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Thank you all so much for coming to our event to celebrate gaming. You could be at home, wearing a skull mask and playing Call of Duty: Modern Warfare II. I’m so happy you chose to come here in person. And by doing so, by being here with your friends and colleagues, you have made a statement. And that is, the metaverse doesn’t quite work yet.
Perhaps a reflection of that is our fifth Women in Gaming breakfast, which we proudly held this morning. The first three times we did this breakfast, we had no food. It turns out that breakfast in the metaverse really sucks in that way. But we saw it as a place where women got food for thought, and they could drink from the well of inspiration.
It’s been a year since our first online-only GamesBeat Summit Next event. For all the hype, we have only taken baby steps toward the metaverse. But we’re still here to mark your progress and offer encouragement for entrepreneurs and builders. This is your one brief shining moment.
It’s been 30 years since Neal Stephenson’s sci-fi novel Snow Crash coined the term metaverse. And who would have thought that one of the bestselling books of 2022 would be a nonfiction book about the metaverse? Think about how science fiction is becoming reality.
Matthew Ball, who opened our preview of this conference with James Gwertzman of a16z, has given us a torch for the road ahead with his book, The Metaverse.
We are at a moment where we may ask whether things are speeding up or slowing down. As Ball insisted, something is happening. There is a feeling of magic in the air. We don’t know exactly what to call it. But is that magic from the metaverse, or something else? Finding that something, that feeling of magic, is why we do GamesBeat Summit Next. We are where business meets passion.
In this environment, you can feel FOMO. No one wants to be checkmated. Brands, many of them already late for gaming, don’t want to be left behind in the metaverse era. And nobody wants to pay a toll on someone else’s platform. You can also feel the FUD, where people declare that something is dead before it starts. This is where we help hash it out.
Nerding out has certainly gone mainstream, and the clearest evidence of that is the awareness of the word “metaverse.”
From 2004 to 2020, Google Trends showed very few mentions of the metaverse in the public zeitgeist. But it spiked in October 2020, and it gathered more steam in October 2021 when Mark Zuckerberg renamed Facebook as Meta. Mentions peaked in January, bottomed out again in August, and it’s bouncing back.
Hollywood and science fiction novels have been training us to comprehend the metaverse. Westworld took us part way. Marvel helped us out with alternative timelines in the multiverse films like The Avengers and Dr. Strange. Just this week, Amazon launched The Peripheral, another metaverse-like drama. These things are pounding the metaverse into our heads. Maybe this is how new ideas break into the mainstream.
Why should you, as a game developer or publisher or marketer or investor, be interested in the metaverse? Take a top-down view of the world economy, which is around $104 trillion this year.
The digital economy is about 20% of the world economy, at around $21 trillion. As Ball noted, we could model the metaverse as 10% of the digital economy by 2032. Digital’s share of the world economy may grow to 25% by that time, and the world economy could grow at 2.5% on average.
At that rate of change, the metaverse economy would be worth $3.65 trillion in a decade. This would suggest the metaverse accounts for a quarter of the growth in the digital economy starting around 2022. Already, estimates from McKinsey to Goldman Sachs put the metaverse valuation at about $5 trillion to $13 trillion by 2030 or so.
Now let’s look at the game economy. Right now, our industry is about $200 billion. Bain estimated in a report last week that games will grow 50% in five years to $300 billion. Now put that next to the metaverse numbers, which are measured in the trillions. Does it seem right? Anyone familiar with gaming would say that it seems low. Gaming is supposed to lead the way.
People underestimate gaming. Neal Stephenson himself acknowledged in an interview in 2011 that the thing that he missed in Snow Crash was the emergence of the metaverse through gaming. He thought it was going to be TVs.
Last January, Jason Rubin of Meta told our audience that game engines will be the primary tool used to make the metaverse, which will be a 3D-animated reality. The people who know how to use game engines are game devs. So game devs will drive the metaverse forward. But it would be presumptuous of us all to say that victory is a foregone conclusion. It’s like saying we’ve won before the game starts.
Yet in the middle of COVID, games brought joy back. During the pandemic, we learned it was OK to say that we were not OK. And it became OK to say games helped us cope. The plague destigmatized virtual life. The word metaverse came back to life during the pandemic because people believed that it would save us from online isolation. Let’s remember that.
And here are the questions. Should we keep pursuing the dream of the metaverse? Should we try to create standards even though it’s so time-consuming? Should we keep investing in NFTs and blockchain even though some gamers and game devs hate it so much?
Now we’re being hit by a slowdown in the broader economy. We have a stock market crash, the war in Ukraine, inflation, a crypto winter, slowing game sales, a console shortage, the end of Moore’s Law, and falling NFT prices. Will you invest when everything else is getting dragged down?
There are a lot of naysayers out there who say you should quit. Those people are probably the same ones that told Nintendo to get out of hardware.
This is why a commons, a safe space, a gathering place where we can discuss these things, is more important than ever. And so I welcome you to GamesBeat Summit Next, where I hope you can find that passion that matters so much in business.
