Data & Dimensions | Ep. 2 - What Went Wrong in Meta’s Metaverse

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Neil Barbour: Hi, I'm Neil Barbour, industry analyst with S&P Global Market Intelligence. Welcome to Data & Dimensions, a podcast dedicated to exploring the transformative evolution of the internet into immersive 3D virtual spaces.  

Ian Hughes: Hi, I'm Ian Hughes, senior research analyst at 451 Research in S&P Global Commodity Insights, a science fiction author and an honorary Doctor of Technology. And I specialize in emerging technology for the majority of my thirty five year career. So, Neil, you've been out and about for this episode with an interview with someone I've known for a very long time, and who was extremely an influential reporter back in two thousand and six. When I met him, he actually interviewed me about putting the Wimbledon tennis championship into Second Life.  

Barbour: That's great. Yeah. That's right. Ian, I got to talk to Wagner, James AU about his book Making a metaverse That Matters, and his blog, New World Notes. And we talked about, um, why consumers are gravitating towards certain metaverse projects, why others are falling behind, some of the potential dangers in the metaverse. But before that, maybe we'll run through a few news stories that may or may not be related to the text at hand. You know, I'll sort of start us off here. On September twenty ninth, EA agreed to be acquired by Public investment Fund, Silver Lake and Infinity Partners for fifty five billion. They'll be going private after being a public company for, what, 20, 25years now? So they will be taking on $20 billion dollars and leveraged to get there. I've been working with fellow analyst Richard Berndes to size up EA sports rights portfolio and the costs that are required to make such games as EA FC, which used to be known as FIFA, Madden, EA, NHL. These are the really the core properties inside of the EA, the EA portfolio, and they drive a vast majority of the revenue. We were looking at what it costs to get those games across the finish line. So if you want to make a game like that, you have to license the teams and the players. They were spending north of like $600 million for the full ball of wax to get all of those sports games across the finish line. That's not such a big deal for EA FC and FIFA, which drives something like a billion or a billion and a half in revenue annually. Sometimes Madden doesn't do quite as well as that. It's a smaller property just because football is sort of confined to the US, um, whereas soccer is popular globally. Uh, so it's kind of a story where they're taking on additional leverage. They're operating with a company that isn't really growing its top line in the same way it was about a half decade ago. Uh, it may be interesting to see what sort of cost savings they need to engage with down the line to make this deal make sense on the other side, but I do want to pick your brain about what you think of their latest property, Battlefield 6, which is sort of being positioned as the real growth factor for EA in the next few years.  

Hughes: Yes. So Battlefield 6 is the flagship military shooter simulator multiplayer game that's up there to challenge against the main competitors there of Call of Duty. And it's released about the same time or just after this, this announcement of EA's being bought turned up. So they were they were ready with this, this asset to go. And it's an incredibly popular I mean, given we're at number six, it's clearly incredibly popular brand and it's been used for things like Star Wars as well. So people kind of have seen some of the Battlefield Battlefront stuff going on there. And um, there's only so many shooters everyone can play. So it's trying to trying to kind of capture people, grab them in on this one. And I believe there was whilst it's currently a sort of fully purchased game, it's one that is going to have a free to play piece the same as Call of Duty does. So that's, that's coming in the next month or so. And it will just be interesting to see who gets dragged into what.  

Barbour: Yeah, definitely. Like you say, I mean it feels like Call of Duty really cornered the military shooter market for the past half decade or so. Um, EA tried to put, uh, another Battlefield out one or two years ago. Kind of fizzled. It was dead on arrival. You know, they changed things around map sizing and loadouts and things like that. For whatever reason, it just didn't resonate with consumers. But this time around, it seems like they've really got their hooks in and they've sold seven million out the door or had seven million concurrent players within the first day or two. Um, and that's a pretty strong start for, for any game. Um, but you got to play it a little bit, right? I mean, what are your first impressions of Battlefield 6? I very much enjoy it.  

Hughes: There's a particular, um, thing with Battlefield that the environment that you're in decays with war. So buildings fall down, fronts of buildings fall down, rubble appears everywhere, which you tend not to get so much with Call of Duty. Call of duty is very much bullet holes in the wall and stuff. But static, fixed. So for maybe for pro players and stuff like that, knowing that you where everything is and it stays there can make a more predictable kind of pattern of play. Whereas this, this decay, I think, kind of causes it to be a bit more frenetic for everyone. So it may not suit the esports kind of side of things, maybe as much, but it is fun, which is the point of games. 

Barbour: Call of duty is typically 6 vs. 6 and Battlefield is what, 32 vs. 32, it's a much bigger environment. There's a lot of things going on at any given time.  

