EP.38: Into The Metaverse - 2022 Year in Review
With Yonatan Raz-Fridman and Jane Bernhard. Includes full transcript of the episode.
The journey Into The Metaverse continues with full speed as we conclude 2022 and embarking on a fresh new year with 2023. This is our finale episode for the year.
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Yon on Linkedin: https://www.linkedin.com/in/yonatanrf/
Jane on Linkedin: https://www.linkedin.com/in/jane-bernhard-5a354a131/
Full Episode Transcript
At the beginning of 2022, Facebook had recently changed their name to Meta, which catapulted the term metaverse to mainstream media. Many misconceptions of the term metaverse were brought to the forefront of the conversation like the metaverse being a VR device, or even here already. Then the world realized headsets were decades away from becoming mainstream. The economy tanked, and the tech and infrastructure wasn't there yet.
We overhyped how close we were to having the metaverse becoming a reality and then critics were quick to criticize the word metaverse and were jumping on the bandwagon that because the metaverse wasn't here yet, that it was never coming. They pointed to empty worlds without a community like Decentraland as their proof that the metaverse was empty without realizing that one company is not going to build the metaverse alone.
When you really look at it, it's going to take time and billions upon billions of dollars and tech stacks that are far more advanced than where we are today. We also saw Meta under deliver. They set expectations that the world would move more quickly than it has.
So Yon, it's almost 2023. Where are we now and what have you learned about the metaverse this year?
Well, what a great opening to this season finale. And when I say season, I mean the whole year. And there's so much that has been going on in this space and having a front row seat, both as a company builder in the space and creating the Into The Metaverse podcast and talking to so many amazing people. I think it's pretty clear that 2022 started with this amazing chatter about the metaverse. A lot of activity that has happened, and incredible level of confusion for a lot of people. Which means that it looked as if the metaverse at the beginning of 2022 was essentially NFTs and virtual worlds and avatar and the future of commerce and the future of everything. I remember starting the year and there was this piece of information - that the next internet is the metaverse, that the next e-commerce is the metaverse, that the future of gaming is metaverse. So everything that is the “next”, is likely the metaverse. I think it was a great articulation of the level of confusion and lack of clarity on what the metaverse is.
I think it also led to this explosion of interest and investment in the space yet still in a relatively nascent manner. By no means do I think that the metaverse is something that majority of people in the world know or heard of or understand. I think we're talking about what remains to be a niche concept that few people in the know actually spend a lot of time on - either because they're in the gaming industry or because they're in general tech or because they are working with brands.
Definitely that wider community has a bit more color and understanding, but I think we're finishing 2022 with a bit more realistic perspective on how long it'll take to actually realize the metaverse in its most ambitious vision of an open network of virtual worlds in 3D that are interoperable and persistent and synchronous where anyone can own and carry their identity and assets and take it from one world to another. I think there is a bit more understanding that this is going to take years, if at all, to materialize just because of the radical collaboration from so many different stakeholders in business, in government, in society, and so on and so forth. And so I think we're finishing 2022 with a bit more realistic perspective on how long it'll take.
We're also finishing 2022 with a bit more understanding that NFTs are not the metaverse; that web3 is not the metaverse; video games are not the metaverse. And I think while there isn't yet very crisp consensus on what is the metaverse in a way that translate that bigger picture that I provided a second ago I think at least we know what it's probably not. And you know what? Finishing 2022, after such a massive hype year with the financial changes in the macroeconomic environment, finishing 2022 with a notion of, you know what, there is this big thing called the metaverse, it's going to take years to actually realize it and that’s ok. And then starting 2023 with a fresh perspective and just focusing on building and creating and putting meaning and use cases and examples into what a metaverse could look like, I think that's a pretty good place to start the year.
I completely agree. I think that there was this public narrative that the metaverse is being oversold and that was being dominated by the soundbites from a couple major companies like Meta. And I think what you were saying about the Metaverse not just being web3, it's not just VR is very true. And this semester, I'm a second year at Columbia Business School. I did an independent study for the business school where I interviewed about 35 executives and CEOs from every major gaming and tech company, including you Yon. Learned a lot from that. And every company that I researched from Epic to Nvidia to Gala Games is investing in this in some form. They just define it differently. And this technology is going to alter the way we live our lives, the way we communicate and engage in economic transactions. But there are very difficult barriers to entry. And to me, the biggest barrier to entry is the advancements of the systems and the hardware needed to enable it and make it accessible, make it affordable. We need improved performance in CPUs, GPS, graphic processing units, AR and VR glasses, and the next generation of communications tech as we move beyond current wifi protocols in 5G.
I'm curious what you think are the biggest barriers to entry that we've seen this year in achieving a metaverse that fundamentally alters the way we experience technology.
