Metaverse, a virtual world parallel to the real world and always online. “Ready Player One”, “The Matrix” and other works describe such scenes from different angles. With the development of technologies such as game virtual engines and deep learning, this concept has once again aroused heated discussion.
What is the meta universe? When asked this question, we often imagine from the perspectives of technology, design, etc. The author of this article tries to share with Epic CEO Tim Sweeney from the perspective of platform operation, business model, and benefit distribution. Related views.
Text | Joseph Kim
Game producer, well-known Youtuber
Interviewee | Tim Sweeney, CEO of Epic
A huge new world composed of games and virtual spaces is emerging, which people call the “Metaverse”. Regarding the considerable potential of Metaverse, the scientific and technological circles have carried out a lot of reports and discussions. However, few people talk about what factors are needed for the operation of the meta-universe platform. Specifically, what type of economy will the future Metaverse platform need to build a healthy and vibrant ecosystem for all participants (including all participants at the commercial end of the value chain and future consumers of Metaverse)?
The following are selected questions from the interview:
▌What is the meta-universe economy?
Joseph Kim：What we want to discuss is, if Metaverse is the next frontier field and the next large-scale platform, then how should we build an efficient and fair economic system for this new platform? You have talked about building the metaverse into an economic field. What does it mean specifically?
Tim Sweeney:First of all, no one knows exactly what the meta universe is like.
People have made many fictitious descriptions of the meta universe, but these descriptions only involve a certain part of the meta universe. Most of the descriptions existed even before the social network was born, so many of them can only be regarded as improvisations and speculations.
However, Metaverse will become a real-time 3D social media. Instead of sending messages and pictures asynchronously, we will gather and interact in this virtual world, and enjoy the joyful experience from pure games to pure social experiences.
Another key element of the meta universe is that it does not come from any industry giant, but the crystallization of the co-creation of millions of people. Everyone makes their own for the meta universe through content creation, programming and game design. Contributions can also add value to the meta universe in other ways.
Therefore, it will be a large-scale participatory media that we have never really seen before. Of course, we have “Fortress Night” and “ROBLOX”, these games can represent a certain aspect of the metaverse, but they are far from reflecting the full picture. The meta universe we are discussing is obviously not just a masterpiece of a company, not just a company’s product or source of income. What we are talking about is a mass-participatory media. If there is no economic support behind it, then it must become a self-contained entity and become an economic system by itself.
Companies can create content to build the world, but people cannot profit from these jobs, so it may be another story of a technology giant nugging gold through emerging industries.
Therefore, the key is that we must not only establish a 3D platform and establish technical standards, but also establish a fair economic system, where all creators can participate in this economic system, earn money and get rewards. This system must establish rules to ensure that consumers are treated fairly, to avoid large-scale cheating, fraud or fraud, and to ensure that companies can freely publish content on this platform and profit from it.
You know, such a system can be called a platform only when most of the revenue goes to the creator, not just the company that builds the platform. Windows is a platform, but is iOS a platform? It’s not good. Android is of course a platform. There are dozens of different application stores on it, selling various products.
Our goal is to build the meta universe into a platform. right? We must also formulate economic rules for this platform to ensure that consumers can participate in this media. We must also ensure that there is healthy competition in all fields to promote the success of the best creators so that they can truly profit from their work and be able to revolve around The platform develops its own business.
▌Meta universe ≠ an artificial intelligence product
Tim Sweeney:For a platform like Meta Universe, its economic system should be complex and robust. But there should be many different companies that can provide services on this platform and play their own roles. For example, the Web economy, this economic system is built around the World Wide Web. There are websites, commercial enterprises, advertising economy, and payment processing economy. There is a huge supply chain behind it, right? If you open a website and need to collect money, then you can cooperate with PayPal.
This system has a truly competitive infrastructure. All payment service providers compete within this framework and compete for business. Indeed, many companies have established very powerful systems to carry out these businesses.
Meta Universe also provides a large-scale shared online experience, which means that someone has to host millions of servers. These servers run a large number of simulation processes to achieve this experience. It may be a game like “Fortress Night”. It could also be a social experience, or live video and other content.
Then this requires a huge cost. Someone wants to invest billions of dollars to build a data center, or use the original data center to support these online activities. In this system, consumers will spend a lot of money to buy high-quality goods and purchase a consumer experience that brings them joy and enjoyment. But behind this requires a large number of companies and huge costs to provide support.
Meta universe is different from artificial intelligence products that are completely managed by one company. For example, Facebook is an artificial intelligence product, and all Facebook’s profits come from advertising. Users create a Facebook homepage, Facebook can earn millions of dollars through your homepage ads, but you can’t get a cent.
There is also a compromise model between the two. For example, YouTube also has advertising, but creators can also make money through advertising, but YouTube is still making the most of the money.
