The Metaverse: And How It Will Revolutionize Everything

by Matthew Ball

Whether a user has a $1,500 iPhone or an old WiFi-enabled fridge with a video screen, they could play a computationally intensive title such as Cyberpunk 2077 in all its fully rendered glory.

a GPU does not render an entire virtual world, nor even much of it, at any given point. Instead, it renders just what’s necessary for a given user when that user needs it. When a player turns around in a game like The Legend of Zelda: Breath of the Wild, the Nintendo Switch’s Nvidia GPU effectively unloads everything that was previously rendered in order to support the player’s new field of view. This process is called “viewing-frustrum culling.” Other techniques include “occlusion,” in which objects that are in a player’s field of view are not loaded/rendered if they are obstructed by another object, and “level of detail” (LOD), in which information, such as the nuanced texture of a birch tree’s bark, are only rendered when the player should be able to see it.

GPUs do not generate generic rendering “power” that can be divided across users in the way a power plant splits electricity across multiple homes, or in the way a CPU server can support input, location, and synchronization data for a hundred players in a battle royale. Instead, GPUs typically operate as a “locked instance” supporting a single player’s rendering. Many companies are working on this problem, but until it’s possible, there’s no inherent efficiency in designing “mega GPUs” akin to large industrial power generators, turbines, or other infrastructure. While power generators are typically more cost-efficient per unit of power as their capacity increases, the reverse is true with GPUs. A GPU that’s twice as powerful as another, in a simplified sense, costs more than twice as much to produce.

The difficulties of “splitting” or “sharing” GPUs are why Microsoft Xbox’s cloud game streaming server farms are, in fact, made up of racks and racks of de-shelled Xboxes, each one serving a player.

consumers today frequently replace their primary computing device, resulting in enormous improvements for end-user compute every two to three years.

With so many powerful and often inactive devices in the homes and hands of consumers, near other homes and hands, it feels inevitable that we’d develop systems to share in their mostly idle processing power.

Culturally, at least, the idea of collectively shared but privately owned infrastructure is already well understood.

Anyone who installs solar panels at their home can sell excess power to their local grid (and, indirectly, to their neighbor). Elon Musk touts a future in which your Tesla earns you rent as a self-driving car when you’re not using it yourself—...

The idea is that owners of underutilized CPUs and GPUs would be “paid” in some cryptocurrency for the use of their processing capabilities. There might even be a live auction for access to these resources, either those with “jobs” bidding for access or those with capacity bidding on jobs. Could such a marketplace provide some of the massive amounts of processing capacity that will be required by the Metaverse?

Every computer, no matter how small, would be designed to be auctioning off any spare cycles at all times. Billions of dynamically arrayed processors will power the deep compute cycles of even the largest industrial customers and provide the ultimate and infinite computing mesh that enables the Metaverse.

Game Engines The concept, history, and future of the Metaverse are all intimately tied to gaming, as we’ve seen, and this fact is perhaps most obvious when we look at the basic code of virtual worlds. This code is typically contained in a “game engine,” a loosely defined term that refers to the bundle of technologies and frameworks that help to build a game, render it, process its logic, and manage its memory. In a simplified sense, think of the game engine as the thing that establishes the virtual laws of the universe—the ruleset that defines all interaction and possibilities.

Historically, all game-makers built and maintained their own game engines. But the past fifteen years have witnessed the rise of an alternative: licensing an engine from Epic Games, which makes the Unreal Engine, or one from Unity Technologies, which makes an eponymous engine.

rather than hiring a developer and then training them to use or build on a proprietary engine, they can instead appeal to the millions of individual developers already familiar with Unity or Unreal and immediately put them to work. For similar reasons, it’s also easier to integrate third-party tools.

