Metaverse (en)

isotopp image Kristian Köhntopp -
October 27, 2021
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I wrote on Twitter something about the term “Metaverse”. That led to a contact with Michael Carl , who wanted to make an episode for his Podcast with me. My german notes and talk prep are now also available here:


The term “Metaverse” was initially coined by Neal Stephenson in 1992, but in the context of the current discussion it was defined as in The Metaverse: What It Is, Where to Find it, Who Will Build It, and Fortnite by Matthew Ball. Ball later wrote a lot more about the same , and that led to the current Valley Hype around it.

We are starting with games, who no longer are what they started out as, but somehow transcended:

  • Fortnite by Epic Games, which now also hosts non-Fortnite events,
  • Roblox, a platform to make and host low-end games, and
  • Minecraft in the Java and Bedrock editions, to show how both fail differently.


Fortnite originally was a Battle Royale game, but is now also a platform that can host events. You can also buy skins for your characters or items, often in a partnership with other IP, for example Marvel/DC super heroes. People gave concerts in there, or hosting other events. Epic likes to do this, openly, because it establishes Fortnite with people who are not originally interested in Battle Royale or part of gaming culture.

Epic Games also makes the Unreal Engine, and the associated pipelines for creating and editing in-game assets, hosts a market to sell these things, and is building a living infrastructure to produce games, and market them. They are in a way the invisible back-cover of many games.


Similarly, but way more casual, Roblox operates a platform to create, host and market low-end games, “making games as a game”, and matching this, they also have assets, and an asset and game marketing outlet. Roblox is mostly a thing with young and very young people, and vastly underrated with older people.

Minecraft in two flavors

Minecraft is a classic: The original game is written in Java, and meanwhile completely replaceable with third party components. There are alternative clients, alternative servers, and alternative assets. The game is bad: It is a sandbox without much story, an ill-defined goal and primitive graphics, the original servers are slow and buggy.

But the graphics are simple enough that even old potato computers can render it. It is written in Java, which can be easily reversed and extended without cooperation from the vendor. And thus there is an extremely rich community of modders, server and client plugins, and many other extensions. As such, Minecraft is a gateway drug into Java programming with young people, because it has unlimited potential for self-motivation and initiates undirected and unprompted learning in many people.

None of that leads to monetization that the current owner, Microsoft, can hook on. As an IP asset, Minecraft Java is an utter failure, because after the initial purchase Microsoft is no longer part of the value chain.

That is why there is “Minecraft Bedrock Edition”, more performant, better designed and from the ground up with an asset marketplace. You can buy Bedrock extensions in that marketplace, and only there. As a maker of extensions, you will have to license IP from Microsoft, and pay percentages, as a customer anyway. With gamers, it is not very popular, sterile, and without its own subculture. Compared to the Java Edition, an even bigger failure.

The Bedrock model is comparable to the Apple Developer mode, but smaller in scope: You can’t seriously develop for Apple machines without having an Apple-ID, a developer license, support for Apple Cloud for handover, and without leaving percentages to the Apple Store. Bedrock copies that model, but not as a Computer-Tablet ecosystem, only as a game, and that did not take off.

Metaverse: A first definition.

The definition of “Metaverse” is hence less 3D goggles, and more “Integration of the gaming industry with the value chain of the entertainment industry for an open digital asset market”. Or more open: siphoning off percentages along the gaming value chain during production, marketing and usage, and improving the value of gaming assets by partnering with entertainment properties and using their IP in gaming contexts.

The objective is to get more lifetime consumer budget out of a person, without bothering them too much by investing actual time. We want to extend the scope of “sellable media” in the widest sense.

Attention and time budgets

People have monetary limits, the consumption part of disposable income . They also have time limits, an attention budget. Both are convertible, but that is media dependent.

Assuming a useful lifetime of 60 years for media consumption, during that time I could read for example one book per week, for a total of 40 books per year. In a total lifetime, that are 2400 books, at - say - 30 Euro each.