Hughes: Going up to 128 vs. 128.  

Barbour: Wow. That's great.  

Hughes: And yes, the vehicles. So there's jumping in helicopters jumping in jets. There's tanks. I think the latest maps that have just been released, which I haven't played yet. I think you can drive around in a golf buggy. So four of you in a golf buggy zooming around, and I saw something about there going to, um, kind of naval warfare as well. So that'll be speedboats and ribs and things, which will be an incredibly.  

Barbour: I remember that from Battlefield 3. They did more with the sea, but I don't, I played the beta and didn't see a ton of that. So that's cool that's coming later. I was a huge fan of Call of Duty Warzone, like a lot of people when it came out 2020, I think it was like, right when the pandemic was getting started, they launched it pretty much along with the global lockdown, and so it benefited from that to some degree. Um, but also I just thought it was incredibly well put together piece of software, a really engaging incentive structure. There's a lot of tension. You know, it was a battle royale, so it was building off of things that had been done before, but really executed in a fantastic way. Plus it had all the great gunplay that you had from previous Call of Duties. They've been refining that gameplay loop for 15 years. And it was, it was I think, you know, this is qualitative, I guess, but it plays better than Fortnite from a minute-to-minute shooting perspective. So I always thought that was a lot of fun. So I'm really interested to see what happens with their free to play battle royale. And it really makes a lot of sense that they need to. These games take a long time to stand up, you know, three, two, three years of development running multiple teams at the same time to get this thing off the ground. Um, they're thinking they can get more revenue than just these upfront purchases. They want to get those microtransactions that come from the live service games that really extended Call of Duty's life cycle as a revenue generating machine and be a more profitable game. Um, so that sort of leads me into the next story I want to talk about is, uh, Jason Schreier over at Bloomberg reported, uh, that Microsoft had set a profitability target for some of its studios, maybe most of its studios, maybe the whole portfolio, uh, 2023 of 30%. So we sort of contributed to that story with a few data points and some insights. Um, thirty percent is a pretty high profitability metric for the gaming industry. Uh, you know, EA has been there in some of its best years. Um, Nintendo was there at the back half of the switch one era. Um, but Take-Two doesn't really ever get there. Uh, Sony very rarely gets there. Now, some of this is apples to oranges because, uh, Sony and Microsoft and Nintendo have hardware in their stack, and some of these other companies don't, but kind of underlines how hard it is for some of these companies to hit these metrics. Any insight there, Ian?  

Hughes: Well, I think the challenge has been this, um, the rise of the triple A game or even the quadruple a game or however many A's we want to do, that they have become so, so big and needed so many people to, to build them for so long that it's clearly, if you've not got something quite right after you release it, you've you're in a in a world of hurt from, from profitability point of view. Yet at the same time, you get quirky little things come out from indie developers that just explode and become the most popular thing. And they're clearly making loads of money because there's like two people wrote them, you know, for a couple of weeks or a couple of years or whatever. If you're making two hundred million dollars off a game that costs ten million dollars to make or much, much less in some cases, that's fantastic profitability story like Balatro. I mean, Balatro card game, it's it is huge and everywhere, and everybody talks about it and people try and emulate it and things. And it's kind of the same that happened with Minecraft. Minecraft was, you know, a labor of love that eventually got became this multibillion dollar right thing when Microsoft bought it. But the, the that's kind of why they all stick with these franchises, isn't it? So they've bought the rights for something. We kind of everyone buys it every year because they go, well, I had it last year. I don't want to miss out. So they may or may not put anything fantastic in any of the new games. But, um, that that's at some point just wears out, doesn't it? And you kind of go, well it is interesting.  

Barbour: Yeah. Developing a sticky audience, it seems they have really captivated… EA has captivated like a FIFA audience. And it seems like every year there is a base level of the amount of people who will buy it and if it reviews well, or like there's a World Cup, then it'll sell a little more. But there's always a pretty good baseline of revenue that they can drive. Um, and similarly, Call of Duty seems to be no matter what the quality is, it sells a ton of copies. Um, but we have seen sort of, uh, a leveling off of that growth trajectory. So that baseline is set. And so the only way, not the only way, but the primary way that these companies are looking at creating a strong profitability metric now is cutting costs. Now you saw a company like Take-Two try to stand up these projects that you're talking about. Bring in a bunch of smaller developers, let them work, see if anything pops. And then, you know, EA had some of that too. It Takes Two kind of came out of a similar development project, um, which was a low cost, highly successful game. Um, but yeah, I think you're right. I think that as these companies change hands and, um, assets converge, that a lot of that stuff is going to be cut off and relegated to truly independent projects. And we're even tracking that in the private markets in terms of venture capital and private equity targeting smaller companies. And that's kind of going that's not doing so hot either. So, um, it could be an interesting time for developers, but the one safe haven they may… have safe haven on in quotes there… is that they could move their development assets over to these open platforms such as Roblox or, um, Fortnite or even Minecraft to a certain extent. You can make add ons inside of that platform, but as we'll talk with James in the interview coming shortly, those companies themselves are not extremely profitable, and most of them are kind of struggling to grow users, with Roblox being the main exception there.  