As the major game engines developed, another type of independent gaming solution emerged: live services suites. Companies such as PlayFab (now owned by Microsoft’s Azure) and GameSparks (Amazon) operate much of what a virtual world needs to “run” online and multiplayer experiences. This includes user account systems, player data storage, processing in-game transactions, version management, player-to-player communications, matchmaking, leaderboards, game analytics, anti-cheat systems, and more, all of which work across platforms. Both Unity and Epic now have their own live services offerings, too, which are available at low-to-no cost and are not limited to their engines. Steam, the world’s largest PC game store and a key point of discussion in Chapter 10, offers its own live services product, Steamworks.

these cross-platform and cross-developer technologies will become a core part of global society. In particular, the next wave of virtual world builders—not game-makers, but retailers, schools, sports teams, construction companies, and cities—are likely to use these solutions. Companies like Unity, Unreal, PlayFab, and GameSparks are in an enviable position. Most obviously, they become a sort of standard feature, or lingua franca, for the virtual world

Integrated Virtual World Platforms As both independent game engines and live services suites developed over the past two decades, other companies combined these approaches into a new one: integrated virtual world platforms (IVWPs) such as Roblox, Minecraft, and Fortnite Creative. IVWPs are based around their own general-purpose and cross-platform game engines, similar to Unity and Unreal (Fortnite Creative, or FNC, which is owned by Epic Games, is built using Epic’s Unreal Engine). However, they are designed so that no actual “coding” is required. Instead, games, experiences, and virtual worlds are built using graphical interfaces, symbols, and objectives.

The IVWP interface enables users to create more easily and with fewer people, less investment, and less expertise and skill. Most Roblox creators, for example, are kids, and nearly 10 million users have created virtual worlds on Roblox’s platform. In addition, every virtual world built on these platforms must use the platform’s entire live services suite—its account and communication systems, avatar database, virtual currency, and more. All of these virtual worlds must be accessed through the IVWP, which therefore serves as a unified experiential layer and a single installer file. In this sense, building a world on Roblox is more like constructing a Facebook page than a Squarespace website. Roblox even operates an integrated marketplace for developers where they can upload anything they custom-made for their virtual world (e.g., a Christmas tree, a snowed-on tree, a barren tree, a pine bark texture) and license it to other game makers. This provides developers with a second source of income (developer-to-developer rather than just developer-to-player), while also making it easier, cheaper, and faster for others to build their virtual worlds. The process also drives further standardization of virtual objects and data.

it’s harder to build an IVWP than a game engine in the first place.

Part of Roblox’s surging engagement is driven by its growing userbase. From Q4 2018 to January 2022, average monthly players increased from an estimated 76 million to more than 226 million (or 200%), while average daily players grew from around 13.7 to 54.7 (or 300%).

Roblox’s revenues are up 469% from Q4 2018 to Q4 2021, while its payments to on-platform world builders (i.e., developers) have grown 660%.

as fast as these virtual giants are growing, the number of virtual experiences, innovators, technologies, opportunities, and developers are all growing faster.

While Roblox and Minecraft are among the most popular games in the world, their reach is modest when considered in the broadest terms. These two supposed titans have 30–55 million daily active users, a fraction of the global internet population of 4.5–5 billion.

When Microsoft acquired Minecraft developer Mojang in 2014, the title had sold more copies than any other game in history, and also had more monthly active users—25 million—than any AAA video game in history. Seven years later, Minecraft had grown nearly five times in monthly users, but also had ceded its crown to Roblox, which had grown from fewer than 5 million monthly users to over 200 million.

Many new IVWPs are being developed around different technical premises, too. At the end of 2021, even the largest of the blockchain-based IVWPs, which includes Decentraland, The Sandbox, Cryptovoxels, Somnium Space, and Upland, had less than 1% of Roblox’s and Minecraft’s daily active users. However, these platforms believe that by allowing users more ownership over their in-world items, as well as a say in how the platform is governed, and a right to share in its profitability, they will be able to grow far more quickly than traditional IVWPs (more on this theory in Chapter 11).