Well, first of all, I think building on all these different components that you've mentioned around the wider metaverse stack. I think all of that explains that when we look at existing platforms today that people think of as prototypes of a metaverse like Fortnite Creative, like Minecraft, like Roblox, and so on and so forth. I think really what we're talking about, we're talking about probably something like web2.5. It's not web2, which was really the two-dimensional YouTube, Facebook, Instagram, the big platform that have emerged over the last 15 years. We're probably looking at platforms that are more 2.5, right? And I think that's fine. Obviously we're at a transitional period and it could well be that some of these platform, the web2.5 platforms like Fortnite Creative, Roblox, Minecraft, it could well be that they become the big platforms of the next wave of web3.0 and metaverse really merge together.
It could well be that these companies are going to set the stage and will be the category leader, or they may not. I think what we see now in my mind, platforms like Roblox, which obviously I'm a big believer in, and I'm very excited about what they are building, and I myself am building on the platform. I think it's a great example of what happens when you build an infrastructure that allows anyone to create experiences in 3D that people love and want to engage with, that have a thriving economy and an opportunity for anyone to monetize and build a business. And I think all of that and enabling some level of interoperability of your identity on your assets across millions of millions of experiences on the platform. That's a great example of what a metaverse could look like in the open web, but one that is really attractive to many people.
As a side note, in many conversation I have, I like to make that point, which is anyone below 25 years of age is in already living in the metaverse. They don't need to be explained what it is. They don't need to be convinced about its value. They are already in it. They grew up in these platforms and everyone that comes after them now, including my 17 month old baby girl, while everyone above 25 year old is the rest of the world. Who needs to be explained what the metaverse is, needs to be convinced that the metaverse is going to be a thing. But for the younger demographic, the younger generation, they are already in it. They have already expressed themselves at 3D avatars for the past decade at least, if not more, and not as a character in a game, but as themselves. And that's the big difference between characters and avatars - avatars represent who we are. Avatars represent our personalities. These virtual worlds characters are figures in a game that we play that is dictated by whoever is created the content. And I think we're moving into a wave where 3D avatars represent our personality, and I think that sits at the center of what this new internet would look like for human endeavor, collaboration, communication, interaction, experiences, entertainment, shopping, socialization, et cetera, et cetera.
And so when we're talking about all of the components in the stack that you've mentioned, I had amazing guests on the podcast from some of these incredible companies like Nvidia, like Unity, right? Like Polygon and I think when you look at that, you realize how early we are in the evolution of the tech that really needs to be available to enable what we talk about when we refer to the metaverse. And all the way from the telco from the communication protocol, from the bandwidth. How can a metaverse come to life with a network of interoperable 3D worlds accessible from any device when we don't really have fast internet in large parts of the world, right?
So at the moment we are having a metaverse party and everyone likes to talk about the metaverse, but we're so early in that evolution. It's so nascent as a category and I think that's what exciting because everyone, you, me and many other builders and creators have a chance every day to contribute to what this thing could become and what it could look like, and how do we make sure that we're building a meaningful metaverse that is focused on creativity and inclusivity and prosperity for a wide population of people, unlike what we've seen with the first generation of creation on the internet, where initially we've done it for free and then we've done it for free only to realize that other people are monetizing the content we're creating if it's Instagram and Facebook, and so on and so forth.
And I think that's where there is that interesting intersection of what people talk about when they refer to web3 and what people talk about when we think about the metaverse. To me, the metaverse is really about the transition of the Internet from 2D to 3D internet and all of the implications surrounding that. And then web3 is moving from a centralized Internet where platforms own the wealth into a decentralized Internet where the platform users and creators co-own the wealth with the platform. And I think those two massive forces, the 2D to 3D and centralization to decentralization, these are the two forces that go together over the next decade. I hope we're going to see more innovation in those two areas in 2023.
Super interesting, and one thing I really want to talk about and get your opinion on is interoperability. It's something I've been working on and asked everyone who I spoke with in this independent study, and what I see really is a war on who's going to own identity. Because you have a company like Apple who wants to own identity then you have companies like Gala Games and Animoca brands that are fighting for a decentralized metaverse. But you can see how a company like Apple isn't incentivized to want a decentralized metaverse because they own the iPhone and can have this portal open to identity. And you can see a company like Microsoft wanting that as well. And so I think that although this is gonna take a number of years to make it interoperable is gonna take so much code support. I spoke with someone at Gala Games who was saying the amount of code support that it takes to bring your avatar and all of its belongings from one game to another is already immense.
So what does that mean if you're doing it between PlayStation and Epic? And what does it mean for the game? If you're playing a battle game with a gun and you go into a game with animals, how do you bring everything there and make it okay for kids? So I'm just curious, do you see these two ideas coming into conflict? And how are these mindsets gonna evolve throughout the buildout of the wider metaverse?
Well, there's two things. The first is interoperability. Interoperability for the sake of interoperability makes no sense, right? I think there needs to be clear value proposition of what do we talk about when we talk about interoperability? If I play on Roblox and then I want to carry my digital assets to Fortnite, it makes no sense. I may be playing in a game that is a role play game. It's an a action adventure that looks like a certain style. Why would I take those assets with me to a first person shooter game that looks like Fortnite, right?It's going to be great to move around my assets over the internet everywhere I go and I can buy it on Roblox and I can sell it in a different game. But why would you do that? Why would a Fortnite player buy assets from a different game?
