Throughout this series on the rise of multiverse virtual worlds, I have outlined the collision of gaming and social media into a new multiverse era of social media within virtual worlds due to technological and cultural changes. The result will be a healthier ecosystem of social media than what currently exists and the economic development of these virtual worlds such that many people turn to them as sources of income.
The critical question that remains in this final part of the series: Who will be the dominant companies of this multiverse era who build the most popular virtual worlds? Will one virtual world achieve a monopoly or will there be many worlds we hop between on a daily basis? Will the most influential company be the developer of a certain world or an infrastructure layer underpinning many worlds?
(This is the final column in a seven-part series about “multiverse” virtual worlds.)
There are three categories of competitors in position for this new stage: gaming incumbents, social media incumbents and new virtual world startups.
I do not have a precise vision for which companies will rise to the top yet but I will raise key points to help us explore the landscape further. The most central question in the competitive landscape is whether it is more advantageous to start as a popular MMO (massively multiplayer online) game, as a dominant social platform or as a purpose-built platform built for virtual worlds created primarily through user-generated content (UGC).
Gaming incumbents poised for this next evolution are the ones that have already become UGC-driven social platforms, as well.
Most gaming companies will not seriously pursue this path because it is more about crafting a social environment and dealing with the complexities of a virtual economy than just creating a compelling game. The core gaming market is booming, so it will appear to be an unnecessary risk to change focus, even though the success of multiverse worlds will eat into the market for traditional MMO games to some extent. Their devoted customer base would be annoyed by a departure from the type of gameplay they have come to expect, and those game publishers won’t want to alienate their core customers.
The three open-world gaming companies that seem best positioned to evolve into the multiverse era are Epic Games (creator of Fortnite), Mojang (creator of Minecraft) and Roblox (creator of the Roblox platform), although each will face unique challenges in adapting. These three have become social hangouts for young internet users to a degree that they are core utilities among tweens and blur the distinction between socializing in the physical world versus the virtual world.
Roblox’s chief business officer, Craig Donato, spoke to this point in reference to focus groups his company has conducted: “Kids and teens today perceive reality differently. Rather than seeing a hard line between a digital and physical reality, they see one continuous one, and live with a foot in each.”
Fortnite is a hub for socializing among many people, though it’s still primarily oriented around a “battle royale” death match. Violent conflict between individuals isn’t likely to be what defines the top few most popular multiverse virtual worlds: that’s not the environment the majority of consumers want to socialize in or hop into when they have a few minutes free. Epic CEO Tim Sweeney, however, has implied that Fortnite will evolve into more of a UGC-driven social platform, and recently said that “…Gaming will be as much as a communication platform as an entertainment experience … Whether we like it or not we have to accept gaming as a platform for world discourse.”
Fortnite has generated the most mainstream press attention of any MMO in recent times, particularly from media reporters and bloggers who don’t normally monitor the gaming industry. The game’s main advantage in evolving into a broader social hub is that it has a diverse user base, a mainstream pop culture following, and a war chest of cash from Fortnite’s success to finance that vision. Fortnite’s inclusion here is more about what it hopes to do than what it has done. Fortnite’s last-known peak MAU (78 million in 2018) is still less than Minecraft and Roblox (each substantially over 100 million now), and the two are already more dominant as social hubs within their core age demographic.
Minecraft and Roblox are fundamentally different from Fortnite’s battle royale format: They already are platforms off which users create their own (Lego-like) virtual worlds and their users’ purpose is anchored in building worlds and cooperative problem solving rather than fighting. With half of Americans ages 9-12 playing Roblox and 68% of Australians ages 9-12 playing Minecraft (I couldn’t find a U.S. statistic), they are extremely popular among the youngest generation of Western internet users who will have the biggest impact on the future of social media over the next decade as they grow into their teens and twenties.
It’s unclear how much Roblox and Minecraft can grow into hubs for adult socializing, as well, because they have been designed for younger users and are under pressure to maintain a kid-safe environment. Even so, they don’t need adults to continue growing and be two of the dominant platforms for multiverse virtual worlds either. In fact, they have arguably already achieved that status given their market penetration and cultural relevance in the age 9-12 demographic. What remains in their progress toward multiverse worlds is the ability to have persistent worlds and far more than 100 users in a given instance, or shard, of a world.
Mojang, the Swedish company behind Minecraft that is now owned by Microsoft’s Xbox division, launched Minecraft a decade ago and has one of the most active “mod-ing” communities around its game, coding their own modifications to customize their worlds. Minecraft seems to attract far more late-teen and adult users than Roblox does. Minecraft is not free to play — an inherent barrier to achieving the market penetration of major social networks — and given it is already one of the most successful games in the world, its ownership may not be keen on fundamental changes to the business.
