What happened to the metaverse?

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I'm Eli Patel, editor-in-chief of The Verge, and Decoder is a show about big ideas and other problems. This week, I'm talking to Matthew Ball, who was last in the show in 2022. We talked about his book, The Metaverse, How It Will Revolutionize Everything. It's 2024 now, and it's safe to say that that has not yet happened.

But Matt's still on the case. In fact, he just released an almost complete update to the book, now with a much more sober title, Building the Spatial Internet. Matt and I talked a lot about where the previous metaverse-type cycle main-busts and what there is to learn from these boom-in-bust waves in technology. We also talked quite a bit about the Apple Vision Pro, as sort of a marker or a symbol of where the metaverse is now and where it has yet to go.

If you read or watched my Vision Pro review in The Verge when it came out, you know that I think the Vision Pro is sort of an endpoint for one side of technologies. And I wanted to know if Matt felt the same way, and what needs to happen to make all of this much more mainstream and accessible? It's tempting to think that the metaverse just fizzled out after the huge explosion of hype that came after Facebook renamed itself to Meta, hype which the lackluster Quest Pro and messy Horizon platform couldn't really live up to, and hype which eventually feels like it got totally washed away by the arrival of generative AI. But Matt's point is that the metaverse didn't just disappear.

The major players like Meta, Fortnite Maker, Epic Games, and Roblox, they're all still plugging away at it, albeit gradually. While Meta and Apple go head-to-head on hardware, the gaming companies whose engines make the 3D internet come to life are still working on some of the core technical ideas, all while contending with an industry-wide downturn that's led to waves of layoffs, not to mention a pretty stark lack of consumer enthusiasm and the whole metaverse concept combined with some intense backlash of both crypto and AI. Matt and I got into all of that and more, and he made the case for why the ideas of how or what we think of as the metaverse today are a lot bigger than just buzzwords and futurist predictions. He's optimistic that we're still on a path towards a new spatial internet, and progress is being made, and booms and busts are just part of the directory from where we are now to where we might be in the future.

Okay, The Metaverse with Matthew Ball. Here we go. Matthew Ball, you are the CEO and managing partner of Apillion, and author of the book The Metaverse, Building the Spatial Internet, which is a different title for a book we already talked about. Welcome to Decoder.

Glad to be back. You were last on the show in 2022. The book did have a different title. It was a much more expansive title.

It was The Metaverse and How It Will Revolutionize Everything. You changed the titles a little smaller. Tell me about that. What's going on with this book?

So the book is a comprehensive update, revision, expansion to that 2022 title. It's about 70% net new in content, 40% longer, and so though the subtitle might seem smaller, the book itself is actually a lot more expansive, artificial intelligence being one of those categories. But I'll tell you, I never really loved the subtitle. It was actually very off-piste for me stylistically.

So I did use this book as an opportunity to change that, just like I updated and improved a lot of the original text. The first time I read the book, and then I was reading the new version, it feels like a textbook in a good way. If you don't know anything, you can read this book and sort of understand you're thinking about the metaverse. There's a bunch of definitions in it, which are important.

The definitions all belong to each other. Is that how you're thinking of this? Is the way a textbook gets revised over time, you're going to keep revising this book over time? The goal is very much to detail all of the technologies, the trends, the behaviors, and the key quandaries that are going to affect the development of the metaverse, the spatial internet, the 3D internet, what have you.

I did not want to advocate for any individual philosophy, business model, technology, or even theory. Of course, a reader can nevertheless understand where I'm kind of tipping my hat and the version of the metaverse that I would most like. But the goal was to take a more factual basis and explain to readers how we got here, where we might need to go, so that whether or not you're a content marketer, a entrepreneur, a large company executive, you can understand these trends holistically and then make your best accordingly. You say tip your hand, the title kind of tip your hand, right?

You have a definition of the metaverse. It's the spatial internet. It's the 3D internet, I think you call it several times. It kind of is the one you think about where you exist in a video game with other people right now is the closest I think we have to it.

And that environment persists. You can take action, you can pay money, you can do all that stuff. Is that still your working model? That was certainly the working model we talked two years ago.

That's quite right. I finished the original book in truly the last few pages where I get a little bit more speculative. And I make the argument that by the end of the decade, many people are likely to acknowledge that the internet that we experienced today, that being 2022, had changed. It had become more immersive, more embodied, more experiential, more 3D.