So I think we need to keep in mind what is the value proposition of interoperability? What is interoperability actually allows us to do? And by the way, the question is way bigger than how do I move my game assets from one game to another? I actually think interoperability across video games is going to be potentially less significant unless it's all under one network of games that there is some level of commonality of the content between them because there has to be a connection. And also it needs to make sense from the game economy perspective. But to me, interoperability when we talk about it in the context of the metaverse, is much, much bigger than just interoperability of game assets. It has to do with our behavior on the internet. Today if I go to website one and I create something, I can't take that data with me. I can't take that information with me. To me, that's also interoperability. It's not just the assets. It's everything around my identity, everything I do, everything I write, everything I collect, everything I make, everything I play with, I think that's in my mind what interoperability would mean. It's everything that I engage with in the 3D internet that I would want to carry with me, and it may sometime involve 3D assets.
In terms of the players and their motivations, look, a company like Apple, in my mind, either going to embrace interoperability, decentralization because they realize it's good for their business and it's important for their future or they will be forced to do it. And we just saw a few weeks ago in the EU, they are now being forced to allow other app stores to be incorporated into their API ecosystem on iOS. And I think that's being forced by the regulator, and so they may well be forced into that. I don't know if it's going to be in the context of enabling decentralization. It's probably going to be just in the context of enabling competition. And we've seen it with Microsoft play out in the nineties with the windows and locking down the ecosystem. So I do expect that ultimately it may take a few years. It may take a decade. I don't know. I do envision that ultimately Apple is going to continue to be so dominant as a platform because of their dominance in the hardware ecosystem.
I do envision that Apple ultimately will have to open the app store and enable more internal competition to their app store. And is that going to enable decentralized applications? Let's see. You see companies like Epic games allowing web3 native games like Blancos from Mythical Games to be incorporated into the Epic store. And games by Gala Games too. And so you're starting to see web2 or web2.5 platforms starting to interact with web3 native companies.
I'm a believer in enabling an internet as the next era of communication and creation, enabling an internet where it is not necessarily purely user owned, but it's a co-owned environment where multiple stakeholders can actually monetize, build wealth, create a business, versus the very rudimentary way of how things are being done today where creators essentially do not make money or they make very little money. And again, this is why companies like Roblox, to me, paved the way because they've built a platform that from the beginning enabled anyone to come in and build and create, very similar to what Apple has done, right? But they mostly follow the 70/30 rule of revenue split. And so I think when we talk about a future of the internet that is co-owned, I do envision ideally that we will have these type of platform and the wider internet where there is a much more prosperous opportunity for creators and consumers alike, and not just for the platform themselves.
What exactly that looks like, how do we enable that into the existing ecosystem of apps? How do we make sure that the technology stack is there to actually enable that at a scaled global manner with billions of users?
That's exactly why this is going to take the next 10, 15 years at least, to really bring to life and realize, and by the way, not surprising, it took the internet 15, 20 years from the early efforts of the world wide web in the early nineties until you saw something like Facebook and YouTube born in 2004, 2005. And so, 2020 has really been the acceleration year of what the future is going to look like. And I think the next 10, 15 years, I envision that a conversation we'll have in 2030 to 2035 is going to be much different than what we're having now. But that's the journey I think we're on.
Definitely. And you touched on something that someone said in my independent study, which is that technology is frequently a solution in search of a problem. And I think what you're talking about is just because you can have the code support to go from Roblox to Epic or from a game in Roblox into Fortnite doesn't mean that you should do it. There has to be a reason and a why and a value there. And I think that's why you've been so successful at Supersocial and in the podcast because you're really thinking about the why. Why are we gonna go from one world to another? What is it going to bring to the audience? What type of value is there going to be?
One thing I worked on at PlayStation was coming up with creative use cases for the metaverse outside of gaming. For example, if we did dating in a immersive world, what about it is better? Is it more immersive? Is it safer? Can you meet more people? And I think that all of these companies that are trying to enter the space really need to think about the why.
I wanna switch gears and talk about NFTs because we saw a lot of criticism of NFTs, web3 and crypto in 2022. We saw hundreds of NFT drops, some with utility outside of just keeping them in a digital wallet and some just keeping them in a digital wallet. And to me, I don't personally see the value of an NFT just sitting inside a wallet. I think the value is more having a community or access to events, a concerts, movies, games. But I did talk to a lot of people this year, dozens of people who think that they strongly believe in NFTs just as a collector's item.
So I'm curious what trends did you see in 2022 regarding NFTs and why is there so much criticism about it?
