firm) is collaborating with publishers to develop an opt-in system in which player behavior signals are fed into “global GGWP scores” that will reward positive actions across multiple games.
Unity’s Unity Distribution Portal was launched in 2020. This allows developers to create one build of their app and then distribute it and manage it across all major app stores including Apple’s App Store, Google Play, and Google Play.
For the Metaverse, a number of interchange formats and open standards are being promoted and invested in. OpenXR and WebXR are used for rendering. WASM is a portable binary-code format that executes programs. Tivoli Cloud is used to host virtual spaces. XRE provides an end-to–end solution for humans and AI. VRM is a file format used for 3D humanoid avatars. WebGPU, which is yet to be released, is designed for accelerated graphics, compute, and IPFS , which is a peer–to-peer data protocol and a peer–to-peer hypermedia protocols. Many Metaverse supporters hope that dissatisfaction over the Web 2.0 era will result in more successful and prominent open standards moving forward.
These open standards must offer developers more profits than the closed platforms. These alternatives would be like trying to argue the technical merits and benefits of Esperanto in front of a developer who is fluent in English and whose customers and partners all speak English and whose customers and potential customers are German.
This is difficult. Major platforms invest huge, losing investments in technology and customer acquisition (e.g. Developers can create a profitable market by purchasing consoles at a fraction of the cost.
Today’s virtual leaders know this. They’re investing billions in R&D to make hardware that can be sold at a loss, funding independent developers, buyinggame creators and platforms. This is how they build competing XR standards for users while interlocking all their tools and/or tying their tools into gatekeeping functions like account systems and app stores. You can’t export an experience to Roblox or Fortnite.But you can’t import all your Instagram photos or likes into Twitter, TikTok, or Snapchat.
Blockchain is a major interchange technology, which, although not open in the traditional sense of the word, retains many of the benefits and values of an open standard and looks set to flourish in the Metaverse. For more information, please read the following section: Payments and the Metaverse (and Blockchain).
The Metaverse Intensifies
All of the challenges listed above are at risk of becoming harder, or worse, in the Metaverse era. This, in turn, will make it harder for new platforms to emerge — and, frankly, for the Metaverse to be built.
For example, we want as much of the world to integrate into the Metaverse as possible. This means interconnecting the many devices and platforms around us today, from your car and home-security camera, to your employer’s productivity software, and as well as altogether new ones, such as VR and AR headsets, projection cameras and screens, wearables, and more. As always, much of the aforementioned hardware and experiences will require, or at least benefit from, the use of proprietary standards. Facebook is investing heavily into XR specifically, so that it can establish its own operating system, fight back against the gatekeeping of today’s mobile operating systems, and avoid using a standard created by its direct competitors, such as Snap. All of this creates a burden on developers, and potentially a vicious circle, whereby no platform has enough users to develop for, and no platform has enough content to attract users.
We also want many of the virtual experiences that already exist to interconnect in brand new ways. Thus far, the only ‘thing’ a player shares across Call of Duty and Fortnite is a controlled and the platform ID through which they access online multiplayer. But in the future, we’ll want to move assets, items, achievements, play history, currency, avatars and more (see Section #7). However, many game publishers will continue to use their own engines and account systems. And they have many valid reasons to do so (e.g. control over their tech pipeline, maximizing their gross margins, avoiding enabling competing platforms). But we also don’t want these publishers to be cut off from the interoperable Metaverse unless they invest in learning how to use another publisher’s engine, and then invest in porting their live-operated games to them.
What’s more, billions of dollars have been invested into other non-gaming rendering solutions and scans. For example, the film and TV industry primarily uses software such as Maya, Houdini, Pixar’s RenderMan, and Blenderman for its CGI assets, sets, and characters. Meanwhile, the engineering industry focuses on a range of home-grown solutions, as well as AutoCAD. Every one one of these offerings has its own native file types, proprietary codecs, metadata systems, rules, and more. And it’s likely that, at least for the foreseeable future, heavily verticalized software will be best at addressing specialized vertical needs. This makes interconnection inherently difficult. However, as with gaming publishers, we want to leverage as many existing models, investments, and skillsets as possible to build the Metaverse.