But I also say that it's unlikely that we use the term metaverse at that point. In fact, it's unlikely that we use any of the terms save for the word internet and perhaps the 3D internet. The one flaw or foundational flaw with the metaverse beyond its association with dystopian literature, beyond its association with a specific company, and beyond that perhaps failed projects in both crypto and VR, is the fact that it is very much perceived as an end state, right? The metaverse is a fully realized experience.

And that makes understanding our trajectory from whenever to there really hard. And so the goal here was actually to separate away from an end state and to instead talk about the minor contributions, the major accelerants, and the overall pathway to getting there. Whether we call that spatial or immersive, it's kind of immaterial. In the tier since you wrote the first version of the book and you're on the show, what are the minor iterative steps and what do you think are the major accelerants?

Well, I think there are three areas that have exceeded expectations. And I like to highlight that blockchain is 15 years old. HMDs or head-mounted displays are roughly 70-year technology. And then artificial intelligence is varyingly dated at around 70 or in some instances, 100 years old.

In each of those areas, it feels like the last two and a half years have actually felt more like decades of acceleration. Artificial intelligence is a super clear example. When you take a look at head-mounted displays, the introduction of Vision Pro, though it hasn't changed the world as we know it today, it's a brilliant case study because it shows you what perhaps the most technically capable, most brand-savvy, and most accomplished tech pioneer has and has not been able to achieve with the device category or the form factor. And then blockchains, essentially 70% of all money going into that technology has gone in since that book was published.

Probably 95% of total transactions, nearly all users. And of course, we crashed from a peak market cap of 3 trillion down to 800 billion. We nearly reclaimed that high a few months ago. During that time, we had countless failures of technology, of products of entrepreneurs.

And so those three areas, though again, between 15 and 100 years each, have changed quite comprehensively. And so actually bringing users through not just to understand that new history, but to place it within new context and to better understand and acknowledge what the problems are felt like one of the most important updates to the book. Let's start with the Vision Pro because it's the flashiest thing that probably listeners understand the most is the most different thing. I spent a lot of time with it.

I reviewed it. My read of it, it feels like it echoes yours, right? Like here's the best we can do. It's nowhere near good enough.

There's a part of me that says, I put this in my review, that maybe camera-based pass-through on screens in front of your eyes, maybe we should just admit to ourselves, this is a good end. And we have to build some other kind of technology to make this work. Are you seeing the Vision Pro that way? Or do you see iterative steps from this Vision Pro to something that enables more of the metaverse that you have been thinking about?

So I think you and I are largely aligned. In fact, your review is quoted quite extensively in the book itself because I thought it was particularly insightful in that same regard. And I mean that earnestly. I think of it in a few different ways.

First and foremost, I think it is important to recognize that while we don't know how much Apple has spent building this device, we have some semblance of an idea. Since Mike Rockwell, who led the development of the Vision Pro, began his group in 2015, Apple has spent roughly $135 billion on total R&D. They don't have product P&Ls. They probably couldn't even tell you the answer how much did they spend the investments in- I feel like Tim Cook knows the answer.

I know Apple likes to say this by itself. I'm confident Tim Cook knows the answer. Well, I'm sure he can tell you in some vague sense, but my point is just extricating silicon development for the Vision Pro from the rest of the line is difficult. But the point is, Tim Cook proudly said this is our most advanced device ever.

It's the most sophisticated piece of consumer hardware ever produced. He said 5,000 plus R&D patents went into the device specifically. Not the broader corpus of work that might include the Vision Pro 2, optical AR glasses, but just the Vision Pro. That's about 25% of all patents they filed since 2015.

And so no matter how you allocate that $135 billion, you're getting to tens of billions of spend, not identical to Meta, which is also spent on marketing, on content, on device subsidies. But that is to say, we now have two companies that have spent tens of billions of dollars, have slightly different stylistic interface product optimization and trade-off choices. And we feel like both of those devices are far away from being mainstream. When you go back to that initial announcement, I remember Jay Peters or perhaps Alex Heath had that leak from Mark trying to reassure his staff.

And he said, we actually find this reassuring because the worst thing that could have happened was Apple had discovered something we hadn't. And instead he felt reassured that there was no new science. So the reason why I say this is you go back 15 years ago, it was consensus in big tech that this was going to be a solvable problem by the end of the decade. Not just that we could produce the device we wanted, but that we would have and hundreds of millions of consumers would have embraced it.