There's two things that happened with NFTs - the first one is it became an access to an exclusive club. People want to be associated and want to belong to special groups, to groups of interest and member clubs. It started with the gentleman clubs in England hundreds of years ago. I'm a member in Soho House, a thought after membership club that people want to belong to. People want to belong to something and even better if it's an exclusive club that very few can access, but you can be part of of like-minded individual and so on and so forth. That's as simple as that in my mind when it comes to those NFTs. And then what happened, of course, as with exclusivity, you need to pay up. And you saw these ridiculous prices for NFTs of being associated with an exclusive group of people. I think that may potentially continue, right? Is NFTs the mechanism for that? May or may not be. Do we need it in order to create this special group of interests and create a sense of belonging? No, we don't. But I think it was a way for a lot of people to justify why purchasing an NFT of a certain kind makes sense. So that's number one.
The second thing is we saw NFTs as a speculative asset. Now obviously with the wider changes in the crypto market and the decline of prices, we're now seeing that it was a very speculative asset. Like any cryptocurrency, it was another derivative of cryptocurrency. And as a speculative asset, some people bought it because of its certain art characteristics, or because they believe that a certain NFT collection or creator is going to be worth a lot of money, but it doesn't really make any difference. The notion is that this was a speculative asset that people wanted to invest in as a risky asset. And this may or may not continue later down the road.
I think the third thing that we saw is the creation of NFTs as an asset to build community, communities of people who love art, people who want to participate in a certain game development or any other creative endeavor. And we saw it with Stoner Cats from Mila Kunis, which sold out. And so that's the one that I find the most interesting, which is, how do we use digital assets in order to nurture and build a community? And I think the reason you saw excitement about that third group is because, again, people want to belong. People want to be part of something. We've seen it with communities of games, like World of Warcraft, like Fortnite, like Minecraft, like Roblox, right? You see it on TikTok, people like to follow and be part of communities that they're interested in. However, I think that unlike the speculative asset and the special interest group or members club, that by definition will likely continue to be high priced, to enter with those more communal activities or NFT that our communities, I think that may or may not continue, but it's probably need to be either free or very accessible. Because ultimately it's not really about the money, it's about building the community. And then it becomes the same thing that we're dealing in other mediums, which is people want to be part of great communities who love a certain type of content. Every brand has fans. So I think NFTs as a brand, as an opportunity to build a community that stands for something, that's the one that in my mind has the highest potential of being widespread. If you strip out the tech, it's about a sense of belonging. It's about a story of a brand that I want to belong to, and it's about a certain type of content that I care about and I'm passionate about, and I want to be close to it.
On the other hand, thinking about NFTs as the perfect technical solution to enable interoperability of, and ownership of, digital assets? I don't know. I think there's a lot of challenges there that are due to the scalability of blockchains anywhere from the gas fees to other factors. But I do think that at the moment when we talk about the centralization and the ability to own assets and carry them with us, it doesn't seem like there are other alternatives to blockchain as a core fundamental infrastructure technology. It doesn't seem like there is an alternative that is better. However, it's clear that blockchain as a technology, That enables decentralization is still at the early, early, early stages. But I think there's going to be innovation coming in over the next decade. We need to look at the use cases and we need to see where it drives the highest value proposition for people, how big it is, right? It really needs to be at a large scale of people rather than, the small communities that are either about exclusivity or speculative assets.
I think if entities can continue and grow as a category that is about community creation and at large scale, that gives anyone an entry point to the content they love, maybe there is a chance to look at NFTs as a more fundamental technology in a decentralized, 3D internet.
I definitely agree. I think there's been a theme in the last episode of marketing in the metaverse episode with talking about building a community, especially around NFTs, but also around brands. And I want to switch gears and talk about building a community and brands. What we've seen are the more successful brand entrances have been on the Roblox platform, like NARS Color Quest that Supersocial created. You were extremely successful. And I think one of the reasons for that is because you were focused on building a community and not just entering into a random world that didn't already have a community. Roblox is such a social space. There are millions of daily active users, and one of the trends we saw is that the companies that were focused on community were successful. Another trend we saw talking to Candace Beck from Chipotle, is merging the physical and digital worlds. I'm curious what other trends you saw this year in marketing.
Ultimately the two important things that I've witnessed this year is the importance of authenticity and being thoughtfully opportunistic. And let me unpack what that means. I think on the authenticity part, I think as a brand, every brand has its own spirit, soul, uniqueness. And when you come into a platform like Roblox, I think it's really important to translate your brand in a really authentic way and to truly know who you are, what you're about, and also why are you coming into a platform like Roblox and why would it matter to the audience, to players, to the community of users. And I think that ties really well to the second thing I mentioned, which is being thoughtfully opportunistic. Obviously there is something going on and there's a big shift and it's okay to be experimental and it's okay to be opportunistic. When I talk about being thoughtfully opportunistic, I saw a lot of brands rushing in and building something just because they can, just because they should, just because they wanted to have that next big press release that puts a flag on the ground. And by the way, that's not a bad business objective, but that's not thoughtful. I don't think that's sustainable. And I don't think that's strategic to the brand because ultimately when you come into these communities, and Roblox is a community, when you come into these communities, you're coming in to really build relationships. It's very difficult to build your reputation and it's very easy to ruin that. And I think there are definitely some really good examples. And you mentioned one of them what we've done with NARS Cosmetics on the Roblox platform, there are a few other good examples of brands who came into Roblox in a thoughtful manner. To really connect with the audience where they are in the way they want, and empower them with the brand story. On the other hand, there's a lot of examples of brands who came into Roblox with a less thoughtful manner which ultimately led to mediocre results.
