From Microsoft's acquisition of Activision Blizzard to look at the future prospect and industry path of Metaverse

Original title: "Content as the core: From the perspective of Microsoft's acquisition of Activision Blizzard to see the future vision and industrial path of Metaverse｜Light source point of view"

Original source: Light source capital

Original author : Wu Jian (Partner of Light Source Capital)

Yesterday, Microsoft announced the acquisition of Activision Blizzard for US$68.7 billion, the largest acquisition in the history of the game industry , and it is also the largest investment in the current technology giant's layout for Metaverse. Satya Nadella, CEO of Microsoft, said: "Games are the most dynamic and exciting category of entertainment on all platforms today and play a key role in the development of the Metaverse platform." One of the most exciting, at the same time, games have also played an important role in the development of the Metaverse.)

Why does the world's second largest company by market capitalization continue Continue to expand the layout in this field? Why did games play a key role in the development of the Metaverse? What kind of impact will this incident have on the game industry and the Metaverse battlefield in the future?

Wu Jian, the industrial partner of Light Source Capital, based on his long-term first-line game industry and game investment experience, has come up with some views on Metaverse. Wu Jian worked in Blizzard Entertainment for eight years and was responsible for the launch and operation of many Blizzard Entertainment games such as "World of Warcraft" in China.

At the current point in time, his point of view seems to have been better verified: the first half of Metaverse is highly consistent with the development of the game industry and is inseparable; The ability to build content will be the core of Metaverse's competition, and the engine for creating content will also be the most important tool. There is reason to believe that it was Activision Blizzard's top game design capabilities and outstanding engine technology capabilities (and of course stable profitability) that made Microsoft fall into this world-shocking son.

The following are the internal views of Light Source Capital on Metaverse in 2021, slightly adjusted according to the latest situation:  

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Quick View

· We use Metaverse instead of "Metaverse", and try to describe each stage, hoping that readers will focus on the map, rather than a certain concept or short-term behavior. We believe that the coming of the future world where virtual reality is integrated will be a long-term trend.

· The final Metaverse is not a virtual world, not a reflection of the real world, but a reality and Virtually fully interwoven and fully integrated worlds.

· The inevitability of the emergence of the Metaverse can be considered from two aspects: on the one hand, from the perspective of the evolution of the Internet , the emergence of Metaverse as a next-generation network is inevitable. On the other hand, from the perspective of the development of human economic life itself, Metaverse has its legitimacy as a solution.

· Content will be the core of the future Metaverse, the perspective of content as the core is not content determinism , the impact of technological change on content cannot be ignored, but compared with the complex technologies and underlying facilities that build Metaverse, content is the ultimate carrier for Metaverse to gather users and finally stimulate more individuality and creative value appeals.

· A good game is the perfect blend of technology, art, humanity and engineering. The game industry has always been a scene for the application and experimentation of various advanced technologies, as well as a scene for the application and experimentation of business models. As a rare entity in the world that can create high-quality interactive content, truly excellent game companies are actually very scarce.

Since 2021, Metaverse has gradually been favored by leading Internet companies, venture capital institutions, and primary and secondary market participants at home and abroad. Roblox mentioned Metaverse in its IPO prospectus, and large technology companies regard it as a "next-generation network". Among them, Facebook, the most radical, directly changed its name to Meta; in China, the hardware and software surrounding Metaverse has also received high attention. Tencent, Byte Companies such as Jump and Mihayou have invested heavily in related fields.

As for the characteristics and form of Metaverse, there is no authoritative definition yet, and the most widely cited definition is mentioned in Roblox’s IPO materials. Roblox believes that a true Metaverse should have eight elements: identity, friends, immersion, low latency, diversity, anywhere, economic system, and civilization.

We believe that if we exclude the influence of some early attempts and marginal cases, and keep an open attitude towards concepts and prospects, the development trend of Metaverse has been shown in turn , and will eventually change every aspect of human life.

On the one hand, the evolution of the Internet itself and the continuous advancement of technology will undoubtedly enable the Internet to further develop in the virtual world and at the same time affect the real world more deeply , and eventually develop into a stage or form of fusion of virtual and real.

On the other hand, the development of economy and technology will lead to the further liberation of human beings, and the two will explore new forms in satisfying human spiritual needs. The name of this new form or phase, when it is finally realized, is to be determined, but at this stage people have projected this vision and expectation into the Metaverse.

In this context, Light Source Capital launched observation and forward-looking investment in Metaverse, and cooperated with various excellent companies at all levels from technology to application, hardware to software Enterprises form long-term partnerships.   

