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The metaverse has become a vision for the next generation of the internet, and everyone has a different idea of what it will be. And so a new book hopes to explain the basics of what it will be.
Navigating the Metaverse is a vision for the economy, strategy, and advice that companies can follow as they make their way into the metaverse.
The book was written by metaverse luminaries Cathy Hackl, chief metaverse officer of the Futures Intelligence Group; Dirk Lueth, co-CEO of Upland; and Tommaso DiBartolo, scholar at the University of California at Berkeley. Is it all a bunch of hype? Do we need cryptocurrency and non-fungible tokens (NFTs) to get there?
It’s one of multiple books in the works to help explain what companies like Meta, Epic Games, Roblox and more are gunning for as they prepare to move into the next generation of computing.
The authors believe the metaverse is the next technology inflection point akin to the Internet and social media
– creating new commercial opportunities for those willing to pioneer. They believe that the metaverse economy is unique in that decentralized app (dApp) operators, users, and businesses come together to form tokenomics that are mutually beneficial to all. They believe consumers will participate in community and brand-building that will make them into more like partners and creators of user-generated content.
I talked to them about the opportunities and some of the risks around the metaverse, like whether gamers are really going to go for NFTs. I also asked them about the concerns people have about decentralization, the open metaverse vs. closed ecosystems, and some of the hucksterism involved. The book features a forward by Yat Siu, executive chairman of Animoca Brands.
Here’s an edited transcript of the interview.
GamesBeat: How long ago did you start on this project? What was the mission?
Dirk Leuth: We started back in the summer sometime, June or July. That was the first time we thought about it. We wanted to get the ideas out. We saw all these companies, especially brands, coming in and saying, “We’ve heard about the metaverse. What’s it about? Can you educate us?” We thought about doing something small at the time, because we were all engaged with Upland. Maybe do a small ebook, one or two chapters. Then Tommaso, Cathy, and I started brainstorming. All of a sudden we had so many topics to cover. It wasn’t just one ebook worth of ideas that people could download with their email. It looked like a real book.
We started adding more and more content to it. Then the publisher came around and said they were super interested in publishing the book. That’s how it came together. We focused on it during the months of November and December, getting the book done.
GamesBeat: Was there anything you could look to for a point of comparison or inspiration? It doesn’t feel like there are that many metaverse books out there.
Cathy Hackl: We were early on. There weren’t a lot of resources out there just yet. One reason we wrote the book was to help educate others and share some of the knowledge that the three of us, in our different ways, had garnered. We saw it as an opportunity to educate and help answer some questions that we were getting asked all the time. We weren’t so focused on inspiring ourselves through other literature. We wanted to educate people moving forward. Who knows? Our book might become an inspiration for other books.
I will mention something that I think is interesting. Out of, let’s say, the books that I know are coming out in the next quarter or so, or even the next six months, ours is one of the only ones–I can’t say it’s the only one. But it’s probably one of the only ones that’s published by an actual publisher that has a woman author. Most of the other ones coming out are written by men. I do hope that it becomes an inspiration for other women to write more about metaverse and Web3.
GamesBeat: Who is this targeting? What sorts of people?
John Arkontaky: We were trying to classify this. The best high-level term we came up with was “advanced beginners.” In providing this educational material, when we thought of a good place to start, we had to start at the beginning. We started all the way back with what the metaverse is, key terminology, to level the knowledge playing field so we could build on that, and hopefully, to Cathy’s point, inspire some creativity, some projects and innovation from businesses out there, from creators, from entrepreneurs and players, whoever.
We take it a bit slow, and then we ramp up pretty quickly into the metaverse economy and what you can do with NFTs, what NFTs are. Business concepts, how to build a business case, frameworks. We think that it has a wide appeal to a bunch of audiences, even people that have been immersed in the metaverse for a while. They might not have been thinking about the metaverse from this angle of what they can do, how they can contribute, and the community involved. That’s what we want to do. We want to turn on the light switch for anybody to jump in and help realize a vision of the metaverse.
GamesBeat: Do you take any particular interesting stands here on things like what makes up the metaverse, how it’s going to evolve? What kind of predictions do you believe in the most?