Hughes: I know this interview with James is going to be could be fantastic. So, um, so I guess that's the end of the news. On with the show.  

Barbour: Thanks, Ian. Today I have with me Wagner James Au, author of Making a metaverse That Matters, editor in chief of the New World Notes blog and the original embedded reporter in Second Life. James, welcome to the show.  

Au: Hey, Neil, good to finally talk to you on the podcast.  

Barbour: James, why don't you start by telling us a little more about the book Making a metaverse That Matters from Wiley Publishing, and maybe a little bit about the afterword you recently added to the project.  

Au: Yeah, I guess I could explain why it's called making a metaverse that matters is because when I was writing it, I wanted to coalesce basically twenty years of working in virtual worlds into what we've learned and what are the best lessons. And this was happening right when the metaverse hype wave was hitting again. Or actually, it was the second time it hit, um, with, uh, Meta talking about it and all the excitement about what Meta was building. And really, it's like, it's like they didn't learn any lesson from the last twenty years. So they were just going off. And we'll talk about that more in the podcast. But they were going off in bizarre directions. And so I was talking to my agent. I was like, well, let's let's not just say we're, you know, here's why the metaverse is great or whatever. Because first, uh, most people don't understand what it is. They don't have a clear definition. And secondly, they're not understanding why it's important, why, you know, people talk vaguely. Oh, it's the next generation of the, the the web or mobile. is like, there's a lot more to it. And especially on, I mean, on a cultural and social level. So I really want to express all of that. And that's why it's making a metaverse that matters.  

Barbour: Right. And so you write a lot about the long tail of the metaverse, going back to the days of Second Life and the early aughts. You know, again, you were embedded as a reporter in that, that virtual world. Um, you know, when you look at what companies like Meta and Roblox are building right now, you know, what are what are some of the specific history lessons that maybe they're overlooking?  

Barbour: Yeah, well, Roblox has actually been around almost as long as Second Life. They launched in 2006. So, uh, they didn't really take off like crazy until they went to mobile, which is actually one thing that they did, um, they did quite a bit right is they, they went to mobile, With Meta, and I get into this in the book in the new afterword, is they ignored so much of the wisdom that has been developed of what works and what doesn't work, which is very bizarre because, uh, as I explained in the book, the whole reason Meta, Facebook at the time, bought Oculus, the VR headset startup, is because  Cory Ondrejka, who was a co-founder of Second Life, he was a VP at Facebook at the time, and he convinced Zuckerberg to buy Oculus. And so that shifted that direction. And Cory, you know, explained how Second Life worked and why it was still so successful and what they learned. And it's like after he left the company in 2014, it's like they forgot all of that and they ignored me. And they had some other, uh, Linden Lab staff and, you know, John Carmack, of course, who's he's been trying to build a metaverse since Snowcrash came out and all of them were sidelined. Until you look the head metaverse guy at Meta, he has literally no gaming, 3D world virtual reality experience. Um, and so that's where they're at now. 

Barbour: Talking about Bosworth? 

Au: Well Bosworth doesn't. I forget his… his lieutenant underneath him also has no experience with that. So. Yeah, they're just throwing a lot of ideas in that are randomly based on some things that work. But really, you know, like, um, I mentioned in the, uh, new afterward, they, they got they panicked and saw that VR chat was way more popular in the quest than, than Horizon Worlds was. So they started imitating VR chat. And so, yeah, it's just uh, how backwards the whole project is at Meta has been. 

Barbour: So you sort of think putting the the hardware is, uh, first it was putting the cart before the horse, so to speak.  

Au: Yeah. Yeah, totally. Yeah. Uh, I mean, and again, I mentioned this in the book, they were warned that VR has so many problems about in regard to going mass market that, you know, like Microsoft researcher Danah Boyd mentioned, look, you know, she did research on it and it tends to cause, uh, women, uh, nausea. It tends to literally make them vomit. Um, and there there's very interesting there could be on a hormonal level, causing those issues. Uh, and she, she published this in a very prominent business journal, and it's like they never listened. And I, I checked with Meta to see if they looked into it. And I talked to like five people. And no, they didn't look into it. So they're they've spent tens of billions of dollars on a product that has no evidence that it'll go mass market, and it seems to cause half the population to literally spew chunks. Um, yeah.  