Why does the Metaverse appear?

We believe that the inevitability of the emergence of Metaverse can be seen from two dimensions.

First, from the perspective of Internet evolution, the emergence of the next-generation network "Metaverse" is inevitable.

The Internet is a great innovation of the 20th century, which has greatly changed the efficiency of human society, and in turn affected its structure. According to the Wikipedia entry, the development of the Internet is divided into:

1. Early research and development (1965-1981);

2. Consolidation of networks to create the Internet (1981-1994);

3. Commercialization, privatization and wider access , forming the modern Internet (1995 to the present), which can be divided into three parts: Web 1.0, Web 2.0, and mobile Internet.

We are still in the era of mobile Internet. During the evolution of the Internet, two points that deserve people's attention are:

* The technologies that lead to the next generation of Internet are all hidden in the earlier stage, and under certain conditions, they will cross the "singularity" of technology, detonating the demand for the next generation of Internet.

* New requirements will further promote technology to accelerate iteration and create huge business value.

In the era of Web 1.0 and 2.0, the development of the VLSI industry for the popularization of PCs and the popularization of optical fiber technology for networking have all verified the After the "point", technology and demand spirally promote each other.

In the era of mobile Internet, it is generally accepted in the industry that the emergence of the iPhone is the node, but the technologies that gave birth to the iPhone have appeared for quite a long time, such as micro gyroscopes, ARM-based Architecture CPU, screen touch, Corning glass, etc.

The emergence of the iPhone and the arrival of newer and faster networks have made the scale and network effects of the mobile Internet appear. The ensuing large-scale commercialization has put forward new requirements for the technology and industry, such as better performance CPU, GPU, faster network, cloud computing, clearer display technology, higher computing power, Smarter algorithms, better cameras, etc., and continue to push the wave of mobile Internet to go deeper.

The revolutionary changes in the era of the mobile Internet are: on the one hand, the penetration rate and penetration depth of the Internet among the population has increased significantly, which is reflected in the users who access the Internet The proportion is getting higher and higher, and the access time has also reached an unprecedented 6 hours/day during the 2020 epidemic; on the other hand, the number of machine access is increasing, including wearable devices, home appliances, cars, robots and even The factory, which laid a solid foundation for the next step of the virtual-real fusion network.

At present, the penetration depth and breadth of the mobile Internet have approached the limit, and the deeper integration of people and the network is limited However, we are convinced that according to the path of increasing penetration depth and breadth (longer time and more scenarios), the performance of computing power, network, display, and human-computer interaction still needs to be greatly improved.   

As In the pre-mobile Internet era, some innovations were generally considered niche, bloated, inefficient, or unable to be popularized on a large scale because their technologies had not passed the critical point of popularization, but they did contain the prototypes of next-generation technologies and equipment. Beyond the tipping point, the next generation of networks will arrive at an accelerated pace.

Second, from the perspective of the development of human economic life itself, Metaverse has its legitimacy as a solution.

The use of tools by human beings is a process of continuous self-liberation at the material level. Stone tools and fire enabled humans to develop energy-intensive brains; animal power and metal tools developed agriculture and cities; and the Industrial Revolution gave birth to a "leisure class."

The corresponding process is that material liberation is accompanied by a simultaneous rise in spiritual needs. From ancient rock paintings to sculpture, drama, philosophy, religion, and the current large-scale modern entertainment industry, they are all signs of this trend.

It is foreseeable that with the further development of AI and automation, the proportion of people who directly participate in the creation of materials and services will gradually decrease to meet the human needs in terms of quantity and quality. The ever-expanding spiritual needs will be the core task of the future world.

We have reason to believe that, on a longer time scale, the evolution of society will enter the scholars who mentioned that "absolute demand" decreased and "relative demand" increased stage, that is, the proportion of needs based on material survival is decreasing, and a greater proportion of "relative needs" will migrate to the spiritual level, thereby redefining the core concept of "scarcity".

On this basis, we believe that, on the one hand, after "scarcity" is redefined, economic activities that meet spiritual needs will The proportion will be higher and higher.

On the other hand, these changes may mean that the traditional content production-consumption structure will also undergo certain changes. For example, for a long time in the past, the overall satisfaction of people's spiritual life still followed the pattern of creation by a few and consumption by the majority. With the transfer of "scarcity", the consumption pattern of spiritual life will also change.