Part of that is because you haven't really seen that authentic and thoughtful design and strategy implemented into the virtual world that they've created on Roblox. And the Roblox community is a very sophisticated group of players, group of users who know when people are coming to preach them or when they come to truly engage with them. The last piece about authenticity is also understanding why people on Roblox come to Roblox. What do they seek? What do they care about? What do they want to engage with? What do they want to play? And so I think 2022 has been the year of brands discovering Roblox, many of which have been opportunistic. I believe in 2023 we will see a higher level of sophistication from brands operating not just on Roblox, but I think in the wider space, if it's Fortnite, web3, etc. I definitely expect to see a higher level of sophistication from brands, and I expect to see a higher level of execution of what actually is being created and introduced to these communities, and using 2023 as a springboard for what the next wave of virtual worlds and experiences look like in metaverse version 1.
I think that we're also going to see marketing completely shifting from being constantly bombarded by ads to users getting to elect to go into these experiences.
Something I wonder is, we talked earlier about all the skepticism that there is around metaverse, especially this year, but I wonder if people were to look into Roblox, listen to the podcast, to hear about the authenticity and the value that you can bring and the purpose and the mission and making worlds more immersive and so many kids spending time there. And we're at a war of generations of this younger generation that grows up on the Roblox platform or playing Fortnite. So used to being immersed in a 3D virtual world with an older generation who looks and just reads potentially is reading headlines about meta or VR. And I'm curious if you think that there's a war of generations and what the world is going to look like as these younger kids grow up and become tech leaders.
Well, definitely. I think there is a certain disconnect and I think we've seen it before. I think the last time we’ve seen this generational behavior change was probably in the 2005 to 2010 era. These are the five years where Facebook, YouTube and Instagram were born. Some of the biggest platforms in social tech were born and I think that's the last time and the change was huge. Now we have people who are 50, 60 year olds on Facebook, but in 2005, even in 2010, that's nothing that we've seen. It was a young people platform. It was the millennials platform. And I think what we're seeing now is exactly that same disconnect, which is very natural. You're seeing anyone below age 20/25 who are super native to immersive social 3D platforms, the intersection between a video game and social media, right. In a 3D environment. So you're seeing that first native generation and then you see everyone else. And a lot of the business leaders of today are probably anywhere between age 35-65+, right? They're millennials, GenX, etc. And I think that the disconnect is there, and I think that's why it's going to take a few more years until not only we reach an equilibrium of understanding and have an empathy to what this new generation wants and what they seek, but also for understanding what it takes to actually translate that behavior shift into business decision, products that are being built, services that are created. And I think it's totally natural, but again, that's what's so exciting. For brands and for marketers, what that means, there is an opportunity to connect with audiences and tell stories and later down the road, sell products in a completely new way.
Five years ago, who would've thought that a cosmetics brand would build their own video game? Think about that. People were barely doing activations in video games. If five years ago you saw some skin of a brand on some video game, you would be like, oh my god, wow. What an innovator. Now it's yeah, sure. Now you have brands like Nars Cosmetics, like Walmart, like Nike, who are building their own bespoke virtual worlds on a platform like Roblox, which is essentially a video game and a social media platform intersecting at the same time. A few years ago, it would've been inconceivable. So we're seeing a whole new category of products and experiences being built by brands, and I think that's why what I get excited about is it's that evolution, right? We started with the world wide web and desktop internet and websites. Then we evolved to iPhone apps. Which became a whole ecosystem of brand experiences, an opportunity to connect with your audiences. And I think now we're moving to a 3D internet, virtual worlds in 3D that are closer to a video game than to an app or a website. And I think you're starting to see the brand innovations and experimentation, some of which, again, is more opportunistic. And that's okay. That's part of the evolution of the category and part of it is more meaningful and strategic and thoughtful. That's exactly what is happening now. And so this is why I think over the next two to three years, we're still going to see a lot of experimentation. We're going to see a lot of learning about what it is, how you measure it, what makes sense, why it matters, what it means for brands, and what it means for consumers. Until we really reach a certain level of maturity of the category, which I actually suspect will happen in about three to five years, where you're starting to see much more professionalism and much more clear business objectives, and also understanding what it all really means for that audience and those consumers.
And to your last point, yes, a lot of those young people that are now users, many of them are joining the workforce, they are joining companies, they will become contributors, creators, operators, leaders in businesses, and they will help shape what the future of the internet looks like because they are not only going to be creators in a platform like Roblox, but they're going to be decision makers in some very large companies over the coming decade. And naturally coming from a generation that was born in these 3D social platforms, they will be uniquely qualified to better understand what the next 20 years of the internet could and should look like. I think we're also talking about gaming, building that underlying infrastructure potentially of the metaverse and how gamers have always been at the forefront of technical innovation.