While we are seeing horrific layoffs and lots of struggles during the downturn, the core of the game industry is stable.
Games are recession resistant. Drake Star reported that game investments and game acquisitions actually went up in Q3 in comparison to the second quarter. You people just can’t sit still. And gaming VCs have a lot of dry powder to invest.
Some lost their nerve before reaching nirvana. Google pulled the plug on Stadia. Comcast scuttled G4TV. The fashionable take is that Mark Zuckerberg wasted $13 billion so far with his heavy investments into VR. But Mark has not lost his nerve.
Let’s not forget that Roblox has more than 200 million people playing four billion hours a month. GTA has sold 160 million copies. And thanks to free-to-play games on mobile, there are three billion gamers in the world, 10 times as many as a decade ago.
GamesBeat is now doing three conferences on games a year where we can measure our progress from event to event.
Back in January at our metaverse event, Richard Bartle and Richard Garriott discussed the future of AI and non-player characters. Bartle envisioned a day where NPCs would be so human that we might feel pretty bad gunning them down. We wondered if AI would enable us to create art on the scale to populate vast virtual worlds, or translate your virtual goods from one type to another as you crossed into a new world.
Then we all became aware of DALL-E, Midjourney, Stable Diffusion and more that show the creativity of generative AI. In August, AI Inworld raised $50 million to create AI-infused NPCs for games.
We have seen the same surprising things happen with interoperable avatars, metaverse standards, and new uses for NFTs. And just on Monday, Edward Saatchi’s Fable announced they’re creating The Simulation, where you can bring to life AI characters based on NFTs, and these characters learn and grow. In the past year, in this very short time, things that we thought were impossible have started to happen.
Back in January, Brendan Greene said that he would build a virtual world the size of the Earth. He said he could only do that through a combination of game development, user-generated content, and AI. And remember that Jensen Huang, CEO of Nvidia, said he would be able to create the metaverse for free by creating a digital twin of the Earth so that supercomputers could predict climate change for decades to come.
So Brendan Greene just might get his digital twin of the planet this way, for free. On top of that, Huang believes that much of the art for the metaverse will be built automatically by AI.
I bring this up because I think this is the wrong time to lose your nerve. People outside of your industry see the value of what you’ve created, and they want you to keep on going because they can use your innovations, just like the 1960s NASA and the space race produced so many spinoff benefits for other industries, from semiconductor chips to Teflon.
How will the metaverse turn out? Will it be dominated by walled gardens or will we see an open metaverse? I think that it will involve a tug of war, a yin and yang between decentralization and centralization.
I want it all to move forward. But at the same time, we should be careful and thoughtful. I want us to embrace diverse perspectives, and that is why more than 50% of our speakers here come from diverse backgrounds. As we look for gaming’s golden age, we should put all of the issues of diversity and wellness into the center.
Matthew Ball said in the concluding pages of his book that trust has never been more important when it comes to the relationship between people and technology. Do we trust our platforms to have our interests at heart? We need only look at the Epic vs. Apple lawsuit to find our answer.
It is our responsibility as a people to make the metaverse happen in a utopian way, not a dystopian one. We are not all living in a simulation. As Ball said in his book, we have agency.
We should pull down the height of the walled gardens, as Unity’s John Riccitiello has suggested. Otherwise, says our speaker Herman Narula in his new book Virtual Society, we just make the metaverse better and more profitable for those walled gardens, but worse for everyone else. I, like Herman, believe that the metaverse is a digital prototype for where society is headed.
We’re moving along with our Metaverse Forum, which will hold both public and private thought leadership sessions on a regular basis so that we can help create an open metaverse. Like Neal Stephenson himself did with the creation of his new company Lamina1, we have put a stake down ourselves in favor of the open metaverse. I can’t tell you how excited I am to say that Neal will be doing a fireside chat at the close of the day.
Openness lets us do our jobs. We’re journalists. We tell stories. We are not fake news. We believe in getting it right and covering gaming every day.
One of the things that will guide us is a simple rule. Follow the money. When we follow the money in our own part of the industry, we have seen many layoffs in the gaming media. My heart goes out to many colleagues who have lost jobs. We the media are in a fragile business. We are still here thanks to these events, and your support for us and our community.
Thank you to sponsors who are supporting a free and independent press that is capable of authentically covering games. Thanks to our speakers and advisers too, who have believed in our community for a long time. Thanks to our staff who have been working tirelessly. And remember we have our online-only GamesBeat/Facebook event on January 31, our Into the Metaverse 3 event on February 1-2, and our in-person GamesBeat Summit 2023 event in early May in Los Angeles.
I think of this space as our little Camelot, where you put down your swords and shields at the door, where for one brief shining moment … maybe you know how the song goes.
I hope that you all succeed with your grand plans, as I believe that gaming’s destiny is to lead the way to the metaverse, holding the light for that one brief shining moment when all others in the world will follow you.