Facebook’s Horizon Worlds is not limited to immersive VR and AR, but it is focused in those areas, which contrasts with Roblox, which is available in immersive VR but prioritizes traditional screen interfaces, such as an iPad or PC screen. Upstarts such as Rec Room and VRChat are also centered on immersive VR world creation, and are rapidly accumulating users. With valuations around $1 billion–$3 billion each at the end of the 2021, the two platforms remain small. But at the start of 2020, Unity Technology and Roblox Corporation were valued at less than $10 billion and $4.2 billion respectively. Two years later, both have valuations that exceed $50 billion.

Roughly half of all games today run on Unity, while Unreal Engine’s share of high-fidelity 3D immersive worlds is estimated at between 15% and 25%. Roblox’s R&D expenditures may exceed that of both Unreal and Unity, but this ignores the billions in additional investment made by licensors of these engines. The two most popular games in the world, excluding low-fidelity casual titles such as Candy Crush, are PUBG Mobile and Free Fire, both built on Unity.

many of these developers will still use Unreal or Unity as a game engine, or GameSparks or PlayFab for live services.

Roblox pays a developer less than 25% of the revenue a player spends on their game.§ Epic’s Unreal Engine, conversely, takes only a 5% royalty on revenues. The total cost of Unity’s engine is likely to be less than 1% of a successful game’s revenue. Roblox does take on additional expenses for its developers, such as costly server fees, customer service, and billing, but in most cases a developer will still have higher profit potential by building a standalone virtual world, rather than one inside an IVWP.

While games and game engines are central to the Metaverse, they don’t come close to encompassing it.

In recent years, Unity and Unreal have made inroads into non-gaming categories, including engineering, filmmaking, and computer-aided design. In 2019, as discussed earlier, the Hong Kong International Airport used Unity to build a “digital twin” that could be connected to myriad sensors and cameras throughout the airport to track and evaluate passenger flows, maintenance, and more—all in real time. The use of “game engines” to power such simulations does make it easier to produce a Metaverse which spans both the physical and virtual planes of existence.

As measured by the number of assets created, the fastest-growing category of virtual software may be those that scan the real world. Matterport, for example, is a multi-billion-dollar platform company whose software converts scans from devices such as iPhones to produce rich 3D models of building interiors. Today, the company’s software is primarily used by property owners to create vivid and navigable replicas of their real estate on sites such as Zillow, Redfin, or Compass, affording would-be renters, as well as construction professionals and other services providers, a better way to understand the space than allowed by blueprints, photographs, or even live tours.

Recall Tim Sweeney’s warning about the scope of the Metaverse: “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.” It’s easy to find such a statement hyperbolic, and it may be. Yet we already worry about how the big five technology companies—Google, Apple, Microsoft, Amazon, and Facebook, each one valued in the trillions—manage our digital lives, influencing how we think, what we buy, and more. And right now, most of our lives are still offline. While hundreds of millions of people today are hired through the internet, and work using their iPhones, they don’t literally perform their work inside iOS or by building iOS content.

Consider the “interoperability” of physical goods, such as a pair of shoes.

The Adidas store manager would need to create a system to block non-Adidas shoes, write a policy, and then enforce it.

Today, there are hundreds of different file formats used to structure and store data. There are dozens of popular real-time rendering engines, most of which have been fragmented further through various code customizations.* As a result, almost all virtual worlds and software systems are incapable of understanding what each considers a “shoe” (data), let alone being able to use that understanding (code).

Gaming is a different story. When the industry began to emerge in the 1950s, no standards for virtual objects, rendering, or engines existed. In many cases, the companies producing these games were pioneering computer-based content. Apple’s Audio Interchange File Format (AIFF) is still the most common audio file format used to store sound on Apple computers; it was created in 1988 and based on game maker Electronic Arts’ 1985 general purpose Interchange File Format standard. Furthermore, video games were never intended to be part of a “network” like the internet. Instead, they existed to run on a fixed and offline piece of software. Virtual worlds today have so much technical diversity for this reason, but also because of the intense computational and networking demands of modern gaming—everything is purpose-built and individually optimized. AR and VR experiences, 2D and 3D games, realistic and cartoon-styled worlds, high concurrent users and low concurrent user simulations, high-budget and low-budget titles, and 3D printers—all use different formats and store data differently. Full standardization would likely mean underserving one application, falling massively short on another, and so on—often in unpredictable ways.