Speaking of technology, I'd love to switch gears and hear your views on AR and VR. We saw a lot of issues with headsets this year from the cost to the bulkiness to the dizziness it causes. There's a chicken and the egg issue of needing more headsets sold to create more content. But people also not wanting to buy headsets if there isn't enough content. My opinion is that until a company like Apple or Microsoft comes out with a headset that's as easy to use and accessible and affordable as an iPhone, headsets are not gonna be mainstream. And I'm curious what your view is on that and what you notice about AR and VR this year. Are we making more headway than we think in the space? Or will this just be a very slow build out?
I think that the truth is probably somewhere in the middle. I think we're in a rapid evolution of the category of those devices. No one really knows what Apple is going to come out with whenever they do. Is it going to be a VR that you can also use as an AR device outside, or is it an AR device that has an add-on to enable VR? I don't think anyone really knows from a value proposition perspective.
I'll talk a bit about the wider category from a value proposition perspective, I am very bullish about VR. I'm very bullish about the form factor. I think it's going to be a huge category because it will enable a different type of interaction and use cases that do not exist today. Anywhere from design collaboration in large scale teams where you can work any from anywhere at any time and feel like you are embedded in the room and you can experience in a sensory way, feel people are with you working. I think you can only really feel that with a headset. Now, that headset is fully VR or does it enable you to be immersed in virtual content while you can also interact with your physical surrounding without necessarily being isolated. I think maybe that is the big technical innovation and technical unlock that Apple or someone like Apple will come out with. But I'm very bullish on the notion that as a category, VR and AR are going to elevate certain use cases anywhere from workplaces, collaboration, especially in a world that is remote. We're just seeing now some signs of a lot of big companies saying many people who join companies in Covid, in as remote workers are less productive. And so I don't believe that the setup of Zoom and the remote work of what it is today is the ideal solution. I don't think we're going back to fully on premise and in office because people have seen the light and now they know there's a different way of living and working. But I think technology can help make us all feel more connected when we work remotely. That to me is a massive use case for where VR can come in specifically.
I am very excited about seeing experiments like what lightship technology from Niantic and other companies like Snapchat that are really focusing on how do we experience digital content while it is overlaid and it interacts with our physical surrounding. And to me it feels more like what the iPhone has done to smartphones. I think AR as a technology and a potential form factor as the ability to make that level of impact over the next 10, 15 years. However, we haven't even seen anything that is remotely close to the impact of the iPhone form factor. Is it going to be glasses in our eyes? Is it gonna be contact lenses that are computational and connected? I think we're at a really early stage to understand what is the form factor that will enable augmented reality use at scale. I imagine that the next form factor we'll see will probably be just a better version of what we have today until we reach a certain technical unlock that is really revolutionizing the category.
At a higher level, I think of VR as a really specialized form factor. I think of it more like the AAA game console. I think it's going to be a large category that will fit a certain type of audience with certain type of use cases. And it could still be very big, maybe several hundred billion of category. And maybe there's going to be use cases with software application and communities that will increase that market size to the billions of dollars a year. I think AR in a way, has an even greater potential because of the ability to overlay digital content in our physical surrounding, not just in our homes and in our offices, but also outside. In a world where everything is going to be connected and you're going to be able to access the metaverse, and I wrote about it a few months ago and I called it the Real versus the Unreal. I imagine that for a true metaverse and being able to carry and own our digital assets and identity, it's not just virtually - it's virtually and also in a way that connects with our physical surrounding, which I think is important and is not going anywhere. Creating a metaverse that is only going to be accessible virtually, that's going to be a bit dystopian. Our world is beautiful. Interaction in real life is amazing. That's not going anywhere. It's actually more important than ever before, and I think technologies like augmented reality can really make a difference in bringing technology even more to our physical surrounding, into our real life and connecting the virtual and the physical in new ways. To me, that's the big unlock when we think of augmented reality.
The press this year has been talking so much about the dystopian metaverse and what it's going to look like if we live our lives online and never interact in the physical world. And I think what you're talking about is the metaverse being a place where you are more connected to people, where you feel like they're actually there. Where remote work is more connected, and I do think it's possible to create a healthy, safe, positive version of the metaverse where people feel like they can express themselves in different ways and they're more connected and it's more immersive and you work more quickly.
One thing I want to talk about is digital identity. We saw some really incredible studies done by Roblox and the Fashion Institute of Technology this year that show younger generations are starting to care as much about their digital identities as their physical ones, which is incredibly interesting. Again, a war of the generations. I think the older generations don't really understand virtual items or the benefits but for the younger generation I can be whoever I wanna be, I can be exactly as I am and people aren't going to judge me and I can be imaginative. And it allows for this new expression of creativity. I'm wondering, since you worked so closely in the space with Supersocial, what did you learn this year about digital identity?