The trend of social content production and social content consumption has emerged. In the era of mobile Internet, we have seen some signs, such as Online literature, short videos, games in the form of Roblox, and some strategic games with active user creation ecology have, to a certain extent, directly or indirectly realized the creation and consumption of most people; this direction of respecting individuality and creativity represents With beauty and kindness, we think it will be the direction of the future. If the threshold is greatly lowered, the integrated ecology of socialized content production and socialized content consumption will soon prosper.   

Therefore Whether it is in the industrial sense, as the next generation Internet after the mobile Internet, or in the sense of social development, as a solution to meet the huge spiritual needs, the emergence of Metaverse (or the next generation network that appears by other names) has both industrial Inheritance, but also the inevitability of demand.

Metaverse industry landscape with content as the core

We believe that the vision or ending of the Metaverse is an overall concept under the future time and space, and a collection of expanded human spiritual activities; the development of the virtual world gradually penetrates and affects the real world , covering the real world. Under this trend, content will be the core of the future Metaverse.

The content-centric perspective is not content determinism. Whether it is from McLuhan's thesis that "the medium is the message" or from the experience gained by Light Source Capital in serving a large number of partners, we deeply feel the huge impact of technological changes on content.

However, compared with the complex technologies and underlying facilities that build Metaverse, content is the ultimate carrier for Metaverse to gather users and finally stimulate more individuality and creative value appeals . Whether it is the existing exploration of online offline concerts, exhibitions, etc., or the construction of a virtual world similar to "Ready Player One", or the fusion of virtual and real scenes based on VR or AR, it is essentially through content Construct an independent or related Metaverse.

Content is the carrier of spiritual needs, and content is the core It is a relatively concise and clear way to sort out and look forward to the prospects of the Metaverse. We established the following Metaverse analysis framework.

Under this framework, the content platform is the core of future metaverse construction, and the main body of providing content in one or more metaverses It is the core participant of Metaverse; around this core is how to produce content (engine) and how to distribute content (entry); at a more basic level, hardware or infrastructure including AI, high-performance chips, and new-generation networks are required support.

In addition, in addition to mapping real-world relationships, the operation of the Metaverse may also bring about new organizational forms. The realization of these organizational forms requires the support of basic services such as underlying protocols and standards.

Content

Creation Top interactive content companies will be the most important part of the Metaverse ecosystem in the future. But in this area (and most of the Metaverse), there will continue to be two main categories of head competitors and module competitors.

Among the top competitors, game companies are one of the important players.

Game production relies on digital, Behavior-like methodology, creating and expressing content in the form most suitable for interaction, covering graphic images, animation, sound effects, multimedia and other art design forms. It can be said that a good game is technology, art, humanity and nature. A perfect combination of engineering. The game industry has always been a scene for the application and experimentation of various advanced technologies, as well as a scene for the application and experimentation of business models.

Of course, as a rare game company in the world that can create high-quality interactive content The main body is actually very scarce, such as Nintendo, MiHoYo, Blizzard and so on.

Large technology companies will also be extremely important players in this field, especially in the part where virtual reality is combined, large technology companies have advantages by virtue of their technical capabilities. For example, Microsoft's "Flight Simulator" has accumulated rich experience in rendering technology and machine learning; while companies such as Google have the advantage of making digital "twin worlds" based on the real world; Experiment based on digital content in life and work scenarios.

On the other hand, some companies may have excellent technological innovation advantages, but if they do not have integrated content creation capabilities, we define them as module competitors, For example, some companies that focus on IP, as well as virtual idols that have already appeared.   

Engine

Digital engine, as the name implies, is the engine of digital content. Judging from the current industrial structure, the top competitors are companies that are expected to evolve into world-class engines.

For example, commercial 3D game engines represented by Unreal, followed by Unity, and self-developed engines of leading game companies. Through the continuous improvement of system functions, these engines can finally build basic services at the OS level, while continuously improving technical details.

System-level, full-stack engines, considering their economy and ecological richness, there may be only a very few that can win the competition in the end.

Among the module competitors, one type may be combined with hardware and have significant advantages in a single field. For example, Apple combines 3D structured light hardware and advanced algorithms in its products to project real human signs into digital identities, which is essentially an engine for generating content.   

Entrance

The entrance mentioned here refers to the integration of various technologies Or, the user chooses to enter the mainstream device of the network. In the stage of Web1.0 and 2.0, the most important entrance is the PC, and in the mobile Internet era, it is the mobile phone.

The characteristics of Metaverse mean that the portal will be a master of computing power, AI, sensing technology, biometrics and even medical and health technology, bringing users multi-dimensional Immersive interactive experience. When the technological tipping point comes, terminal companies that integrate multiple technologies will be the first to achieve rapid growth, and will shape the Metaverse single or multi-entry form.