Barbour: So, you know, there's the democratization factor. You're sort of talking about that, um, Roblox leaned into going mobile and being multi-platform, and, uh, maybe Meta started with the headset and grew outward. I know, you know, horizon is available on more platforms now, but sort of had a disadvantage getting out of the gate. Maybe so. That's an interesting point on that. So maybe to flip that a little bit, what do you think developers are getting right about the metaverse? I guess you don't have to pick any one company, although it would be great to hear what you think Meta is doing correctly, if anything.  

Au: I really want to say something nice about Meta, but they just keep going in these very bizarre directions. Yeah. You know, like, I know there's some very smart people there. I'll definitely say that. But, um, you know, they're not the ones calling the shots, but, uh, you know, to say what's going right. Well, Roblox, uh, they were very smart, uh, from the beginning. They've had kind of like a Roblox. Like a Lego-like avatar. Is the Roblox avatar.  

Barbour: Sure 

Au: And that, I think, caused them to be underestimated by the game industry. They're still underestimated. As you know, people in the game industry look at these little blocky, Lego like avatars like, well, what? Why? That's not cool. That's not immersive. That's not high res. Why would that be so popular? But what they're missing is if you're a kid and most of Roblox users are, you know, in their, you know, between 8 and 13, le's say, you know, you're still figuring out your personality. You're still figuring out what your actual interests are. So you want a blank canvas of your avatar. Uh, and that's, uh, by contrast, there's a mistake many people make with metaverse platforms is you think you have to have a very realistic human avatar that is, like, super hot. And that actually contradicts one of the really unique values of metaverse platform, of virtual world, where avatars are, there is that people have a chance to remake themselves from scratch. And so it was very smart for for Roblox to do that in a similar way. VRChat, like I mentioned, it's it's vastly more successful on the quest on Metazoan platform. It's vastly more successful than Horizon Worlds. One of the reasons is they, the, um, they really encouraged the community to grow and build the culture from within the world. And what happened because of that? It tends to be people who are heavy internet users, early adopters of internet culture. So you go in and stereotypically, you'll see a lot of anime girls and a lot of furries, because those were the main subcultures that were on the cutting edge of internet culture, anime and furries. Right? And so they basically have pretty much everyone who's into anime and furries on VRChat. And so like I mentioned, I think in my afterword, I updated the by estimate, they have about 12 million monthly active users. So they're doing really well. Um, so yeah, those are two lessons to think about. 

Barbour: It can be a little intimidating for normies to wander into that atmosphere, though. I mean, it creates a certain ceiling to the mass market adoption.  

Au: Yeah, I've talked to them about that. Like giving them advice on how to, you know, expand a bit more from beyond that.  

Barbour: Yeah. And I think maybe I'll say something nice about Meta since maybe you're having trouble grasping it. But I do think that the horizon world that they stood up and when I was first playing there was that, um, there was that paintball like, shooter game they had.  

Au: Oh, yeah. Seemed to work pretty well.  

Barbour: Yeah. And you'd go in, I'd go in there and you'd, you know, it's proximity chat. Um, so people would be like, hey, what's up? Do you want to go try this other thing? I was, I was looking at it would be some… I remember somebody led me into like an RPG-type of scenario. Um, I mean, there was interesting, um, kind of networking going on, but, you know, speaking of, I guess just low ceilings, it did seem like it the, the traction that it was gaining on that level just sort of ran out of speed at one point. And to your point, I think it probably is the head room of the headsets that they were able to sell 20 Quest 2s is the most successful product they launched. And so that's the peak of your install base. Whereas Roblox can be on any phone. Yeah, yeah. Hundreds of millions, maybe billions, any PC. And then they finally got into consoles over the last couple of years. So. Right.  

Au: And they're on the quest as well, though actually not as popular on the quest. Last I checked.  

Barbour: So how does that work? There's a native quest Roblox app. 

Au: Yeah, yeah, it's in the app store.  

Barbour: Okay. Mhm. Yeah. You don't hear about that getting a lot of usage. They, they seem to have um for a while there it felt like they were giving and pushing developers to sort of embrace VR for a hot minute. And then they kind of banked out of that. Maybe they just saw the uptake and decided maybe it wasn't as big of a priority at that point.  

Au: Right. Yeah. Which is sad. I hope they do something with Horizon Worlds. Like I mentioned in the book, one thing is just give the whole project to a skunkworks team that operates separately from Meta and just let them do whatever the hell they want with it and hope for the best because they can't do worse than what they're doing now.  

Barbour: So what is a skunkworks team? I don't know if I've ever heard that.  