First of all, I very much in belief that by the end of this decade there is going to be a large population of people around the world, mostly young people, who will care as much about their virtual identity as they do about their physical identity, and maybe even more. The beautiful thing is going to be when they are intertwined, I think in the mind of a young person today, their virtual identity, and that's why they care about it so much. They don't really separate it from their physical identity, from their “real identity”. And I think that will grow and will continue and evolve. I think that is pretty fundamental. Think about it, what you and I and older people also think of avatars, oh, is this imaginary thing that kids create online and it's only a game. I think for that generation, for those young people, it's as real as it gets. It is real. It's not a metaverse thing. It's not like a video game thing. No, it's them, it's their personality. Their outfit the avatar and I believe we're going to see a generation where they also will have friends who are totally imaginary, artificial avatars as well. And technology will enable the creation of these avatars. And just like pets, we will have young people who will have friends that are avatars, that are artificial or synthetic beings that they interact with and they have fun with and they socialize with in virtual worlds and aside of their “real life avatar friends”. We're at the beginning of that and this will only grow and people will care about it even more in the future. And this young generation, they are the first ones who are setting that stage of “the avatar is me”. It's not this imaginary person. The avatar is me. And I care about my personality and my appearance as much as I am when I walk outside my home and I go into a classroom.
So that's the first thing. And then definitely over the past couple of years operating on the Roblox platform and building experiences for these younger demographics and seeing the role that avatar plays, I became more and more bullish and in belief that human expression and creativity and ingenuity is going to be really intertwined with avatars and the role avatars play in virtual world over the coming decade. And I think that's part of why this is such a big behavioral shift is because it's no longer playing a character in a certain game. You're in a virtual world that is representative of the world around you and humanity as a whole. And that is very powerful. That is a pretty significant paradigm shift that we're seeing at the moment, powered by emerging platforms and embraced by a new generation of users and players and communities.
And then lastly, I would say there always going to be bad actors. The metaverse is going to be as meaningful and safe and trusted and prosperous as we are going to create it. And when I say we, I mean communities, users, creators, companies, platforms, the government. I think it's going to be on all of us. Some of the key challenges that have happened because of social media and web 2.0 and to think that in the metaverse it's just going to be everything perfect and nice. It's a bit naive. We're going to face exactly the same challenges. It's just going to be way more complex because these are going to be synchronous, persistent, immersive, large scale virtual worlds in 3D. We're going to have to deal with all of that which is why I think it's so important that companies and creators are really focusing on building technologies that would enable a meaningful metaverse to actually be realized. But ultimately, a meaningful metaverse will be created because of the creators and because the way communities and users want to be treated and standing up for themselves and getting the support of the regulator when the time comes. But I don't envision government as the authority that is going to make the metaverse meaningful. They might be able to help, but it's on us, the creators, communities, and companies to make sure that we're actually gonna have a prosperous and meaningful metaverse. Otherwise, it's going to stay in the realm of a dream.
I completely agree and I appreciate the sentiment that we want to create a safe space as well for kids. I know that's something that you're passionate about and have talked a lot about on the podcast, creating a safe space for kids where there's not bullying or harassment or anything inappropriate. And I think perhaps there needs to be someone at each of these major tech companies working specifically on enabling a safe space for the younger generation.
I want to pan out a little bit and talk about the myriad of amazing and insightful conversations that you have had on the podcast this year. What were some of your favorite conversations and what were your biggest aha moments of 2022?
There's been so many amazing conversations, almost 40 episodes this year alone of amazing guests from web3 like Ryan Wyatt who runs Polygon Studios to OGs like Tim O'Reilly, who coined the term Web 2.0 after the .com crash, to Neil Stephenson who wrote Snow Crash, to Tammy Bhaumik, who runs civility and partnerships at Roblox, to creators and entrepreneurs and brand marketers and people in gaming and business and ethics, and marketing. And so there's just been so many amazing guests, people in big technology companies like Nvidia, who are building a lot of the infrastructure that can enable a persistent 3D internet, and so I'm very proud of the incredible guests we brought on board this year. The depths of the conversations I believe have been truly insightful and meaningful, and I'm hopeful that the community of listeners and and the audience of the podcast really learned and have gained some insights that really helped them to better understand what the metaverse could become, what it should become, and how they can play a role in it in their day-to-day job.