The challenge goes beyond file formats and approaches more ontological questions. It’s relatively easy to agree on what an image is—they’re only two dimensional and don’t move (with video files just being successions of images). But in 3D, especially with interactive objects, agreement is far harder. For example, is a shoe an object, or is it a collection of objects? And if so, how many? Are the caps on a shoelace part of the shoelace, or separate from it? Does a shoe have a dozen individual eyelets, each of which can be customized or even removed, or are they a single interconnected set? If shoes seem hard, just imagine avatars—would-be representations of real people. Forget trees; what is a person?

Beyond visuals, there are other attributes that must be examined, such as motion or “rigging.”

If a player buys an outfit in Activision Blizzard’s Call of Duty and wants to use it in EA’s Battlefield, how is that to work? Does Activision send the outfit’s ownership record to EA, which manages it until it’s needed elsewhere, or does Activision indefinitely manage the outfit and provide EA temporary rights to use it? And how is Activision paid to do this? If the player sells the outfit to an EA user who doesn’t have an Activision account, what happens then? Which company even processes the transaction? What if the users decide to modify the outfit in the EA game? How is that record altered? If users have virtual items scattered across multiple titles, how do they ever know what, altogether, they own and where what they own can or cannot be used?

To achieve even a measure of interoperability, the gaming industry will need to align on a handful of so-called interchange solutions—various common standards, working conventions, “systems of systems,” and “frameworks of frameworks” that can safely pass, interpret, and contextualize information from or to third parties, and consent to unprecedented (but secure and legal) data-sharing models that allow competitors to both “read” and “write” against their databases and even withdraw valuable items and virtual currency.

Economics, then, will drive standardization and interoperation over time.

cloud-based consoles that use their own technology stacks, namely Nvidia’s GeForce Now, Amazon’s Luna, and Google’s Stadia.

combined with the ever-growing complexity of virtual words, is why cross-platform game engines such as Unity and Unreal have proliferated. They emerged as a response to fragmentation, and they don’t just solve it, they do it at a low cost and to everyone’s benefit—even that of the most entrenched platforms.

For more than a decade after online console gaming emerged, Sony refused to support cross-play, cross-purchasing, or cross-progression between games played on its PlayStation and other platforms.

it seemed that PlayStation saw cross-platform gaming as a threat. If users didn’t need a PlayStation to play with other PlayStation users—the majority of console gamers—they’d be less likely to buy a PlayStation in the first place, and PlayStation users might even churn away to competitors.

only two years later, PlayStation enabled cross-play, cross-purchasing, and cross-progression. Three years after that, nearly every game that could support this functionality offered it.

it did so in response to the success of Fortnite, which came from a company, Epic Games, that not coincidentally focused on cross-platform gaming.

It was the first mainstream AAA game† that could be played on nearly every major gaming device globally, including two generations of PlayStations and Xboxes, the Nintendo Switch, Mac, PC, iPhone, and Android.

Fortnite was also designed as a social game; it became better as more of your friends used it. And it was built around live services, rather than a fixed narrative or any offline play: the game’s content never ended and was updated as often as twice per week. This, plus superb creative execution, helped Fortnite become the most popular AAA game globally (excluding China) by the end of 2018. It was generating more revenue per month than any game in history.

cross-platform play, progression, and purchasing means every console competes on hardware, content, and services. Sony still thrives, too: PlayStation drives over 45% of total Fortnite revenues (and the PlayStation 5 has outsold the Xbox Series S and X by a ratio of more than 2:1).