Au: like, um, you know, kind of in defense contracting. I think Boeing did this or Lockheed, they just had a team of brilliant geeks and just give them an office that's separate from the corporate hierarchy and let them do their thing. And a lot of great inventions come out of it.  

Barbour: It just kind of seemed like that was Carmack's role there. John Carmack, who was famous for, you know, standing up doom and Wolfenstein 3D. He worked at Meta for a while, you know this, I'm just saying for the benefit of our audience.  

Au: But, um, he got very frustrated to the point he was bashing the company during company speeches,  

Barbour: he definitely was critical, I don't know. Yeah, maybe bashing is fair, but yeah, they they would. They kept giving him space to do it at Meta Connect like three years in a row. They would give him multiple hours to talk about it, and he would. He would definitely speak his mind.  

Au: Yeah, he'd say, so we're building the metaverse. And I literally he literally rolls his eyes. He's like, okay. And he's like, well, why don't you just let him do whatever the hell he wants to do? Just give him $50 million and let him hire his own people and leave him alone. But yeah. So I'm it's mind boggling.  

Barbour: It is interesting, though. I mean, you talk about, like, you know, throw another fifty million dollars out the door. Neither Roblox nor Meta has been profitable in this space, neither through hardware nor software. Although I suppose if you were to peel out the software division Meta, maybe there would be a positive story to tell there. I'm not so sure. Um, so I mean it at this point, it's $50 million. Might be a, a small fraction of what? Au: Roblox has the other problem where they have a lot of users. I mean, it's roughly 360 million monthly active, something like that, So, you know, larger than the US, but it's just they have they spent so much money on R&D and security and all those issues, which we'll talk about that they're actually technically not making a profit. I think they may had a few quarters where they did make a profit, but yeah, it's uh, but,  

Barbour: I don't know, I'd have to look for that. Maybe  

Au: They're successful in terms of having just a huge install base.  

Barbour: Right. And it's kind of I sometimes liken it to the Netflix story of for, you know, quarters and years. Perhaps Netflix was not profitable or not particularly profitable, but they were operating off of investor money and to a large degree, and in the hopes that one day the numbers would flip and that they would be profitable. And, you know, you've seen those success stories sometimes and sometimes you don't. So let's get the Gen AI thing out of the way. I mean, where do you where do you see Gen AI and the metaverse experience? I know you've written recently, um, how a new prompt tool was kind of a setback for Rec Room. Rec room is a is another metaverse like platform available on Oculus and a few other spaces. 

Au: Yeah. So it's a really popular on Xbox. So they have a large user base. Um, the estimates I put in the afterwards, like about forty million monthly active. But, um, I think earlier this year they added a, uh, a wand tool, a gen AI prompt tool, and uh, with the idea, like, you know, anyone can use it, you just, you just put in prompts to create 3D objects. Um, but, uh, well, two things happen. So it just everyone started using it in Rec Room, so they were just prompting all kinds of crap into the platform, just all kinds of 3D objects, which, you know, causes a lot of lag, causes a lot of, uh, issues of incorporating that to interact within, you know, with multiple users. So it was causing problems there. It also took up a lot of bandwidth just because it was an LLM. So it uses a lot of compute. And then the even more fundamental issue is you. They had a they have a large user base of people who learn the in-world tools. Rec Room has a very impressive platform. They have an internal scripting system, an internal physics, and is really impressive. And people have learned to use those tools. And that's kind of what the metaverse on an essential level is about, is, is being able to create collaboratively and share the creation, also alter the world around you with the tools. So there's a sense of authorship and a sense of craft. And then so they're doing this and all of a sudden there's all these people just prompting a bunch of crap from nowhere. And so it kind of it definitely alienated user base. I talked to a Rec Room developer saying that, yeah, like, it just they the community, the developer community who make great content that people love. They just felt sidelined. So they ended up, uh, all the costs. They ended up laying off half their staff, which is crazy. And yeah, and Gen AI was a huge part of that.  

Barbour: Yeah. So you're kind of saying the, the core audience, which had become really adept at creating in-game items, felt alienated by suddenly what I guess exactly might call like the kipple that started to amass on the floor.  

Au: Yeah.  

Barbour: Um, yeah. I remember playing around with Rec Room in the early days and just being really blown away at those creator tools. It felt like the things that other platforms not to call Meta out again here, but Meta kept promising stuff like this. And then, yeah, you go to Rec Room and it was already all there. I mean, you could say that Rec Room is maybe more limited in the universe of things you could do, but maybe not. I'm kind of riffing there, but yeah. So you could see, though, I mean, you know, going back to about the profitability of these companies, um, you know, maybe AI is not the most, um, efficient driver of, of revenue. Uh, but, you know, you can,,, is it unrealistic for them to, to lean into the idea that these tools will get better, you know, through the crucible of public betas, or there will be this uneven spike in adoption. And then maybe over the long term, there's a there's a better growth curve to be harvested. I mean, do you discount that or.  