With AAA games, one can do around 4-6 of them per year, 240-300 in a lifetime, at a value of around 60 Euro each.

That’s a total lifetime value of around 70k Euro in books, or 20k Euro in games per person.

We can see that games are too cheap compared to their production cost, but a higher price than 60 Euro is unrealistic even for AAA titles. That is one reason why each and every game has additional ways of spending money after purchase.

In general with both media types, there is a lot of my lifetime attention span bound for comparatively little money: We need to up the burn rate. Books, movies and especially AAA games are much too valuable per time and their consume binds too much attention for the business to scale up. We need a different way to extract money that does not bind as many minutes of person-lifetime and attention.

That is critically important, because there is also a lot of free content which competes for attention with our paid for assets, and which often is “good enough” to bind time which we then cannot monetize.

A sidebar: death and inheritances

With an aging population there is the sidebar “boomers die, their children inherit”. For example, right now I have around 600 Steam titles, and around 1000 Kindle books. When I die this represents multiple 10k Euro of value. How can my son inherit this? Politics has no answers, and the vendors say “he won’t”. I can only leave my Steam login to my son, and crack the DRM of my Kindle titles.

Economically, Kindle and Steam inheritances are largely irrelevant, or would be even be positive, and it is unclear why vendors are blocking this.

When I am inheriting a villa at the lake, I can go in, open the veranda, walk down through the park to the shore and enjoy the asset within minutes. It does not take much time.

Inheriting my Kindle and Steam library, my son will need to invest a lot of time to enjoy that: With 1200 books that will bind 30 years of lifetime, and with an inheritance of 1000 games there will be titles from 2002 that look like drawn with crayons today. I am inheriting “Skyrim”, but I will have to purchase the “VR” and “Remastered” editions of that myself.

We can see immediately that this will hardly lead to a loss in revenue for vendors, in some cases it is more like a kind of advertisement, actually.

Assets: high budget, little time

Even today, games offer loot boxes, pay-to-win and pay-to-skip purchases, and they sell cosmetics. Unlike the first three, the last one is hardly controversial.

  • Pay-to-Win: to finish the game successfully you have to buy equipment with real money. Ideally this becomes apparent only of tou already are invested in the game emotionally and with lifetime.
  • Pay-to-Skip: gameplay is often interrupted with annoying delays in which you can’t play, except you purchase immediate continuations with real money.
  • Lootboxes: The game sells containers with “random” in-game assets to you, some of which are very important in the context of the game. The actual game is just a wrapper for an addictive (and usually rigged) game of chance. The practice is already illegal as unregulated gambling in several EU countries.

Contrary to this, cosmetics are widely accepted: These are assets that change the way the character or their equipment looks like, without affecting gameplay. Also, virtual houses and house furnishings that have no effect on gameplay.

For example, in “Elder Scrolls Online” as a player you can get easily and early in-game houses which are spectacularly located, and have a lot of empty space for decorations. Furnishings to decorate the house can be gotten as trophies in-game, but every day things can only be gotten by using real money and purchase from the shop.

This has many desirable properties for the vendor: The player can spend a lot of money (without limits!) in-game, and hardly has to invest time or attention to make use of these assets. We are no longer revenue-bound by the players’ attention budget. This is a much better thing to sell than books, films or the games themselves. The game only provides context and reason for the cosmetics to exist, and defines their visuals.

Epic Games

This is precisely the operating model of Epic Games: With the Unreal Engine the company owns a platform for the fast and efficient design and rendering of really good-looking games. This also includes the tooling for making in-game assets, but also a market to sell these to other game developers. With the Epic Launcher and the integrated shop this is also a platform for game sales, and to collect meta and usage data for Epic, which again (for money) are sold back to the developer as analytics. Epic operates a payment system, which pipes money from the customer to the developer, not only for games, but also for extensions, DLC and in-game purchases.