In terms of aha moments throughout the year - I think there's been a few really interesting insights that came up. One that I thought was interesting, although I don't necessarily agree with, was Tim O'Reilly who basically said, we are in the metaverse now, right? Zoom, riverside. This is the metaverse, it's the point of digital interaction between people. To me that's the metaverse. The metaverse doesn't have to be a 3D thing. I thought that was a really interesting argument to make from a person I truly respect who played an amazing role in popularizing the web. I don't necessarily agree with that prognosis, but I appreciate the sentiment as I do think that the metaverse is about the evolution of the internet from 2D to 3D. Over time. Another really interesting call-outs that I would have from the conversation we've had this year is really realizing how important avatars play a role in human experience on the internet. I think it was something that in 2022 we started with. Yeah. Avatars and expression and Oh, cool. But I don't think people have fully grasped that what we're seeing now with young people, the way they express themselves as avatars in these 3D social platforms, I don't think people truly realize how big and profound this change is going to be. So that's the second thing I would say that avatars are going to play a critical role, not only in popularizing what the metaverse is, but also giving everyone a chance to understand and experience for themselves what it's like to actually be immersed in a virtual world, a social platform in 3D, and expressing yourself and your creativity as a 3D avatar no matter who you are, your age, etc. That's going to be something that will accelerate in adoption.
And then the third is, I love how we've gradually over the year throughout the conversations we've cemented the understanding that web3, NFTs, blockchain, crypto is not the metaverse. And I think that was important to really crystallize so we can make sure that we remove the buzzwords. And yes, of course, the decline of the crypto market helped. And of course the financial slowdown made people take a step back and think about what actually we're building and what matters. But I love the fact that we're finishing 2022 with a slightly better understanding that the metaverse is a bit more complex than just connecting it to one single technology if it's NFTs or blockchain, and so on and so forth. And also realizing that the Metaverse is not a video game. The metaverse is not a video game. The metaverse is not going to be just video games in a different shape or form. Video game as a video game will continue to be an incredibly important, exciting and engaging interactive entertainment format that is not going anywhere. Casual games, open world explorations, massive battle games online. All of these different games will continue to grow and it'll continue to be a thriving category. The metaverse is not going to be a video game, and I'm taking away from all the amazing conversations this year on the podcast is that we are still at the very early stages of truly understanding and defining not only what the metaverse is and what it could become, but what do we want the metaverse to be, and I think what the metaverse will be is what we make it to be and the things we create and the companies we build over the next decade. That's how I'd like to enter 2023, taking all of the amazing inspiration and insights we've heard from the guests on the podcast who really help me and I hope the wider community of Into the Metaverse to have a better understanding what the metaverse is, what it's not, and continue to be open-minded and explore the evolution of that space in 2023.
So I definitely think you've helped a lot of people understand the space, including myself. When I was at PlayStation and I was doing a deep dive into the metaverse, the first thing that they told me was to listen to the podcast Into the Metaverse, get a great understanding of it. I think you've really helped, just from a personal experience, me understand the space and the realistic aspects of the space. Not just the flashy aspects of what it could look like in 50 years, but really that we're building the future right now and it's going to happen slowly. And you mentioned what you took away from this year. I'm curious as we conclude, final question, Yon, what is the main message you want listeners to take away from this episode and everything that happened regarding the metaverse this year?
The one thing I want people to take away is that the metaverse is not going to be a tiny change that is happening tomorrow. What I want people to take away is that this is a journey and it's going to take time, and I would recommend everyone to not only be patient and help shape what it could become over the next decade, but also play an active role in promoting what do we want to see as the metaverse evolve in terms of the experiences, in terms of making sure it's inclusive, in terms of making sure that it's prosperous for everyone, and really understanding that we probably can't even imagine what the metaverse will truly become. The reason is that a lot of what we take inspiration from what the future comes from science fiction. And many of the science fiction stories relating to the metaverse are limited and at times a bit dystopian. And I wrote about that in a letter, of creating an anti dystopian metaverse. And I think it's important that we look at those stories like Ready Player One, like Snow Crash, and not only understand where technology can go, but also make sure that we understand the pitfalls and the dangers of what it could be and what it could mean for humans. And then take all of that and look at where we are now and let's go and build a meaningful metaverse that really gets us excited, makes us feel proud of something we want to have our kids interacting with. And in your day-to-day work, make sure that you bring that vision of creating a meaningful metaverse into your day-to-day creation while continuing to learn an experiment.
Ultimately, it's going to be a joint effort. No single person is going to shape what the metaverse is. And so my main message is enjoy the holiday break, and then in 2023, when you're back in the office, bring all of your great vision and amazing inspiration and passion and focus on building things that matter that people will care about and that humanity as a whole would actually want to see coming to life.
Awesome. Thanks so much Yon and happy holidays everyone.
And thank you Jane also for you, for the passion you brought through the podcast and being involved. And I'm so excited to conclude 2022 on a high note and starting 2023 on a high note as well with a lot of creativity and passion and bringing to life amazing experiences and amazing content for the folks who are listening to the podcast.
Our mission is to become the leading destination to learn about the metaverse - what it is, why it’s important, how it will impact our lives, and what opportunities it unlocks. We are pursuing this mission by publishing podcast shows and letters that help make sense of the metaverse.
Into The Metaverse is a multi-segment podcast show that covers companies, technologies and trends through deep interviews with the brilliant minds who build, create for, and invest in the metaverse.
Hosted by Yonatan Raz-Fridman (founder & CEO of Supersocial) with the Marketing segment co-hosted by Jane Bernhard (Columbia MBA)