Leuth: One core thing was appealing to lots of people. The fundamental thing about the metaverse is it’s this new land of opportunity, where entrepreneurship will get a completely new twist in the sense that anyone can become an entrepreneur in the metaverse. It doesn’t matter where they’re from. Very often in the metaverse people will assume different identities. It’s all obfuscated. Maybe in the future you’ll do business with someone in Africa or Asia, but at the end of the day if they deliver good products or good ideas, whatever you’ll see in the metaverse–that’s the true decentralization ideal, not just about technology and blockchain, but also conceptually. People anywhere in the world can make it.
Most of the metaverse ideas, people are pushing the creator economy very much, which is true, but we believe it’s one step higher. It’s entrepreneurs. It’s not just the people who are talented and creating cool-looking designs. It’s also the people who are maybe just resellers of things, just like in real life. We’re among the first who are outspoken about this very entrepreneurial approach.
Tommaso Di Bartolo: We have a small five-step approach or a framework that builds up throughout the entire book. One focus is primarily on commercial opportunities that are created through the Web3 and blockchain-based technologies, with a focus on interoperability. Commerce and interoperability as a main step. That’s one thing we focus on. Then we dive into the perspective of tokenomics. And when we say that, what we put at the center of all this is the empowerment of the end user and the co-creation, the ability to co-create with an end user. The reflection of–an end user in Web 2.0 had a different definition than an end user in Web3.
The third pillar we have here is the perspective–there is no metaverse without NFTs. We need to talk about the importance of NFTs within the metaverse. How does an NFT increase its yield within the metaverse? Why NFTs and metaverse are, let’s say, a match made in the metaverse or in heaven. That’s the third approach that we have as a pillar. The last two pillars we have touch on what Dirk mentioned, the entrepreneurship element, empowering others not just to be in the metaverse and live in the metaverse, but create the next-generation economy that is transparent and decentralized and empowers end users to build businesses within it.
We created this overall framework on how to start. How to start with the metaverse is a quest we got a lot before the book. We take a four-step approach. Start small, own land. We talk about why owning land is important. Then we build up to the point of the physical/digital connection, bringing the physical world to the digital world.
GamesBeat: It feels like one definition you don’t accept is individual companies calling what they create the metaverse. Saying Roblox or some other walled garden is the metaverse.
Leuth: It goes back to the idea of the metaverse as one universe. One internet, one metaverse. What we’ll probably experience in the next five or 10 years is this whole shift away from being ad-centric toward being user-centric. The whole NFT thing comes in there, where people are taking their assets, taking their identity and moving them around, reusing their stuff. That’s what is very different now. We’ve had Roblox and Minecraft for many years now, but these are just worlds which are, as you said, encapsulated.
Hackl: It’s important to mention that, because you have three different people writing the book, there might be different perspectives at times. Sometimes we agree and sometimes we don’t fully agree. But that’s part of the magic of the book. There’s a section that talks about further guidance from the authors, whether it’s from me or from Bartolo. It makes sure that our voices and the visions we have – which might agree at some times, but not at other times – are also portrayed in the book.
GamesBeat: It feels like it’s also maybe not as dense as some other texts that have been written online. It feels like you’re trying to make it more accessible.
Hackl: We want to appeal to a mass-market business audience. If it’s super-dense and highly technical, that’s not necessarily going to be something someone’s going to be able to pick up and read easily. I will say, I gave the book to my dad, who’s in his late ‘70s, and he finds it dense. He’s not in tech. He had to take it slow. So it all depends on the audience, how much they’ve read about the metaverse and so on. But this is a business book that appeals to a mass market audience.
GamesBeat: It feels like NFTs are a very key part of interoperability and ownership for consumers and creators here. But they’ve run into a buzzsaw of resistance from people like hardcore gamers. Do we fail to get to the metaverse if people don’t accept NFTs?
Leuth: What we’re going to see–when you have traditional games where people are used to paying up front, they don’t want to pay all the time. It’s a different target group you’re going after. The metaverse, which is based on NFTs, will create new genres of things where people will find this is an important aspect. Very much like in the old world, when you choose to play Fortnite instead of Minecraft or whatever. That’s a choice. In the future you’ll choose to go into the metaverse, maybe earn some money, maybe pay for something, but overall enjoy doing that.
The mistake is to say that all the traditional games and everything have to use NFTs. There’s a big part of the market that will be covered by traditional things. TV never really went away, after all. Radio never went away. The traditional ways of doing things will stick around. There will just be new things as well. Of course, TV as a format doesn’t work very well online. There has to be a different format. The same will happen with games. The old format will still work, but NFT-based games will introduce new things.