I hope that Metaverse, as a future medium, can become a more efficient engine than any existing closed system and promote economic efficiency. And in the end we will reach a state where the share of creators is much higher than that of the platform. Moreover, when non-creators obtain profits, they must distribute profits through a competitive mechanism to ensure that their costs and profits match the services they provide.
For example, MasterCard and Visa, which provide payment services, charge a 2.5% share, and they may earn 1% or 0.5% of profits from it. They have done a good job on this point. This is what they deserve, not platforms like iOS or Android, which take a 30% commission, of which 28% becomes the platform’s profit. Therefore, economic efficiency will become a key driving force for the growth of the platform. Economic efficiency plays an important role in the operation and growth of the platform.
I think Metaverse as an open platform may eventually be an order of magnitude larger than any company, including Epic.
Epic is completely built by ourselves and is our proprietary resource pipeline. We are trying to cooperate with more and more partners to connect our social system and account system together, so that you can connect the Epic friend system established by purchasing “Fortnite” with the friend system of other services. To make your friends everywhere.
I think establishing an interconnected system is a good way to realize an open platform. Over time, the true realization of interconnection and standardization is the right approach in the interests of everyone. We want to build a more connected world so that everyone can benefit.
At the technical level, I think we should adopt a gradual improvement method over the years, and make a little progress every month, until a real meta-universe world is built in a few years. right? To achieve the interconnection of social systems, we already have a game social system. We have XBOX Live, Steam, Nintendo switch, and PlayStation Network. There are too many unrelated systems in the industry. We should connect them together.
We have many different game engines, each of which has strong competitiveness. But what we need now is a new standard that everyone can agree with. In fact, there are already very good standards, such as the Pixar USD scene format used for 3D scene exchange, which is a standard for resources. We also need to establish social network standards so that we can build a multiplayer game. Some participants can use the client on the Unreal engine, and some participants can use the client on the Unity engine. It’s like establishing a true interoperability standard that everyone can use. Such a future is worth looking forward to.
▌How to ensure the economic benefits of creators?
Joseph Kim：Speaking of meta universe, it may also become a platform for creators in some form. You just talked about the feasibility of ensuring the creator’s economy. So how should such a system be designed to ensure the economic benefits of creators? Is the platform fee or other factors to be considered here?
Tim Sweeney:This economic system consists of a large number of components. The key is to realize that this system is actually burdened with a lot of operating costs. These costs can’t be compared with the cost of operating a store as we know it, like Epic. The cost of operating the store includes payment fees, 2.5% to 3%, and CDN bandwidth fees, which need to be purchased from Akamai, Amazon or other companies. These costs account for about one percent of revenue. In addition, there are customer service costs, which account for about 1% to 1.5% of revenue. Therefore, the operating cost of a store is between 5% and 7%, except that all amounts in the store’s commission that exceed this ratio are profits.
Our rake is 12%. However, Metaverse or similar platforms also need to host millions of servers, which are used to provide user content and run 3D simulations, including realistic physics simulations. These are all new cost factors. I think the most important thing is to ensure transparency and competition. right?
We must get used to achieving this goal step by step. Because “Fortress Night”, “Minecraft” and “ROBLOX” are not completely standards-based open platforms. I think the best way to achieve this goal is to adopt more standards, gradually open the economic system, and finally reach the ideal open state, instead of completely abandoning the old model at the beginning, starting from scratch, and inventing some blocks. Things like chains.
If we no longer pay attention to the supply side of the game industry, such as Apple App Store and Google Play and other suppliers, you will see that the economic competition in the game industry is actually very fierce. If you need an engine, you can choose Unity with a single business model, which is charged according to a “per customer agreement” method. You can also choose Epic, which can be used for free but requires a certain profit commission. You can also use the free and open source Godot Engine. You can use this engine to do anything without spending a penny, and you can also give back to the community.
So the competition in the engine field is very fierce. There are also online services. There are many types of online services, Microsoft provides online services, Amazon also provides online services, such as Gamelift and Gameparks. There is also Steam, and our Epic online service, we are also participating in the competition.
As a game developer, one of the great advantages is that you can wander around the entire market and pick out the most suitable components for you. You can use Epic online services, Gamesparks, or any service you want. You can use Unreal Engine or Unity. No one sets up artificial barriers: “If you choose Unreal Engine, you must use our online service and you must buy it in our store. We won’t say that.
All services of Epic Services are interoperable with those of competitors. We do not impose any licensing, technical or business restrictions. I think this model is very important. We are building a meta-universe based on a company’s games and building an increasingly open platform. We need to ensure that all components of this platform are open to competitors and that the best competitors can be on this platform. Survive and succeed. Even if they are directly competing with Epic’s core business or other businesses.image
Author: Joseph Kim
Translation: Tencent Interactive Entertainment Social Value Research Center