Roblox launched in 2006, but gained most of its current traction starting in 2013 after enabling game developers to convert into real money the Robux virtual currency from their games. By acting as a simplified game engine and social platform for users to build their own game and play others’ games, it has enabled young people to build fairly complex virtual worlds with limited coding ability and to earn real-world money from the virtual economies of their creations. There are more than 50 million user-created games on Roblox now, ranging from managing restaurants and theme parks to stopping bank robbers and taking care of adopted pets.
It’s a delicate shift to enable persistent worlds with thousands or millions of concurrent users on the same instance of a world. Minecraft and Roblox users would organically adjust to this possibility though, entering certain worlds that stand out as most popular and continuing to build and socialize in those top few. Most users who create their own worlds on these platforms right now would have to shift to creating a small part of a vastly bigger world, and there are technical and financial challenges to solve in enabling that at broad scale, but it already exists to an extent in both games.
Roblox tells TechCrunch that it has 10 games with over one billion plays and 5,000 games with over one million plays. There is already natural concentration around a small number of the top experiences, though according to Roblox’s Donato, the norm among active users is to explore dozens or even hundreds of different worlds on the platform.
Even the most popular virtual worlds within Roblox and Minecraft don’t come close to the vivid graphics, dramatic stories and player abilities of AAA console and PC games. Older users have a higher bar for those characteristics than tweens do. Many of the most popular games within Roblox — like Adopt Me! where users simulate being a family in a manner reminiscent of playing with a doll house — will be boring to adults.
If late-teens and adults will concentrate in more technically sophisticated multiverse virtual worlds in the future, could these two platforms’ focus on worlds built by amateurs and small teams of (young) professionals cause them to miss the opportunity?
Both Minecraft and Roblox are popular enough now that they have amassed massive social graphs and are paying out hundreds of millions of dollars per year to developers for games they have built on their platforms. That should make them increasingly attractive to professional game development teams. Yet, the whole economy of new virtual worlds would have to run through Minecraft and Roblox, limiting the control and financial upside of those development teams. Roblox in particular is unlikely to attract many top-notch game development studios if it continues to take a large majority of each game’s earnings (users buy Robux for roughly $0.01 each, so $1 for 100, but Roblox takes a 30% cut from developer earnings, then only pays out Robux at a rate of $0.0035 each, or $0.35 per 100).
Alternatively, Minecraft and Roblox may be the perfect platforms to give rise to the major multiverse virtual worlds specifically because they are simple enough (and have a low enough bar of artistic quality) that they are not intimidating to everyday people to build on, whereas a AAA-quality virtual world could intimidate users from contributing because they recognize how inferior their contributions are.
The companies behind dominant social apps will have a harder time building virtual worlds of the sort that come from gaming companies, but their existing popularity could allow them to succeed as one of the most popular virtual worlds by creating a very simple one that incorporates aspects of a user’s social profile. Or they could take a Minecraft/Roblox approach and build tools for users to create their own simple virtual worlds that anyone they invite can join.
Even if these companies don’t end up providing the virtual space where people socialize, they could still function as the universal social graph, identity verification and Real Money Trading system across different virtual worlds. That ultimately may be an even bigger business opportunity. It would be a natural direction for Discord, the voice and text-based chat platform for gamers, to evolve in.
Tencent has not demonstrated an initiative toward building something like multiverse virtual worlds per se, but it launched a free-to-play Minecraft competitor called Handcraft Planet, and, given its unique position as simultaneously one of the world’s most dominant social media and gaming companies, it could make a formidable play in the future. It is already a substantial minority owner of Epic Games, an investor in Discord, and a strategic partner of Roblox.
YouTube and Twitter won’t take this direction because it’s such a radical departure from their core function, which is less about socializing and more about distribution of traditional media content and hosting commentary that stems from that content.
Facebook is without a doubt the strongest contender among social giants to pull off building a popular multiverse virtual world. That is in large part because for years its executives have envisioned the future of social media as progressing toward immersive virtual worlds in virtual or mixed reality, and have been building toward it. The company already has a virtual world building initiative for socializing in VR — Horizon — and its acquisition of cloud game-hosting startup PlayGiga shows it is assembling the building blocks for a multiverse world.
Due to the long timeline before mainstream adoption of VR or AR hardware is likely to happen, Facebook will end up orienting Horizon toward mobile and PC users. Facebook also holds the enviable position that it can afford to buy any gaming company it believes has a major advantage in becoming a dominant virtual world or platform for virtual worlds.
Beyond incumbent companies, a wave of startups are vying to create the leading UGC-driven, socializing-centric virtual worlds. Klang Games, Darewise Entertainment, Singularity 6, Clockwork Labs and Novaquark are among those who’ve raised millions in venture capital for yet-to-be released projects. New types of cross-platform, cooperative, multiplayer games like those being developed at Elodie Games or Embark Studios could gradually become competitors here too.