15 years later, companies like Meta haven't even shipped their optical AR display. The introduction of the Vision Pro is simultaneously an affirmation that the era of HMDs is here, yet a reminder that it's very far off for the average person. I'm a little bit more optimistic as to whether or not the Vision Pro has us on the right path, partly because I think when you separate all the constituent parts, you can see the progress. Our devices have roughly the same battery life, roughly the same price point, roughly the same weight as they did seven or eight years ago, but they have four times the sensors, three times the screen resolution, three to four times the frame rate.

They're capable of doing far more. They have spatial audio and so on and so forth. But I would say that we have certainly learned that that day that 10, 15 years ago we imagined would already be here is still probably 10 to 15 years away. So the data point here that I think a lot is inside Meta, you actually just talked to Meta CTO, Andrew Bosworth, who is sharp on the Metaverse and the amount of money he's spending.

They restructured, right? They said, okay, look, the Quest and the headsets are going to go in this division. The glasses, the Meta Ray-Ban sunglasses, that is a great product. It's finding its own product market fit.

We're going to put all of our effort there. And they're moving away from the Metaverse ideas that prompted the name change into what you might call augmented reality with the Ray-Ban glasses, which are basically just a voice assistant and some headphones and cameras and sunglasses. And that's where the consumers are. Do you see that as evidence that this is actually getting more refined or that 15-year roadmap has another 15 years to go?

I'm interested by your perspective there because I would disagree with the characterization. Now, the top part about that is that organizational changes are opaque. They're partly for PR and optics and they're never really going to explain how the priorities have changed. What we know is that Vishal Shah, who's in charge of essentially the software and experiences layer for Quest devices, now also runs the hardware.

And now both of those divisions report directly to Boz, who runs all of Reality Labs. That seems like an elevation of the software side of the company. The AR glasses themselves, as I understand them, still report within the metaverse division, still report up through the rest of that team. It does seem that the artificial intelligence layer is coming from another part of the business, but the implementation for that audio assistant is still going through the Reality Labs group.

The more important point that I would argue is if you go back to 2021, when Mark changed the name of the company, he was quite clear in both the hype videos that they released, as well as his own talking points, that AR, mixed reality, traditional 2D interfaces, and VR were inexperably linked core and parts of the metaverse and that there was no starting or ending line between those experiences. The downside of that was the only device you could buy from them at the time was virtual reality. The only thing that you could really experience of their metaverse group was virtual reality. Even Neil Stevenson, who largely appeared to that when he wrote Snow Crash in 1992, has publicly separated himself from that idea, but there's still a lingering perception.

We're seeing more and more of that, right? Some of these companies are actively trying to distance themselves from VR or at least the idea that they only do VR. We see that with meta and the Ray-Ban glasses and to some extent with the Apple Vision Pro. Apple only talks about it as a mixed reality device or pass-through that lets you stay in your environment.

That's been the big bet in Silicon Valley for a long time. We're going to get to actual augmented reality where we're going to layer digital information over the world you're in. My killer app for that is just please help me with faces names. I don't spend any amount of money on a device that would help me with faces names.

But that's, you know, to do that is to build a worldwide facial recognition database. There's some costs along the way. Is that part of your metaverse definition, this more traditional augmented reality that everyone's been talking about for so long? Yeah, and this gets to the idea of the 3D internet, right?

It's where we get into the ideas of persistent digital twins, the idea that the way in which you actually solve for self-driving vehicles at level five, at scale, with improved accident rates is to build persistent, essentially UGC-contributed simulations. We know, in fact, that that's a significant part of Tesla's roadmap and part of the RoboTaxi plan. They are today building a persistent live Unreal Engine-based simulation in San Francisco. And their idea is essentially that every single part of their self-driving car network, including privately owned vehicles, would be transmitting LiDAR, infrared radar scans to build that 3D representation.

And not only would that be used to aid the driving cars themselves, it would become essential infrastructure for the city, for emergency services, for ads, and what have you. That's an important part. And if you rewind three years ago, Jensen Huang took a lot of flack for making the argument that the metaverse was eventually going to be half of world GDP, which still sounds fantastical and is in excess of even my expectations for it. But his perception there was actually the same, right?

That the fundamental processes of the modern economy would be running through industrial-grade 3D simulations, which in his perspective was the metaverse, rather than just a consumer leisure VR headset experience. We need to take a quick break. We'll be right back. Support for this show comes from Odoo.