AR and VR devices continue to improve in terms of miniaturization, computing power, power consumption, network, etc., and it seems likely to become the first batch in the early stage of Metaverse main entrance.

Among the modular competitors, tactile feedback, brain-computer interface and other subdivided technologies that support access will produce new invisible champions driven by demand. For example, in the field of tactile feedback, by pioneering broadband motors and providing massive tactile simulation solutions, Soler Electronics has pushed broadband motors to various scenarios; in terms of the most imaginative invasive brain-computer interface, the current domestic NeuraMatrix already has medical The ability of the domain to apply such interfaces.   

Chip

The real-time and interactive nature of the Metaverse means that the future will be Both the terminal side and the center side will need to carry more and more intensive data processing tasks, the requirements for computing performance will increase day by day, and the demand for large computing power chips will continue to rise; while the computing performance is improved, the application scenarios of the Metaverse will also be on the rise. Indexes such as the energy efficiency ratio of the chip put forward new requirements.

In this regard we believe that the network Chips (such as Yunhe Zhiwang), high-performance general-purpose GPUs (such as Muxi Integrated Circuits), new architecture chips with large computing power and low power consumption on the end side (such as Houmo Intelligent), and supporting new generation display technology and AIoT Chips (such as Yiswei computing) will benefit and grow rapidly.

Next Generation Communication Network

In the process of marching towards the Metaverse, the network may be realized The biggest obstacle to real-time interaction, which has already been significantly demonstrated in the current game field.

Bandwidth or high concurrency is the first limitation. Although online games can currently support millions of people accessing one game at the same time, real-time matching The number of players in an irreversible scene generally does not exceed three digits; in addition, in order to achieve greater freedom of exploration and behavior, in addition to the improvement of end-side rendering capabilities, the amount of data uploaded and downloaded will be several orders of magnitude higher than the current one; Second, network latency and reliability issues will be more serious in real-time interactions with more people.

Therefore, a more powerful next-generation communication network is still indispensable to realize the Metaverse.   

Cloud Computing

Realize the massive and real-time data required by Metaverse, It will also put forward new requirements for the current cloud computing. The surge in data throughput and higher latency requirements will put new requirements on cloud computing in terms of computing power, elasticity, and computing architecture.

Also as a transitional solution, Edge Networks may have continued demand for quite some time before the Metaverse is finally implemented.

AI

The importance of AI to the Metaverse lies in revolutionizing the way digital content is created.

On the one hand, as a tool, AI will provide efficient tools for large organizations and professional institutions to create "digital twins" of the real world and people, create new content, and ultimately It even realizes the autonomous creation of content by AI to achieve the possibility of unlimited exploration; on the other hand, as a secondary part, AI will also be the main technical means for users in Metaverse to independently create content.

Blockchain

Blockchain technology and blockchain-based smart contracts have created many possibilities, making it easy to produce and trade digital results in the virtual world. Therefore, at least at the current stage, blockchain technology seems to be one of the more suitable technologies to support the development of Metaverse.

How far is the Metaverse from us?

Looking back at the history of the Internet, it will take a long time for new technologies to undergo qualitative changes. The vision of Metaverse is grand and futuristic. If we recognize that the current situation of Roblox is the initial stage of Metaverse, then there will be many different stages between now and the end, and each stage may be more than mobile Internet from technology budding to mature stage. longer.

From the perspective of combining technology evolution and content development, we have carried out a simple stage division, which can be roughly divided into:   

Phase One: Emerging Stage (1955-2020)

With users With increasingly frequent and varied interactions in the virtual world, the Metaverse has sprouted in the field of interactive content.

Roblox will officially bring the concept of Metaverse to the public in 2021, but for heavy PC gamers, it belongs to them The Metaverse may have existed twenty years ago: After the emergence of high-quality large-scale MMOs (Massive Multiplayer Online massively multiplayer online games), a large number of users are deeply immersed in them, both like "UO" ("Ultima Online", Network Genesis) , "Dark Age of Camelot", "World of Warcraft" (and Blizzard's unfinished "Titan") and other large MMORPGs (Massive Multiplayer Online Role-Playing Game, massively multiplayer online role-playing games), in which users form guilds, Adventure, fighting; there are also games like "Second Life" and "MyWorld" that simulate the real world or real life, in which users can experience modern life in another dimension.

Comparatively speaking, "Minecraft" and "Roblox" are latecomers. With their unique form and experience, these two products fully meet the needs of young people for creativity and imagination, and have achieved great success.