It’s critical that developers can easily export their work from one virtual platform, rendering solution, or engine to another. This is because the majority of creations in the Metaverse will be intended to persist, and be continuously expanded upon — in contrast to most media products (such as films, music albums, and books), which are largely one-off P&Ls with front-loaded revenues. However, virtual experiences aren’t easy to reproduce — there’s no ‘re-record’ or ‘copy and paste’. This could have several adverse outcomes for developers, especially small developers, making it a struggle to shift to new platforms that offer better economics, functionality, or growth potential. This, in turn, would make it easy for successful Metaverse platforms to rent-seek via policy changes and raised take rates — simply because, years earlier, a developer chose them. And if any of these platforms falters, many of their developers would be crushed. For the Metaverse to thrive, we need developers to thrive. And this means making it as easy to take a virtual immersive educational environment or AR playground from one platform to another as it is to move a blog or newsletter.
The limited range of identity and player data, too, is an impediment to the Metaverse economy. Consider the issue of toxicity in gaming. Activision might ban Player B from Call of Duty for abusive or racist language, but Player B can then go on to troll on Epic Games’s Fortnite (or on Twitter, or Facebook). Player B can also just create a new PlayStation Network Account, or change to Xbox Live, and while that means fragmenting his or her achievements, some of these achievements are locked to a given platform anyway. Of course, publishers don’t want to make their competitors’ games better, nor are they usually inclined to share their play data. But no gaming company benefits from toxic behavior, and everyone is negatively affected by it. Banks and other financial institutions didn’t used to share credit data, either — but, eventually, they realized credit scores benefited all. Competitors Airbnb and Vrbo, too, are now partnering with a third party to prevent guests with a history of poor behavior from making future bookings. A go-everywhere AI assistant simply isn’t possible unless identities (among many other things) can interchange.
Should regulators force Apple to open up the iOS platforms to enable direct installation, alternative app stores, alternative payment methods, and greater access to native drivers, developers will likely benefit from higher net revenues and better products. However, their apps will also become more technically complex to operate and optimize, and they will need to take on new costs as well. As with live services in gaming, it will make little sense to build this all in-house.
More broadly, it’s likely that the leading virtual platforms of the Metaverse will be even more lucrative and powerful than today’s mobile leaders. This is because, compared to iOS and Android today, these ‘operating systems’ will span far more of the physical world, while also controlling more of both labor and creative product itself. Consider, as an example, the fact that while millions are hired through their iPhones today, and work using their iPhone, they don’t literally (well, literally virtually) perform their work inside iOS. When your daughter attends school via Zoom, she accesses Zoom and her school through her iPhone, but the school isn’t operated by the iPhone. And when you make or edit an image in iOS, it’s just stored there, not tethered inside of it. There is an enormous risk to using closed tools to build experience locked to (and only discovered through) a closed platform that also operates a closed player network that it exclusively bills for, too. Given these expanded powers, additional checks and interchange solutions will be crucial.
This Metaverse is going to be far more pervasive and powerful than anything else. If one central company gains control of this, they will become more powerful than any government and be a god on Earth. – Tim Sweeney (2016)
To grow the Metaverse, we will need many new tools and technologies. They will span rendering, compute, XR, payments, tools, projection, volumetric compression, AI, ML, you name it. And the quality and capability of these tools will be key to what’s built and by how many builders. But so too are the rates these tools and technologies require, the extent to which they lock in developers, and ways in which they limit consumer choice and the creation of competing innovations.
Emergent Interchange Solutions for the Metaverse
As the need for interchange solutions grows, economics tends to generate a solution. For example, Disney’s Pixar open sourced its Universal Scene Description (USD) file format to help developers create interchangeable 3D data. Nvidia’s Omniverse platform then uses USD to coherently bring together assets from Maya, Houdini, Unreal, AutoCAD, and more, into a shared virtual environment. Epic’s Twinmotion platform can also be used to import models from nearly any BIM and CAD program, such as Archicad, Revit, SketchUp Pro, RIKCAD, and Rhino, and will then use machine learning and AI to upgrade and integrate them wherever possible and in a matter of minutes.
