Investing in the metaverse
“Metaverse” has been the buzzword of 2022. The term has come to prominence with a plethora of definitions that touch 3D graphics, virtual reality (V.R.), augmented reality (A.R.), and virtual worlds. At its core, the metaverse is the emerging successor to the mobile internet. It is poised as a persistent, interactive and interoperable real-time platform comprised of interconnected virtual worlds where people can socialize, work, transact, play, and create.
Building the metaverse requires massive improvements to the underlying technologies powering the current version of the internet. According to Matthew Ball's Metaverse Primer, these technologies include compute, networking, virtual platforms, hardware, digital assets, and payments. Scaling these building blocks requires specialized effort from the most innovative companies.
Neil Rimer, co-founder of Index Ventures and an early investor in Roblox, put it well: "No single company can build a metaverse. It has to be a community." Heeding his advice, we're highlighting 7 companies contributing to the metaverse's future.
NVIDIA
Ticker: NVDA
Nvidia is the inventor of the GPU and created the ability to simulate physics and create architectures in the cloud, positioning them as the provider for hardware and compute for the metaverse. Building off their simulation expertise, Nvidia announced Omniverse, a free collaborative 3D graphics and rendering toolkit. It connects across major 3D creation platforms like Blender and Unreal engine, allowing designers to work seamlessly across their favorite applications to build virtual experiences together. With Omniverse, Nvidia is embracing the concept of interoperability with connected standards and, in turn, building the foundational tools that will unlock the metaverse. If the metaverse takes longer than expected to materialize, its GPU-cloud capabilities will continue to drive industries. Most recently, BMW utilized Nvidia's Omniverse platform to build a "Factory of the Future."
Unity
Ticker: U
Unity Software is the market leader in the fast-growing gaming industry. Its flagship product, Unity, is a game engine powering games and apps that attract more than 2.8 billion monthly active users. Currently, Unity serves 61% of game developers, which is expected to grow over the coming years as their no-to-low code products seek to democratize the process of creating games. Last year, Unity developed a new architecture that provides native APIs to third-party providers and offers a high-level managed API to Unity developers. The new architecture fundamentally improves how Unity delivers and manages SDKs for mixed reality platform integrations. These factors mean Unity has the potential to become the fabric beneath the emerging virtual worlds that will comprise the metaverse.
Microsoft
Ticker: MSFT
Last year, Microsoft released its metaverse product, Microsoft Mesh, which enables shared experiences through mixed reality applications. Alongside Mesh and its A.R. headset Hololens, Microsoft purchased Minecraft maker Mojang Studios. Minecraft is considered one of the pioneering worlds in the closed metaverse alongside Fortnite and Roblox and captures an enormous audience at 93 million monthly active users. Phil Spencer, head of Microsoft Xbox head, has said that he is a believer in the metaverse and believes that the future of Microsoft "blends between real and physical and virtual," and sees Microsoft's metaverse as a "volumetric world mixed with something like Xbox Live with A.I. components around you, avatars and some of them real world." With an arsenal of technologies spanning hardware, virtual worlds, and connectivity, Microsoft is likely to be a major contributor to our shared vision for the metaverse.
Apple
Ticker: AAPL
Apple is the most recent entrant to the metaverse space on this list, brought on by its mixed reality headset rumored to release by 2023. The new headset is speculated to include Apple's new M2 chip, a marked improvement on the already impressive M1 chip powering its current generation of hardware products. If Tim Cook is to be believed, the headset could signal an important step for augmented reality. While Apple is notorious for its walled garden approach to its ecosystem, they are no stranger to leading technological innovation; the introduction of the iPhone helped proliferate the mobile internet. For this reason, we believe Apple will help shepherd the metaverse as the mobile internet's successor.
Roblox
Ticker: RBLX
Roblox is an online gaming platform and game creation system used by two-thirds of all U.S. kids between the ages of 9 and 12 and a third of all Americans under 16. In other words, Roblox is home to a majority of the next generation of consumers. Their personalizable avatar system enables kids to express themselves virtually and attracts brands like Gucci, Nike, and Tommy Hilfiger. Roblox CEO David Baszucki has described the company as the "shepherds of the metaverse," enabling creators to build thousands of unique experiences that power a robust virtual economy with the power to make millionaires. Roblox is likely the best representation of the future of virtual worlds on this list and a great long-term investment in our younger generations.
Tencent
Ticker: TCEHY
Tencent is a Chinese-based company that touches everything from gaming to payments to social networking. WeChat, their messaging service, garners 1.29 billion monthly active users. They are exclusive holders of the Chinese distribution rights for Roblox, and have 40% ownership of Epic Games, the creators of Fortnite and the gaming development tool Unreal Engine. Fortnite boasts 83.3 million monthly active users, while Unreal Engine is powering the next generation of virtual experiences, including web3 and crypto projects such as Wilder World. With an enormous audience and many connected products, Tencent has the ability to build an interoperable system of applications that culminates in a formidable virtual economy.
Coinbase
Ticker: COIN
A digital and global future requires a digital and global currency. As virtual worlds become more prominent and our concept of ownership and identity moves from physical to digital, we will rely more heavily on blockchain-based technology to transfer digital goods and verify who we are. The promise of permissionless, trustless payments through cryptocurrencies represents a future where we can participate in an economy that will extend beyond the boundaries of our current governing bodies. Coinbase is the most prominent company in the crypto space, with 11.4 million average monthly active users in 2021, which positions it well as the payment rail for a digital economy.
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Disclaimer: the views and opinions expressed in this article are those of the authors and should not be regarded as financial advice.
Sources:
- https://blog.coinbase.com/how-coinbase-thinks-about-the-metaverse-16d8070f4841
- https://io-fund.com/artificial-intelligence/metaverse-economy-nvidia-omniverse
- https://www.bloomberg.com/news/newsletters/2021-11-02/in-the-metaverse-it-could-be-meta-vs-tencent
- https://millennialmoney.com/epic-games-stock-ipo/
- https://www.bloomberg.com/news/articles/2020-04-15/kids-flock-to-roblox-for-parties-and-playdates-during-lockdown?leadSource=uverify%20wall
- https://www.businessofapps.com/data/fortnite-statistics/