Video games are known as the ninth art, with content as the carrier and interaction as the core, and always innovatively use the advanced technology and artistic expressions of the current era , which made the game industry fortunate to give birth to various prototypes of the original Metaverse. So can the game industry keep running ahead on the long path of Metaverse development?

I think there are huge possibilities. Large-scale MMO games are essentially to build a virtual world, and then immerse users in it with massive and beautiful content. The trend of the game industry becoming a master of the content industry is becoming more and more obvious. Only the best quality content can keep users in a world. The game industry also naturally has unrestricted imagination, which is what the Metaverse needs in the development process. In this process, the most important thing is the extremely powerful world-class game engine tools and creators that can build a magnificent world.

If you choose to invest in the layout at this stage, you can pay close attention to:  

1) 3D game engines in the head, such as Unreal, Unity, etc., they are the prototype of the world engine;

2)Build the components and technologies of the world engine, such as physics engine, rendering technology, social modules, etc.;

3)Top PGC (Professional Generated Content) developers, such as excellent game companies. At present, the game industry is still an underestimated industry in the world. If you can identify excellent interactive content creators, long-term investment will bring huge returns;

4) authoring tools, which really help ordinary participants become contributors. Concepts such as UGC (User Generated Content), PUGC (Professional User Generated Content) and OGC (Occupationally-generated Content) are also recent hot spots, but authoring tools and engines will eventually have great relevance.    

Second stage: Exploration stage (2021~?)

From After the game industry sprouted, the dandelion seeds of Metaverse quickly spread to the content field and social field, and will gradually enter other fields of human society.

The most notable examples are the concerts of two famous games: Travis Scott's concert inside the "Fortnite" game and Penta Kill's concert outside the League of Legends game In the former, a real singer holds a concert in a game scene, and tens of millions of users watch and interact at the same time. In the latter, a heavy metal virtual band presents a gift to fans. With the explosive stage effect, the audience can communicate and interact in real time.

With the development and progress of technology, the application of various technologies such as VR, XR, holography, etc., the combination of virtual and real space and time display will make human life and All aspects of work will become more convenient and efficient.

At this stage, more and more fields will appear based on reality, but also transcend reality, and perceive more and more realistic immersive experiences. If the layout is carried out at this stage, you can choose:

1) Aiming at the transformation of a single scene, that is, to display various Content scenarios, such as video game platform Rec Room, sports technology company Wave, social platform Soul, etc.;

2) Imported hardware equipment and supporting facilities :VR, AR, MR (Mixed Reality), XR (Extended Reality), gesture tracking, facial sensing, eyeball capture, full-body tracking and full-body sensing and other multi-dimensional interactive technologies;

3) The upgrade from video content to interactive content, its logic is similar to the upgrade from flat content to video content, currently streaming video is the main communication All industries will face evolution;

< b>2) Infrastructure, such as computing power technology, cloud computing, IDC, 5G, 6G, low-orbit satellites, new energy, etc.;

3) AI technology, AI may have developed to GPT-4 (Generative Pre-trained Transformer, next-generation AI model) or even a higher level, and will participate more in creation and in the world Composition;

4) Blockchain-related technology applications, etc.   

Stage 4: Implementation

This stage is also the end of the Metaverse. Our assumptions and inferences about this end are as follows:

The final Metaverse has become the mainstream living state of human society , the vast majority of people live in it;

The final Metaverse has covered all aspects of human reality, and the content is constantly being created. At this stage, UGC and AI Content creation and ecological operation are very systematic;

The final Metaverse economic system is fully connected or integrated with the real world economic system;

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The final Metaverse is not a virtual world, nor a reflection of the real world, but a world where reality and virtuality are completely intertwined and integrated. The earth we live in or the larger interstellar world will eventually be presented in the form of Metaverse;

We cannot give much advice at this stage yet.

As a next-generation network and a solution to meet human spiritual needs, Metaverse's industrial scale and capital value are self-evident. However, its time cycle and development stage are still very long, and people's understanding of Metaverse and the next-generation network it represents will continue to be updated.

From an industry point of view, if the Metaverse concept involved in the industry is based on a certain link or a certain A module unfolds, but there is no possibility of extension or evolution, and its risk may be greater.

We use "Metaverse" instead of "Metaverse", and try to describe each stage, hoping that readers will focus on the map, not a certain concept or short-term behavior. We believe that the arrival of a world where virtual reality merges will be a long-term trend, but it is unknown what the people at that time will eventually call this world. Countless possibilities are intertwined to create countless possible futures.   

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