GamesBeat: Do you think there’s something that will convince gamers and game developers to come around on NFTs? Or is it just a matter of building games that illustrate things like interoperability?
Hackl: A lot of the conversations I’ve had with hardcore gamers that don’t necessarily like NFTs or play-to-earn–sometimes it’s about the fact that it is NFTs. NFTs are a buzzword. There’s a lot of emotions when it comes to NFTs. But sometimes when I have those conversations, sitting down with them, we would agree that blockchain as a technology, the concept of blockchain, is a positive thing. Maybe it’s because sometimes we’re caught in this hype cycle of what NFTs are and what they represent. But I’m finding that we often do agree that blockchain as a technology is a positive thing.
I’ve been trying to focus more on the blockchain as the underlying technology, the computer code behind it, the smart contract behind it. I’m getting away from more hyped terminology around NFTs. But I think that if you sit down with a lot of gamers, blockchain as a technology is something they see value in. They may not see the value in adding NFTs to the current games they play. But I would say that many of them do see blockchain technology as a positive technology. I haven’t done market research on that. This just goes from the conversations I’ve had. But when we step away from the hype around NFTs and play-to-earn, we eventually agree that this technology could be useful for the world.
Di Bartolo: I might also add a different flavor around expectations. When you get into a new environment and you already have a defined role, the identity of a gamer, you already have a pre-set expectation of the usability experience. When we talk about the end user, the gamer who plays all day long, or at least a lot of the time, they have a clear, streamlined environment around them. In the metaverse, though, because of decentralization, because of scalability, that’s not a given yet.
The question is really, are they against the idea of ownership? There, to be honest, I’d echo Cathy’s experience. It’s not about ownership. The expectations of Web 2.0 gaming, the expectations of the triple-A experience, versus the expectations of this new world–is this also triple-A? Is this also streamlined? Does it have the same responsiveness? Because of decentralization, this is not the case. That creates some frustration. I don’t think that the ownership aspect is what they’re bothered by. It’s more, “When do we get a seamless experience like we have now?”
GamesBeat: I don’t want to sidetrack too far on NFTs. But the thing I hear more often from critics among gamers and game developers is that it’s not really decentralized. You still rely on centralized entities like OpenSea. If they go out of business, then you’re not really holding or owning anything permanent. You own something that could still become worthless. The other complaint is that there’s nothing you can do with blockchain or NFTs that you can’t already do. In that sense, they’re not sure what added value NFTs bring. I don’t necessarily agree with this as being damaging to the theory of NFTs or blockchain or the metaverse, but that’s what I hear a lot.
Di Bartolo: The last part that you mentioned, that you can already do all of this–we’re going to experience a new wave of, “if this, then that.” A digital asset has a perpetual way of being repurposed. The four of us could buy an asset, co-create the asset – A plus one becomes A two – and then we could resell that and still keep track of it while co-creating on top of it. In the traditional world, you usually have a limitation of co-creation built around an asset after the resale of it.
This is a new behavior, and because it’s new it’s not really exploited or known. People say, “I understand this one use case around reselling something.” That’s something that already exists. But they don’t understand all the other use cases, like the ability to continue to co-create. I think this will allow a freedom of building new products, of creating new identities, of having new behavior. We’re all exploring co-creating together, and I’m confident that in the near future this will hook gamers too.
GamesBeat: Dirk, you had some strong opinions about what kind of economy works, what doesn’t, and how you need to be careful designing a metaverse economy. Do you get into that in the book?
Leuth: We do. First of all, what’s always risky in the economy–going back to an earlier argument, another reason people are against this right now is because all these NFT drops are rich kids’ clubs. It’s people dropping six figures on something. Of course this isn’t something that’s for a mass market. It’s why people say this doesn’t have anything to do with games, that it’s just finance and speculation, which gives it a bad connotation.
As far as a new creative game economy, it’s very risky. Not that I want to promote Upland here, but I’m an economist. I think I understand a bit about how things work with things like private and state-controlled currencies. I’ve done a lot of research there. But the problem is, when you have such a volatile market–when your game economy is connected to the outside world, the game economy can crash. When it’s going up everything is fine. Everyone is happy. But when everything goes down, your game may still be working. The game mechanics are still there. But it can be too expensive to play. Then all those people will drop out and everything breaks.