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So why not you? Try Odoo for free at odoo.com. That's O-D-O-O.com. This week on Network and Shell, I'm joined by Tank Sinatra, the meme king, with over 50 million followers across Tank's good news, influencers in the wild, and his personal account.

Tank is breaking down what the meme economy really is, how much a single sponsor post pays, why major brands are throwing serious money at jokes and how meme culture thinks preparation age, starter packs, and a perfectly timed screenshot is actually reshaping how we think about money and value. Get ready for a conversation that'll change the way you scroll, make you rethink what going viral is really worth, and prove that sometimes the most serious money moves are wrapped in the silliest of jokes. Listen wherever you get your podcasts or watch on youtube.com slash yourrichbff. We're back with Metaverse author Matthew Paul to discuss whether the tech we have today is at all suited to actually building the 3D internet.

I feel like you're a good person to talk about these ideas with because one of the things that I'm really challenged with the Vision Pro, with AI as it exists today, with Visual Twins as it exists, the whole thing, is the process by which we get from the products and services we have today and the technologies we used to make those products and services and where we might want to go is one, not linear. And then right now it feels to me like I'm not even sure that the core technologies we're using are the ones that enable the next step that everyone wants so i'll just use ai as an example i'm really unsure that llm technology is the thing that can build the ai systems that everyone's actually selling right we've invented a language model and maybe it will never actually reason and maybe we don't want to live in a video game where the ai models are fully hallucinating without any sense of what the player is doing do you see that gap right that's kind of what your book is about is that this is gonna happen in fits and starts but right now there's a lot of emphasis on one or two core technologies that might not be able to take the pressure of the expectations what you are highlighting the perception that transformers solve important use cases today that are much better than the solution we had a few years ago but don't scale has actually become increasingly consensus over the last six to eight months jan le coon who runs the ai division at meta is particularly clear about that he tells researchers starting their careers don't focus on llms john karmick is perhaps my favorite example john was one of the co-founders of id software he's considered the godfather of 3d graphics later he became the cto of oculus vr in 2014 and left in late 2022 he started his own agi startup and he has made this argument that he believes that all of today's technologies are incapable of getting to agi and he says all of the pioneers have been distracted by what he calls multi-billion dollar off-ramps and he doesn't besmirch anyone from doing that but he just says you're never going to get there if every time you see a multi-billion dollar tan you pursue it he has instead made the argument that he believes that actually many of the fundamental premises around agi from the 70s and 80s and 90s are actually a better pathway it's just that they were technologically impossible at the time due to multiple different constraints whether that was edge computing networks bandwidth capacity or just the scarce and poor availability of gpus at the time and so part of the point of the book is to talk about the end state of the metaverse chapter five is not just the definition of the metaverse it's the full spec metaverse the book itself is designed to tell you how we start to get to that end state but then to detail the many different uncertainties but i will say very conclusively that as critical as ai is to building the metaverse and despite the many ways in which today's transformer models multimodal llms can accelerate that path mostly that very different systems and fundamental architectures can be required you said full spec metaverse very quickly tell people you mean that so what i'm attempting to do is to define the metaverse not just by saying a 3d internet but to describe the expansive vision that when mark zuckerberg talks about this as a multi-decade transformation when jensen wong talks about a multi-decade transformation tim sweeney what are they actually describing i use a variety of different modifiers and the reason why i say this is if you say what's the internet it's the tcpip or internet protocol suite and so actually defining the internet technically is not a very good way to explain to the average person what the internet is instead we want to talk about the internet being a consistent cohesive comprehensive way of exchanging data across 110 000 autonomous networks 4 billion plus applications 150 million different servers and billions of end users and devices but what we don't do in that description of the internet is talk about scale talk about experiences talk about applications talk about hardware and so i've a full spec version of the metaverse it basically says it's a massively scaled and persistent 3d network that can essentially be experienced or co-experienced by everyone simultaneously at some sort of rendering requirement that we consider as basic visual fidelity comparable to the real world and where we can interoperate and maintain various forms of data our identity our payments our objects our history and that's an effort to set up that end state so that we can then walk back to what we lack today and then talk about the technological point solutions problems and hypotheses for closing those gaps so let me just come at that again from the lens of here's what we have today the vision pro which you said it's easy apple doesn't want it to have fully immersive environments even though those are the most compelling apps inside the vision pro the idea of it is that you will stay in your environment that you'll pass through information it's not building a simulation environment just passing through camera information there's some amount of they are involved in there it's actually