Linden Lab, the studio behind Second Life, has launched a new world called Sansar that is centered on hosting live events like concerts as its strategy to acquire new users who will then hopefully explore the world, socialize and want to come back. (Second Life itself is unlikely to see a major resurgence due to the technical challenges of evolving it substantially, its “has been” public perception of not being cool and the plethora of erotic content allowed on it.)
Klang’s CEO Mundi Vondi talked with me about what his team is building (and Northzone partner Paul Murphy) at TechCrunch Disrupt Berlin in December. Their virtual world is called Seed and sets the context of humans arriving on a new planet to restart civilization. Your family’s survival and well-being depends on accomplishing more daily tasks than you can do alone, necessitating collaboration with others nearby and increasingly complex social coordination as more users arrive. Users will be able to create and vote on agreements with each other, enabling business and political governance to develop, all the while defending themselves from threats of nature and rival communities developing elsewhere in the same world.
Given the goal of creating a captivating virtual world where all of a person’s friends spend time, starting with either a captivating virtual world or a social graph with everyone’s friends are each massive advantages for large incumbent gaming and social media companies. That said, crafting a multiverse virtual world requires a fundamentally different approach than creating a traditional MMO or 2D posting-based social app (though it’s closer to the game development side for sure). There is a compelling case for new entrants in the market that craft multiverse virtual worlds from scratch to beat out those large companies.
Will multiverse virtual worlds be a winner-take-all or fragmented market?
Network effects will drive people to concentrate in a half dozen multiverse virtual worlds, but there will be a strong segment of the market right behind them with many niche worlds. Unlike broadcasting-based social apps, multiverse worlds offer deeper interaction with a smaller number of people, so there’s little benefit to being in the same world as acquaintances you don’t care about interacting with. So the landscape will look something like the distribution between countries in our physical world: a handful of particularly dominant, highly populated ones and dozens of smaller ones coexisting.
In any case, people will constantly move between different virtual worlds, however, depending on their mood or interests at the moment.
- There will be numerous virtual worlds in part because the more that a virtual world comes to equal the social and economic traits of the physical world, those not substantially benefiting from that will seek a new realm to escape to. A virtual economy so big that major brands and investors from the real world flood in to take advantage of business opportunities will naturally drive entrepreneurial people to seek new frontiers.
- Another factor is users’ ability to take their contributions to or assets from one virtual world to another. This is a challenge for developers of virtual worlds — both the technical interoperability and the interference outside assets could cause in the world they’ve crafted to look and work a certain way. Expect different virtual worlds to take different stances in the importing of outside assets; this will be like differences between countries in what goods are allowed to cross the border.
- Multiverse virtual worlds popular in democratic countries and those popular in non-democratic countries, will likely exist in isolation from each other. The bifurcation of the global internet into a Western internet and a Chinese internet is already underway and poised to continue, given international politics. China blocks Western social networks and, increasingly, games from its economy and aggressively censors the content created by its domestic gaming companies and social media users.
There will be many popular multiverse virtual worlds, but will there be that many different companies? One company could build or acquire multiple virtual worlds, or — like Minecraft and Roblox already do — allow anyone to build new worlds off their platform. Consolidation into a handful of dominant companies seems likely as a natural course of business.
There are two paths along which this market could evolve, and they are not mutually exclusive:
- The first is vertically integrated virtual world companies that build the underlying world, create the core frameworks for users to generate content, create a trading and Real Money Trading platform and build compliance infrastructure. Their own underlying IP defines the experience, as with Minecraft.
- The second is a specialized, disaggregated path where each of those functions contributing to a virtual world are provided by different companies. Platforms for building virtual worlds — perhaps something between a Roblox and Unity — will allow developers to tap into social graph, trading and compliance tools from others. If there will be many popular multiverse virtual worlds, the largest companies could be the ones providing the infrastructure layers rather than those crafting the worlds themselves.
In any case, Facebook, Tencent, Mojang, Roblox and Epic Games are the most interesting large companies to track in the rise of multiverse virtual worlds right now, and over the next 12 to 24 months, we are poised to see how much popularity new virtual worlds by startups like Klang, Darewise, Singularity 6 and others gain.
Virtual Worlds EC-1 (Special Series) Table of Contents
- Part 1: “Games already are social networks“
- Part 2: “Why social networks want even more gaming“
- Part 3: “What virtual worlds in this transition era will look like“
- Part 4: “Why didn’t this already happen?“
- Part 5: “Multiverse virtual worlds will be healthier for society than our current social networks“
- Part 6: “Making money from games: The future of virtual economies“
- Part 7: “The companies that will shape the multiverse era”
Also check out other EC-1s on Extra Crunch.