Au: No, I think it's worth experimenting with. I would say any I would advise any developer thinking of introducing AI. Gen AI is talk with your community first and get a read if they find this really valuable because uh, in Rec Rooms case, in other cases, I think they just kind of felt they had to put these gen AI tools in because the whole industry sort of decided that's where the future is with the jury is still very much out on how much of the future that's going to be. So definitely talk with the community first. And also think of introducing Gen AI in ways that doesn't, uh, alienate the user, the creators especially like, uh, there's a small startup called, uh, Nirik, or it's a game called direct, but it incorporates Gen AI. But to create the world, the background world, like you say, I want a candy world. And then, you know, all of a sudden the mountains will look like lollipops and so on. And that's interesting because it's not, um, it's not forbidding the use of UGC because you still have the UGC tools. It's just that the world logic, as it were, is, uh, built by Gen AI. So it's kind of like procedural generation, but, you know, it's prompted. So that's interesting. That's worth that's worth looking at. So things like that are worth experimenting with for sure.  

Barbour: So that's interesting finding a less disruptive way to import these tools and you know getting more buy in from the audience. Maybe not a bad idea. Yeah. So we've been tracking Roblox engagement recently as a data set that we've just sort of stood up as, as we see these numbers sort of continue to grow. You know, my thoughts on it personally were kept seeing this top line revenue expand at a pretty alarming rate. Um, and I just was thinking like, where's this all coming from? We were getting some, some vague notions inside of the, uh, quarterly reporting around, you know, they were more they were spending a lot on user acquisition. They were going into new platforms. Certainly pulling PlayStation in was a big bump. Um, but when we sort of took it down another layer, um, you know, it does appear that the platform is experiencing a big creative renaissance here, um, with a rush of new experiences steal of brain rot, grow a garden, drastically outperforming output from the previous two years. So, you know, before I want to talk about Roblox moderation issues, but do you have any insight on why Roblox is such a persistently popular part of the metaverse story?  

Barbour: I mean, we talked about it a little bit, but yeah, I mean, really, it's one of the first that was directly inspired. Uh, David Baszucki was inspired in college by the novel Snow Crash. So he's kind of had that vision. And and again, I said they took off because they're, they, um, they started as a PC client, but really took off when they went mobile. And so you have this immediately easy to use and, you know, for as broad an audience as possible. And so that really just made it very accessible, especially for kids, especially able to just jump in and yeah, you, you know, you play around in Roblox experiences and just really usable, uh, very easy to use interface. And yeah, it just really, you know, creating a great consumer experience first before thinking about all of the highfalutin ideas, at least from the immediate, you know, first time user experience, you're just you're just jumping into a game, you know, you're not getting introduced to a whole overwhelming concept of a virtual world or metaverse. You're playing these little games. They fit into a larger whole that you call a metaverse platform or virtual world. But yeah, and then especially with the success you're talking about, like Grow Garden. Also, I think it was partly also a policy change where the company allowed people to sell their games directly to third parties. So you'd have, like, literal kids, like teenagers who would build these really successful games, and then a small studio would acquire them and then grow it even larger, like Grow a Garden. So. Right. Yeah, that's really interesting.  

Barbour: Yeah. The ability for, um, more organized investment to get involved. Yeah, I do think sort of hyper charge this, this growth era. You know, I think about it too sometimes the way you, you jump in and out and move across worlds with not a lot of friction, um, you know, not a lot of loading either. It really does dovetail into sort of like the TikTok-ification of, uh, major media where you just sort of swiping and finding the thing you want. I mean, these, these experiences Steal a Brainrot and Grow a Garden, have grown into, uh, experiences that do seem to have stickiness to them, which is, oh, yeah, antithetical. But just yeah, the platform itself. Right, really lends itself well to that, that consumer mindset.  

Au: Yeah. It's got it's got a Meta, you know, like levels and achievement systems and so on. So those kind of are universal across experiences. So you do feel like you're part of a, a growing ecosystem and a growing community.  

Barbour: So let's talk about the lawsuits. Florida's attorney general has called Roblox a breeding ground for predators. And there have been other accusations of child exploitation. Uh, Roblox popularity obviously gives it a huge attack surface, but is there anything else going on here? What could Roblox do better?  