not a lot which i think is surprising for that product in apple's enormous investment in ar over the years is that the kind of stuff you're thinking of or is it more immersive more vr-ish it's not more immersive and more vr-ish i think again this is why i talk about the internet protocol suite is we're experiencing the internet constantly we're not actively logging onto it it's running sidewalks it's running security badges in our office it's the way that our on-star guide in a gm vehicle is identifying the crash has happened and alerting the authorities we think of it as this again comprehensive coherent consistent network for the ubiquitous exchange of data across all forms of different applications devices and intelligent systems upgrading that to 3d now naturally when we talk about 3d and we talk about that end state vision where you have more consumer applications more time more people more often engaged in these immersive environments it is sensible that having a more 3d native interface is important and you can see that right we have a billion people a month engaging in a 3d real-time environment through roblox fortnight call of duty and so forth but if you haven't grown up with controllers in hands if you're not familiar with dual analog sticks it's hard and even if you have there are fundamental limitations to what you can do in those environments because button mapping is finite and the precision of all of those inputs is still mediocre and so we naturally assume that if you want to fully leverage 3d environments in the classroom in healthcare in design that you require full immersion into that environment you need full digital dexterity and that in order to get older generations and more use cases and you just require those devices doesn't require vr but it at least involves some form of eye-based device yeah it's very visual but that's kind of what i'm getting at right you gotta put something over your eyes you gotta put something on your head and that seems like where all of these plans kind of fall down because that technology is the one that has hit the clearest i wouldn't say dead end but the clear salt right yeah the best we can do and it's still very complicated very expensive and pretty fiddly and the utility doesn't overcome the fiddliness i'm totally with you i mean look i would say the vision pro it is clear that it is a remarkably crafted device that can perform some tasks far better than any other device and yet i think that those few things that it does better are far short of the things that it does worse and at the end of the day the big challenge for any of these head-mounted displays be it ar glasses or vr mr xr goggles is that the smartphone's big advantage is it was probably your and my second computer alongside a pc for most people on earth it was their first computer and that's also their first access pathway to the internet but for everyone today an hmd will be their fourth fifth sixth seventh eighth computer and right now those devices are very far from replacing your need to carry your smartphone or ipad or pc to and from work and out shopping and the few instances in which it does one of those tasks better it's not good enough to replace any of those devices and it's not good enough to warrant being held in your bag yeah i guess the comparison is really after right here we're going to give you a second computer in the united states and mainly in mobile generally around the world we're going to give you a first computer that is an excellent general purpose computer i think it was a ceo flatbury who said we didn't realize they weren't competing with us they're competing with your laptop and so you've got now you've got this excellent general purpose computers and eat everything else what you were describing is the actual reverse right we keep taking shots of the general purpose spatial computer whether it's the quest 3 or the vision pro or whatever else it is in the general case is too hard so we take even more expensive shots at like a vertical and those might be working but it's hard to see how you go from the very like targeted vertical expensive to the general like cheaper mass market i think that's where you get to the new horizon os strategy where that's metas os for the quest correct and they just opened it up to various partners you know in my interview with baas the cto at meta and had reality labs he talks about the fact that there are currently three different challenges facing xr devices and unfortunately they're a vicious cycle one is the price the second is the content and the third is the form factor and all three of those things affect one another right if you want to improve the form factor that typically means it's lighter and more comfortable that typically means it's less powerful and that's going to impede the content on top of that the more skews you have on form factor the harder it is for any content developer to make something one of the fundamental premises that apple had was that they can build a remarkable device that will enrich the content ecosystem but if you're disney as an example right now you can make something much much better that is just for the vision pro but the vision probably has 200 000 total unit sales and the quest has 20 25 million and so the trade-off means you probably want to build to the largest common denominator not to the top end of the market but that means you're not building pioneering content that is going to best demonstrate the vision pro and drive further adoption but the premise of the horizon strategy seems to be that general purpose device for the reasons i mentioned earlier is elusive and so let's instead do an ecosystem where if logitech wants to come out with 150 device that is super light that is only built on cloud or is designed to be tethered to an xbox or playstation only uses controllers and therefore doesn't need external cameras for hand tracking that that will best advance the ecosystem if a surgeon wants to build an enterprise version using the quest hardware they are never going to need hand tracking it's not precisely reliable enough so let's again ship that off that seems like it might be the best bet and would say that let's build a supply chain let's build