With Fortnite, Epic has their own game, which at the same time can also sell 3D assets to players as equipment, cosmetics and other things.

Fortnite is a special kind of game - player vs. player, battle royal - players play against each other and last man standing wins the round. This kind of game is not interesting for all target demographics, but the engine of Fortnite is flexible and can be repurposed. This enables other use-cases, among them also as a “virtual event platform”, which also keeps the interest up through media tie-ins and licensed IP.

The interpretation of “The Metaverse” as a value chain for digital assets, specifically 3D assets, is too short-sighted: As an ecosystem with a controlled number of large market operators and a very large numbers of content creators and customers the foundations will look better and have better longevity. It is entirely possible to allow third parties to operate in this “virtual world”, trade with each other, especially if the market operators at all times get a tiny share from each transaction. This is the idea of the “Microsoft tax”, revitalized.

Players in this market

Different parties have different starting positions and strengths:

  • Epic Games/Fortnite - weak in IP, but some original IP, even if niche. Unreal Engine and other things on the “games invisible back-cover” as a big strength.
  • Roblox - original IP, very young customers, grooms them into future customers, wait 10 years.
  • Microsoft - Minecraft, MS Store et al., too enterprise for success? But Halo, MSFS.
  • Apple (sic!) - no IP, but platform/chain.
  • Disney (sic!) - only IP, but weak marketing outside of films/merchandise. Knows the game very well in the real world: Imagine Disneyland principles applied to a Metaverse.
  • Facebook - wants in at all costs, “pivot our enterprise”: If “social” of the future is “here”, we need to be “here”.
  • Google - all of this is a reason why Stadia still exists, despite being a flop.
  • Amazon - this is where the gaming strategy of Amazon is anchored. Amazon would like to be the AWS of the gaming world, instead of Epic.

Tech Maturity Cycle and standards

Cynefin as a Market Maturity Model.

We are in the chaotic phase of market maturity: Nobody has a business model for this. It is unclear what the market will look like, what the standards are.

This is the landgrab phase, building market share in a new and emerging market. Interop is secondary, because the future standards are not yet visible. Player try to differentiate themselves with features, also to find out which features matter. All players grow in a growing market.

As soon as a business model and stable feature lists exists and there is a system for money extraction the market can consolidate. As always, 3-5 companies will dominate the market, which is dropping out of hypergrowth. The dominating companies acknowledge their respective existence and roles, and compete semi-cooperatively: It is more important to erect barriers to entry for disruptors than to destroy the existing competition, and hence there will be complex, hard to implement standards with expensive compliance tests. This will then, against all wishes, lead to interoperability.

Metaverse, revised definition

So we get: The Metaverse is an integration of the gaming industry with the entertainment industry, and the merging of their value chains, optionally extracting a transactional tax at any point of the value chain. The objective is to monetize the lifetime intellectual consumption budget of any person, and extending the market of products relevant to that person, decoupling spend from attention.

A main result is that books, films and games bind too much time to consume and limit spend. 3D assets are a better sale binding for less time.

This is also the backdrop to read “Epic vs. Apple and Google” properly: This is about opening the monopolistic markets these companies have for their hardware products, and allow other companies to monetize their walled gardens with their own offerings directly.

The german outlook is dreary:

  • lacking highspeed, low latency infrastructure for gaming.
  • lacking a German company with identity platforms (“Login with x”).
  • lacking resources and companies with 3D asset tooling, production, marketplaces.
  • lacking German film/tv/literature IP that can be integrated with any of this, especially on a global scale.
  • German companies and culture looks inward, into the own country, not towards a global cultural base.

Compare with Korea: Korean production chains in K-Pop; Korean “cultural technology” that integrated other cultures styles and art and integrates it into K-Pop; production and grooming pipelines for stars and starlets; emerging similar chains for IP.

In comparison, Germany counts as unarmed.