That’s why you have to be careful with how you design these game economies that involve external tokens. It’s why lots of people will point to things like Axie having issues. “Look, it’s not working.” But it’s not working because these game economies weren’t designed in a way that can sustain over a long time.
GamesBeat: The other thing that goes with that is gamers have this habit of finding weak points and breaking things. [At our GamesBeat Summit 2022 event], Rami Ismail made the point that gamers will shoot into a cave in Destiny 2 for six hours in order to get a bunch of loot by bypassing whatever system was designed to make them do it the longer way around.
Leuth: It’s always a Tom and Jerry game, right? Always trying to chase each other. They find something open and we have to close it. But maybe that’s also a good thing sometimes. You have to have an entity who takes care of things. When you start a new game–it’s the efficiency argument in economics. If you have only 10 players and one of them goes rogue, it breaks the game. If you have a million players and one goes rogue, that’s not so bad. You have the idea of subsidiarity. We help others to help themselves, and once they can run, we can let them go. You can’t start completely centralized from day one, because it’s impossible to think about everything. There will always be people trying to find the loopholes.
It’s why you have to slowly grow things. Upland isn’t in the headlines very much, and we’re doing that on purpose, because we want to build something stable here. This isn’t just a one- or two-year thing. We don’t want to get all the press and sell something for $6 million here, $7 million there. We’ll grow slowly, and hopefully in the long run we’ll be able to step back and everything will work with the DAOs and so on. The community can take over themselves.
GamesBeat: Cathy, where do you think women are going to stake their claim in the metaverse?
Hackl: What I’m starting to see from that perspective is a lot of amazing women banding together, more on the Web3 and NFT side. And gaming too, but I feel like there’s a bit of a bigger thing happening with Web3 and NFTs and women building initiatives there. You have World of Women as a project that’s considered blue-chip now. We’re going to stake our claim by banding together in ways we haven’t been able to before, and also by sharing in the value of the creation of these new technologies.
For example, I’m a founding member of BFF, which is another women-led project. We’re all trying to push the project together. I admire a lot of the work that Randi Zuckerberg is doing with HUG, trying to fund more of these NFT and Web3 projects that are women-led. I’m on the verge of launching my own NFT project. I’ve lost the fear. I’m no longer saying that I’m going to wait or see what happens when my male counterparts launch their projects. I’m ready to do it. I’m ready to be part of this new era, and I’m ready to benefit from it.
Women banding together here, it’s a very supportive community. I’m not saying that women in gaming are not supportive. But I feel like women in Web3, there’s more of a support system right now for a lot of us standing together. It’s a bit of a sea change.
GamesBeat: Do you see an outcome or a scenario where the open metaverse wins? As opposed to big tech companies like Meta?
Di Bartolo: My belief is that decentralization in general is a response to two things. Over the last few years, the human being has been asking for transparency and the ability to have a voice in the digital industry. They’re interested in owning things rather than renting things. This was never possible before these technology advancements now with blockchain, which brought cryptocurrency, metaverses, and the DeFis of this world. That all goes hand in hand now. The human being is continuing to mature and evolve in this direction.
The open metaverse, when we think about owning assets rather than renting assets–as soon as the usability experience on the front end allows all of us to have a pleasant experience, where at the center of all this you have traceability and portability, this is just a matter of time. This will happen. So absolutely, yes, open metaverses working hand in hand all together, and users having ownership at the center of all this, I see this as the way forward.
GamesBeat: And then the last question would be, how soon? How soon is the metaverse going to be here?
Hackl: What I tell anyone is, it’s currently being built. Some people are optimistic and saying five years. I think it’s more like 10, 10 to 15, depending on some of the hardware and connectivity issues. But we’re building it today. We’re laying the rails, the groundwork.
Di Bartolo: It’s here in an early phase. It’s going to mature. And then the question would also be how to define a mature metaverse. It’s an ongoing, evolving experience for humankind. But it’s already started, and it will become better and better.
Leuth: With all the money and talent going into the space right now, there must be something coming out. People are always coming up with new creative ideas. It’s also supported by the fact that true ownership enables much more creativity. I own a house, and so I take care of the house. That’s exactly what will drive the companies that are investing on a big scale, but also on the smaller scale. That’s where this immense influx of creativity–we’ll probably see that in the next two to three years. Hopefully there will be many places where people are able to wander between different metaverses and support the open approach.