a software let's build a highly fragmented ecosystem of software applications but collectively share the r&d collectively push adoption and maybe 15 10 years from now we can start to converge into the mythical device that we hope for and that of course will be the operating system vendor who takes these from everyone i mean it's a good strategy it's played out in various ways over time it's just very counterintuitive now and i would argue that like that is probably one of the challenges of the vision pro today is i mentioned the hollywood use case well the reality is putting aside that it's three and a half thousand dollars i like to remind individuals that in most developed markets the sales hacks on a vision pro exceeds the price to purchase quest 3 that's how large the price gap is it is a way over featured device 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happen on the software side to bring us closer to the metaverse the place where the metaverse might be most accessible to most people today is in games disney just gave epic a billion and a half dollars in february to grow fortnite to grow all the stuff that epic is doing to participate more there with relationships you talk about robots robots is huge the key piece of your definition of the metaverse or 3d computing is that these things will have to interoperate right you don't want to hand over your world to disney epic and then have a totally different identity maybe some people do but to build the kind of economy you're talking about the kind of experiences that you're talking about you definitely need some interoperability is there any hope of that coming because it doesn't feel like these companies aren't incentivized to do it yet so i love this question it's actually one of the more important reasons for the book update which is over the last two and a half years i think most people came away saying that was a bubble i certainly haven't seen the quote unquote revolution that i was promised meta's name change doesn't seem to have changed their trajectory now ai is at the forefront and of course blockchains have come and gone as a result i wouldn't begrudge people for saying like hasn't this been proven isn't it dead duly rejected by consumers the goal of this book is really to talk about the arc and progress of those technologies and i think that those very high level narratives have actually led to us overlooking the very important progress to getting to that end state interoperability being one such example through regulatory action most of all but separate from that actually new technology and investments at the platforms we are seeing that progress apple in concert with disney and pixar as well as their archenemesis epic epic's own competitor in unity microsoft and meta have established what jensen long has called the html of the members o usd as a file format for sharing and exchanging 3d information epic is now pioneering a programming language for the members called verse that various parties have attached to that includes transaction-based memory for the exchange of virtual goods the disney announcement alongside their lego partnership is clearly oriented towards off-platform exchange of not just world but user entitlements disney said that very clearly they're like we will operate sell and merchandise separate from the epic team even roblox has started increasingly open sourcing a number of their different technologies and apple for all of its prohibitions on the iphone and despite its protestations against regulators worldwide the vision pro is actually their most open device in quite some time they support open rendering standards such as web xr and open xr and if you can believe that they're now allowing enterprises with raw camera access speed even on the iphone a developer does not have raw access to what the consumer sees through their smartphones but they get to do so and then exchange share and locally store that information on or when using the vision pro and so the answer is look over two and a half years there's a real cap on how much progress you can see in interoperation you see more technological improvements and commitments to openness then you are likely to see actual commercial agreements and the amount of actual products deployed is going to be fewer still but i do think that there's been a great amount of interoperation since let's say this example it's simple it's understandable disney sells a lot of merchandise they sell a lot of toys and t-shirts and princesses i just want to do this world a lot of stuff the idea that i can buy that stuff in fortnite and it won't just go to roblox when i decide to play roblox right that i can buy these digital goods in one environment and they don't appear in the other one right now that's the status quo the turn is i buy them in fortnite and i have the same stuff in roblox like that's the first to my mind the first easy consumer turn there's a bunch of technologies that may or may not enable that but the blockchain is supposed to who knows if it will but those are the kinds of technologies wanting to do it is a different problem do you see any desire to want to do that because disney's giving the money to epic you have to assume you're going to want to see the return from their investment in epic versus okay now you can also buy stuff in roblox so there's a few different things there i think one that is perhaps understated because the data is really opaque is that we are starting to see a cap on how much individual users are willing to spend on cosmetics partly because what you would call a repeat purchase problem right like how many times are you actually going to buy spider-man skin right like it was very new five or six years ago you got excited you could be in spider-man avatar with your own backpack but once you purchased it nine different times in pubg in call of duty in fortnite your inclination to purchase it again goes down we're starting to see that there was a report the other day that's showing that epic is actually making fewer skins now than they ever did before with an increased reliance on third-party ip integrations and despite that fact sales are going down and so there definitely is a intent to open that up under the belief