Toxic-dystopic interpretation

“Property” in a simulated reality looks like property, but is virtual and can be duplicated easily. Virtualization removes resource constraints in production, but “value” is only created by uniqueness in consumption.

The platform operators and “tax” authorities have full market transparency and can meter the time spent and consumption habits of everybody. They know what you look at and listen to, what you are using, which styles you like and can sell this data for money to creators. They will also sell access to you to creators.

A friend of mine:

HHOS: in the future at birth of child, you will first have to decide which corporate tribe it joins and then find a name compliant with that tribes rules. Switching between tribes is as complicated as an emigration to or from North Korea.

A central building block is also DRM, here under the marketing name of “NFT”. NFT is the blockchain word for DRM, only with added destruction of the planet.

Unique things are only possible with:

  • locking the machine
  • TPM,
  • in-game only licensed assets and mods usable, and
  • NFT Laser Eyes crypto bullshit that burns the planet

In this context also the current engagement of Epic in the NFT bull. Proper standards will be important, and “identity” is central for “property”. This does not need blockchain, and will work better without - the platforms are central anyway.

My friend, commenting further:

It is important to bind these people into this universe (“Hyperinclusion”). They buy in the metaverses store, date their partners in metaverse locations, watch ads for products only available in the metaverse, and can hardly formulate metaverse critical thinking. There is no public space anymore, everything is part of the gated community (cf loss of the almende).

There may be competition between a small number of metaverses, but within one metaverse there is only managed competition. That is, the metaverse monopolizes a life in its totality.

That is a lot like mining towns in the US in the late 19th century. The shop was owned by the mine, the priest was employed by the mine, and the sheriff and mayor were mine employees.

Effectively the FB strategy is to make their social media monopoly permanent.

This leads us to


Cryptocurrencies have demonstrated to large players that money creation is now “up for grabs”. A metaverse is a very good environment to realize that “en passant”.

Again, watch the Epic engagement in crypto for details. This is problematic: Metaverse and production in it takes resources from the real world, but does not produce value for the real world. The real world is getting poorer, but that is where we live. What does that mean long term for the creation of value and money?


URL collection

Golem “Auf der Suche nach dem Wal”

Auf der Suche nach dem Wal ”, a video game growth manager (German article).

Colorado Law Review Dark Patterns

Link from the above.

When the Cat’s Away: Techlash, Loot Boxes, and Regulating “Dark Patterns” in the Video Game Industry’s Monetization Strategies ”, Sektion “IV. Broad Guidance for Crafting Effective Dark Pattern Regulation in the Video Game Industry”

Matthew Ball

The Metaverse: What It Is, Where to Find it, Who Will Build It, and Fortnite : Original Metaverse Article

Media side:

By the time Netflix launched its streaming service, much of Hollywood knew that the future of television was online (IP TV had been deployed in the late 1999s). The challenge was timing and how to package such a service (it took another 10 years for Hollywood to accept all of their channels, genres and content needs to be collapsed into a single app/brand).

Ball writes:

The Metaverse, we think, will be …

  1. Persistent.
  2. Synchronous and live.
  3. Be without any cap to concurrent users, while also providing each user with an individual sense of “presence”
  4. Be a fully functioning economy
  5. Be an experience that spans both the digital and physical worlds, private and public networks/experiences, and open and closed platforms
  6. Offer unprecedented interoperability of data, digital items/assets, content, and so on across each of these experiences
  7. Be populated by “content” and “experiences” created and operated by an incredibly wide range of contributors

The Metaverse is not…

  1. A “virtual world”
  2. A “virtual space” (2nd life)
  3. “Virtual reality”
  4. A “digital and virtual economy”
  5. A “game”
  6. A “virtual theme park or Disneyland”
  7. A “new app store”
  8. A “new UGC platform”

That is, of course, nonsense, it will be all of these things, too. This is Valley Hype to make the Next Internet sellable, and to have a common tale to tell. But in the end this is all about the things it is supposedly NOT.

