Epic Games & the Metaverse – The biggest hurdle

Technology is the least of the problems.

• Epic Games remains the largest advocate for interoperability across platforms in gaming, but its stance will be sorely tested when players want to bring digital goods into its ecosystem which will cost it and its developers money.
• Tim Sweeney, the founder of Epic Games, is, without doubt, the loudest advocate for the forced opening of mobile platforms and interoperability at the moment.
• Epic has sued both Apple and Google, lambasted them in public, and praised the new law in South Korea all of which are aimed at bringing competition into how games are distributed and paid for in the digital ecosystem.
• A complete opening and a large reduction in the fees paid by developers to Apple and Google will benefit Epic Games in the short term but there will come a time when it has to stand by its position and watch its revenue fall as a result.
• Mr. Sweeney is also advocating for a single game license to be applicable for all devices and platforms which could cost the paid-for gaming industry significant revenues.
• However, these moves will cost Epic Games anything now because its games are free to purchase but this will change in the long term.
• It is very clear to me that the biggest challenge of the Metaverse is not technology or hardware but interoperability.
• This is exactly what Mr. Sweeney is advocating for now and is something that must happen if the Metaverse is to take off in any meaningful way.
• This means that a user who buys a digital item from Meta Platforms should be able to take that item and use or wear it in Fortnite.
• This is where all of the difficulties are going to begin because at the moment, digital items remain only available within the ecosystem where they were purchased.
• This is also where Epic Games will be forced to live up to its rhetoric because a user bringing in digital items from other ecosystems will cost Epic and its developers money.
• In the long-term, this degree of interoperability is what is needed for the Metaverse to take off, but it requires the platform owners (of which Epic will be one) to forgo immediate revenues in exchange for revenues in the long term.
• By forgoing revenue and ensuring interoperability, the overall opportunity for everyone including the individual owners will be much greater than if they had kept their ecosystems closed.
• This is predicted by Metcalfe’s Law of Networking and has been demonstrated in the real world numerous times.
• The Internet that everyone depends on today is probably the best example of this in actions.
• I have seen numerous examples where shareholder and other pressures make it impossible for companies to willingly forgo revenue in the shorter term.
• This is why I see this as by far the biggest hurdle that the Metaverse needs to overcome if it is to take off.
• Currently, all of the players are engaged in building their own version of the Metaverse and I suspect hoping that theirs will be the one where everybody wants to come to.
• The reality is that no one version is likely to become the only destination meaning that unless they offer full interoperability, the Metaverse will fall flat on its face and remain a niche location where users go for a few functions and spend a limited amount of time.
• Epic Games is making all of the right noises in terms of advocating for the outcome which is most likely to allow the Metaverse to take off, but its commitment will be sorely tested when its own revenues are at stake.
• Either way, it is going to be a very long time before any of this happens meaning that the Metaverse today remains un-investible outside of a few small private companies most of whom are doing virtual or augmented reality.