Au: Uh, yeah, it's a very unpleasant topic because it's child predators. But, um, really the main fundamental thing is anytime any service, metaverse platform or anything social media which identify recognizably has a lot of kids, you're going to have child predators. That's just inevitable. All of them have to deal with it anytime there's, you know, you know, like on like, say, YouTube and you see kids on videos and stuff, you definitely are going to have child predators. So that's kind of it's a broader issue. And it would be nice if we had a working government that would impose regulations. I mean, what will probably happen because the US is sort of, uh, kind of in a comatose at the moment, uh, the EU will probably impose some regulations and it'll kind of be, you know, we're going to have to follow whatever the EU says. And they can often be draconian. But that's a broader issue, is, is we as a society have not figured out how do you allow kids on the internet while keeping them safe from child predators and other bad actors? So that's just the broader issue with Roblox in particular. I just, um, on New World notes, uh, which is now a Patreon, by the way. Um, I interviewed a Roblox engineer, and it was one of the first interviews I was able to get someone. They were anonymous, but they were explaining it from Roblox point of view, which I found really fascinating, which is like, no, we spend tens of millions on security already, but we can't talk about a lot of things we're doing because that just helps the predators to figure out how to get around what we're doing. So. Yeah. And, and then a lot of the issues are coming from discord like, uh, or other external. You can't, you know, you can't even chat a link in, in Roblox. But what they'll do, the predator will get the kid to go on to on the discord or another service, and that's how they connect to them.  

Barbour: So scary.  

Au: A lot of it is not directly in their control, and then a lot of it they can't talk about. So I can see from their point of view it's like, well, we're doing everything we can and we're spending tens of millions. Uh, but, you know, we can't tell kids not to go to discord or we can't, you know, and we can't tell parents to keep a better eye on them. So there's kind of that issue. I think what's going to happen, though, is because Roblox keeps getting hit by lawsuits. They're going to add some additional layers of regulation, which, you know, would be nice. It would be nice to keep kids safer. But, uh, just to understand, I think from the business point of view, I do think they are trying as much as they can. It's just that this is kind of the first really, really big, uh, of any kind of internet experience to have a lot of kids, you know, like you're saying any anything with kids is going to be attacked. But Roblox almost like, has a, you know, a giant, uh, neon sign saying, child predators come over here. So that's, you know, the problem they have to deal with, inevitably.  

Barbour: And I'm sure they're balancing the idea of trying to keep the platform open and, um, you know, um, just a clean user experience with, with the idea of also trying to lock out bad actors and, and they're incentivized to do so, as you say. I mean, it's not necessarily, um, it would not be unique to, to this, um, administration or this government to, um, lean back in terms of regulating tech and then wait for the EU to move in. And then then the world has to fall in line with that because that's, you know, enough of the market where it doesn't make sense to have two different ecosystems. So, um, yeah, it'd be interesting to see how they follow this story. Or like you're saying, what measures will follow from, um, uh, from these events. Um, but, you know, you know, it's better for everyone, obviously, uh, if they can do as much as possible. And I look at things like, um, you know, my kids had a, uh, Minecraft phase recently, and, um, they, you know, we got them their own accounts and we were trying to manage them, and it seemed like if we would turn off all kind of connection to the outside world, then they wouldn't be able to play together or I wouldn't be able to join their server, you know, and I'm kind of in this, this space for a living. So you'd think I would have some, uh, ability to, to navigate it. And I had some ability, but not maybe not enough. So you can definitely see where, um, where the cracks are there. Um, and the issues.  

Barbour: So, you know, you and I have walked the floors of of metaverse and game development conventions over the past few years, you know, inundated with headsets and smart glasses, some good, some less good. You know, you've sort of made your statement about, um, sort of locking out half the population, but, um, you know, you're but you're not a big fan of XR interface hardware in general. Is that a fair assumption or am I overreaching there?  

Au: Yeah, there's a lot of interesting niche use cases. So I'm not I'm not anti XR headset. I think there are really interesting use cases that that the XR headset actually adds. It's just my, my sense just having looked at this for from different angles for years and years is it's not going to go mass market and we can't even expect it to go mass market. Even on a neurological and evolution level. I found this out talking with, um, expert from Harvard that, um, just the way we process information, it's very dependent on what environment we are in. So if we are in our home environment, we have a different way of processing information as opposed to being out in the wilderness, so to speak. And so when you when you create a layer of virtual information on your perception, it just it's not going to be processed as well as it would be if it was like done analog. So there's kind of these fundamental issues like that. You know, we've seen so many XR headsets and they all remain a niche. And you know, of course the price is an issue. But then again, you know, the Quest does have XR functionality. And, you know, it's still stuttered out at two 25 million. Like you're saying, even though, you know, it's relatively low cost. So there's all these issues that they're dealing with. And then, you know, Meta dauntlessly is still trying to push, you know, like with the, the Ray-Bans and then you come up against the other issues, the social issues, like how do you prevent creepy dudes from video recording women  

Barbour: The front-facing camera is such an issue to overcome.  