Nine newer longer articles on this.

Fortnite Loyalty Program

Keep up engagement and interest. A problem for any MMO:

  • People don’t live in the metaverse, the live here.
  • Primary consumption is casual, not high-end gamer.
  • That is the weakness of the concept, esp Facebook.

It can only become a Metaverse if it becomes a permanent place. That’s still a long road to travel.

My VR goggles are sitting around, idle (sold the Oculus because mandatory FB account). That is, because “entering VR” is an act (set things up, calibrate), and the goggles isolate (when I put them on, I am “gone”), and because it is used only by very few games.

Epic and Facebook: The Race called Metaverse

Pastry Eth Thread

Crypto bullshit with a few good ideas, but also illusions/lies about what will happen:

  • “1/5 of FB now working on AR”, FB looks at Metaverse as “Oculus”, “VR”. That’s dangerous tunnel vision.
  • “The “Metaverse” is a virtual space created by the convergence of virtually enhanced physical reality, AR & the Internet: Our current 2D search based version of the Internet is giving way to a fully 3D immersive reality”: bullshit, unless consumption becomes casual. 3D Assets in Pancake Games are easier to sell “Cosmetics”.
  • “The Metaverse is always “on” & is beyond the control of any individual. It exists in real time, can host any size audience, has a functioning economy, spans across platforms, provides interoperability for digital assets, & consists of the content and experiences its users create.” That is 2nd 2nd life as a concept, and “3D Shoppingmalls” of the early 90ies revived. As a concept not wrong, and at the same time completely wrong.
  • “In the Metaverse, the earning power for young creators won’t be limited to the top 1%. There will be an entire new era of young entrepreneurs making a living in virtual worlds, earning real value and steady income quicker than ever imagined.” LOL. Mainly this is about a microsoft tax, that will siphon off money from creators along the way.
  • “Creators who were once limited in their ability by technological constraints, lack of capital, time, or creativity, now have everything that is needed. What happens when physical objects are dematerialized? All formerly scarce materials become abundant.” LOL. DRM all the way is a requirement to make this work. Also, the permanent promise of creators paradise, when this is really about monopolization of the value chain.

Afterwards: Thread degrades into Laser Eyes Nonsense

Digital Twins

Digital twins will act as “foundations of the metaverse” and allow people to move between real and virtual spaces

Again “2nd 2nd Life”, Skeumorphism is what we do with new tech that does not yet have its own design language. The first cars looked like coaches, and the first Apple applications mimicked Rolodexes and Moleskines. “Digital Twins” is the same thing.

Core idea:

In April 2020, music artist Travis Scott staged a virtual concert inside the game that was attended live by 12.3 million people. It was a global phenomenon that sent the American rapper to the top of all music charts and earned him a reported $20 million.

Read: “OMG, somebody has used a children’s battle royale to earn money without shooting players, but with traditional media work.”, and we are back to “all the ideas of 2nd life we know are problematic may still be valid again”

“If the metaverse is an equivalent reality that coexists next to the physical reality, there needs to be a connection,” said Weir-McCall.

Does not need that at all. If, then more likely as AR than as 3D models, because connections to the real world is what you lose with 3D VR goggles. Casual is king.

Facebook Glass and acceptance

Google Goggle were identifiable and their users vilified as glassholes. Facebook is using Ray Bay to cover that. There is no technical relationship between Oculus and AR. This is about hiding the tech in the goggles to make it acceptable, and prevent a Facebook glasshole effect. Also, AR is more casual than VR. Fashion also allows easier re-sales of the same item, see also Apple Watch accessories.

Laser Eyes

It’s gonna be epic to bring the squid game to the metaverse. Salute to your team! I am a big fan of the TV series. I am super excited to have a chance to participate in this game! LFG!!!

More Laser Eyes.