that if the utility of a purchase increases that the willingness to spend will go up and that more purchases will be will occur i will tell you first and foremost there are actually very few people who believe in the metaverse idea who believe that this is the leading use case right at the end of the day like great you can be peely the banana in more environments but it's not clear how important that is at the end of the day though that is actually where we see a lot of the progress being made gaming is where most people are experiencing sort of 3d internet the gaming industry is also in turmoil yeah there's more players playing there's more money flowing through the system and there's more game studios going out of business is that just an industry shifting towards okay all of the experiences are happening a handful of games or environments versus what we've been doing for years which is lots and lots of new games the challenges that the gaming industry are facing are manifold and that's why we're seeing such turmoil it's not just interest rates it's not just capitalism run amok it is a reflection of several years of accelerated growth followed by several years in which revenues have actually declined at a point in time in which the cost of labor has gone up a reflection of both justified increases in individual compensation or an improvement in work-life balance so you towards immunization but it's unfortunately been in parallel to a pullback in consumer spending it's remarkable to imagine that among every single major media category gaming is the only one that has contracted since the pandemic not stabilized at its prior levels but it's contracted and that has had pretty significant consequences that are also in contrast to what everyone expected there's not a single forecast you can find from 21 22 23 that didn't suggest that the industry was going to have grown tens of billions by now that it did not and unfortunately that has played down right to the bottom but at the end of the day what you're tipping your hat at is also true which is like any increasingly saturated mature channel a few platforms are increasingly powerful in every measure revenue profit the developer scale the profitable developer scale the predictability and the safety of incremental investments and their share of time data and consumer spend and that has made it very hard for all other games to compete i think one reason to be optimistic actually for interoperation especially from epic and roblox is that by opening up they're actually reducing some of the barriers to third parties to compete right one of the challenges if you're an independent game developer is you want to bring an entire friend network over to your new game and then you want to somehow convince them that even though they've only spent five minutes playing your game they should buy a spider-man outfit and they have to hope that they were even able to convince marvel to give them a spider-man license and so the hope would be actually from the epic perspective which is a platform not a content company though epic fortnite uefn like roblox and minecraft are becoming larger more dominant there's more user lock-in of entitlements and spend and time and player networks and avatars actually opening up will start to refertilize the rest of the game industry where do you think it's all goes next you obviously update the book you've been talking about both big changes and minor incremental changes i assume we'll have you back another year to talk about the next version of the book what are the things you're looking for next as markers of progress i think the big commercial deal or interoperation between the big platforms is the most important i think the interesting thing is if you take a look at 2015 to 2017 it's inextricably linked with the success of the metaverse in 2021-2022 it's no coincidence that satya nadella that tencent roblox unity epic and facebook all started talking about the metaverse at the same time and that's because a number of different things that happened between 2015 and 2018 all matured ipads became capable of running real triple-A video games we had the rise of battle royales a genre that has long been contemplated but had only recently become possible with consumer-graded gpus and with servers able to manage that synchronization we had a simultaneous rise of microtransactions and battle passes and then most importantly the floodgates on cross-platform blew open in 2018 strengthening this network effects of all gaming systems that shifted over and three years later we had a gaming world a digital environment that was very different than we had the challenge of that question now is there's few people actually expected that can bring an explosion to happen and actually now to your point on gaming most of the tailwinds have expired like there's no new games that are going to cross-platform battle passes don't seem to be lifting revenues anymore mobile is no longer growing social gaming has essentially reached all of its addressable market there was a hope that virtual reality that web3 gaming that the metaverse would be that next growth engine it hasn't happened yet i think there's a plausible case for generative ai which faces its own legal and ethical barriers but i don't know what that next big explosive moment is going to be yeah well we're gonna have to have you back when it happens let us know matt thanks so much for joining the show thanks for having me thanks again to mattie ball for joining us on decoder his newly updated and revised book the metaverse building the spatial internet is out next week on july 23rd your thoughts about this episode or anything about decoder you can email us at decoder at theverge.com we really do read all the emails you can also see me up directly on threads on and the end of tiktok check out this decoder pod it's a lot of fun if you like decoder to share with your friends and subscribe over your podcast if you really like the show hit the podcast review decoder is a production of the version part of the podcast network our producers are kate cox and nick staff our editor is cali right supervising producer liam james the decoder music is favorite master cylinder see you next time