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In 2020, Epic Games also unveiled Epic Online Services (EOS), a new product line that essentially acts as ‘Fortnite live services in a box’. EOS offers everything that Microsoft PlayFab and Amazon GameLoft do, but for free, and without requiring a specific cloud-server solution, or obligating a developer to use any other Epic products (game engine, store, publishing services), including its Epic ID system. Valve’s Steamworks is also free, but it locks player data and graphs to Steam, and requires all games to launch through the Steam store, too (which also means paying Steam’s store fees forever). EOS, therefore, enables more games to more easily and cheaply interoperate, without locking themselves inside larger platform ecosystems, and while also accessing said platform’s large social graphs. Notably, none of the console platforms have as yet made the move, even though they have gone from having the largest social graphics in gaming to the smallest of any large platform.
Discord is another key interchange solution in the live services category. Developers can plug directly into Discord’s platform to deploy best-in-class audio and text communications to their game and gain access to Discord’s network of over 150MM active players. The former is a critical component of almost ever online title today, while the latter is a player network larger than those of Xbox, Nintendo, and PlayStation.
While Discord’s offering still lacks many core features, such as entitlements management, game analytics, and skill-based matchmaking, it’s easy to imagine the company expanding into many of these functions over time. Furthermore, even partial usage of Discord’s platform has benefits. For example, independent developers can more easily establish a player base without needing a game store such as Steam, while also reducing their reliance on backend providers like Microsoft PlayFab. And should a developer choose to use a game store, they need not rely exclusively on the store’s player network or communication services. The strength of the Discord ecosystem has already led to native integration into Xbox Live, and in 2021, Sony announced plans to do the same with PlayStation Network, thereby reducing both platforms’ control over player networks and socializing. Notably, Discord was able to achieve its market influence specifically because there were no API/rules the closed platforms could use to stop it. Yes, they controlled in-game audio chat – but users could just use Discord apps on their phones to communicate, or turn off in-game audio and run Discord in the background. This isn’t possible with billing, social graphs, analytics, etc.
GGWP (Disclosure: a Makers portfolio company), meanwhile, is working with publishers to create an opt-in system where player behavior signals are fed into a “global GGWP score” that will reward positivity across multiple games.
In 2020, Unity launched the Unity Distribution Portal, which enables developers to create a single build of their app, then distribute and manage it across all mobile app stores, including Apple’s App Store and Google Play.
A number of open standards and interchange formats are also being touted and invested in for the Metaverse. For example, there’s OpenXR and WebXR for rendering, WASM for portable binary-code format for executable programs, Tivoli Cloud for virtual spaces, XRE is an end-to-end solution for hosting humans and AI in a virtual space, while VRM is a popular file format for “3D humanoid avatars”. The not-yet-released WebGPU is intended for accelerated graphics and compute, while Dat is a peer-to-peer data protocol, and IPFS is a peer-to-peer hypermedia protocol. Some Metaverse advocates hope that widespread dissatisfaction with the Web 2.0 era will lead to more prominent and successful open standards going forward.
But for these open standards to “win”, they need to offer developers greater profits than those provided and controlled by the closed platforms. Otherwise, these alternatives are like arguing the technical merits of Esperanto to a developer well versed in English, and whose current partners and customers all speak English, and whose desired customers speak German.
And this is hard. The major platforms make enormous, loss-making investments in tools and technology, customer acquisition (e.g. below cost consoles), and sometimes exclusive content, in order to establish a lucrative market for developers.
And today’s virtual leaders, of course, know this. Which is why they’re spending billions of dollars on R&D for hardware that will be sold at a loss, funding independent creators, buying game developers and platforms, and building competing XR standards for their users, while also interlocking all of their tools into one another and/or tying them into gatekeeping functions such as app stores and account system. There’s a reason you can’t export an experience from Roblox to Minecraft or Fortnite, but just as you can’t easily import all your Instagram photos and likes into Twitter or TikTok or Snapchat.
But there is one major interchange technology that, while not open in the traditional sense, retains most of the values and benefits of an open standard, and also looks likely to thrive in the Metaverse: blockchain. But for that, you’ll have to read the next section: Payments and The Metaverse (and Blockchain)