Au: Yeah, yeah. I asked, you know, we we have walked the floor and seen these, um, many XR headsets and I've asked every single one of them, how do you, how do you prevent the creeper dude problem? And they're like, oh, well, we got a light, a security light that pops up and so on. I just read there's a way of getting around the Ray bans for like $60 add on.  

Barbour: Oh, it turns the light off automatically?  

Au: Something like that, or it obscures it. Um, so people have already figured out how to jailbreak that, and it's just that, you know, you have the social issue that, uh, a lot of people in tech, they just kind of ignore that. Like they ignore that you're going to be imposing this technology on a pre-existing culture and a pre-existing, you know, uh, sociological mores. And you have to recognize that  

Barbour: They're hoping that societal norms change as well. I think I think they're looking at the conversation that we were all having a decade ago. It's like, well, everyone has a phone in their pocket and so you can't do anything anyways. Yada yada and 100 concerns that are born of that issue. And then, um, and, and then all of a sudden we're not talking about that or we're talking about a lot less, I think they're looking at and they think, well, maybe, maybe ten, fifteen years, we won't be talking about having cameras glued to your face all the time. I think that to your point, I think that's a degree of societal change that maybe will take a lot longer than the phone thing did.. I think that's also what they're reaching for.  

Au: Yeah, for sure. I mean, I, I wear contacts, I have to wear contacts or glasses. I don't like wearing them. So I don't know many people who like wearing them as opposed to I can't afford laser surgery.  

Barbour: Would elect to wear glasses… Well, that's the interesting. Let's take out the front facing camera. Do you think people will gravitate towards. Sort of like a low bore visual information, digital assistant type of hardware? Like. Like you would have a watch or something. You say, you know, this is the new watch. It goes on your face. It's called glasses. But, yeah, that idea is that they extend it from a wearable up from wearables, not down from XR.  

Au: Yeah, something like a wearable. I, I was writing a science fiction novel. Uh, and I had the XR. It wasn't a headset. It was a monocle. Like a steampunk monocle that you keep in your pocket. So a very pretty attractive thing. And when you need XR, you take the monocle out and you can look at, like, if you're looking for something at the store or something, I think something like that, that is, you know, a desirable consumer item, but doesn't require you to impose all of these, uh, constraints on it that, uh, you know, like the creeper problem. 

Barbour: We were just looking at, um, rounds of funding. And I think I brought this up in the last episode as well, but it really, um, really caught my imagination. There was a $250 million round of funding targeting a company developing, um, smart contact lenses. So, you know, they were capable of replicating the displays of other connected devices, but also have like, night vision augmentations and things like that. Um, I, I would assume those wouldn't have front facing cameras, although, you know, I may be making a leap of logic there. 

Au: So, um, yeah, I advise for one of them. And it was it was really cool. And the the amount of information that you'd see in the contact were really minimum. And, uh, yeah, I don't, you know, I have enough problem putting my own contacts in without them getting really irritating.  

Barbour: So I definitely have not been comfortable with contacts over my life. So yeah, it would be weird if you didn't have inborn vision problems. You could elect to wear contacts. Ian made the interesting point of would it be? Would it be more advantageous to that point to just replace your eyeball? Um, but maybe that's another 20 or 20 years out.  

Au: Cyberpunk 2077… 

Barbour: Absolutely. Uh, so, yeah, I mean, that's the end of, uh, my interview, I guess. Is there anything you want to pitch here at the end or any closing thoughts or. Yeah, yeah.  

Au: So yeah, I have the new afterword. It's a huge honking afterword about seven thousand words. Got a lot of interesting information after the book came out because of the book. Like, um, a Meta engineer quietly reached out to me and said, hey, you know, you're getting you're getting warmer with all the stuff you're saying Meta is doing wrong. But let me give you even more background. So I got a lot of interesting background there. Um, talk to a lot of other people at Meta and then and talk update what's going on with the metaverse platforms. And so, uh, updated the ecosystem chart, where I track how many users there are across the different metaverse platforms. We're at aggregate of over seven hundred million. So. Wow. You know, it's Roblox puts a lot of the other ones. And yeah. So the the afterward is there. I my my blog New World Notes went down recently because the software has been around for so long. So I moved everything. I moved the blog to my Patreon. Um, hopefully we can put a link in there. But yeah, it's just it's basically the same thing, but it's a patrion. So it's a newsletter and you can get it on your phone and, you know, hopefully feel like contribute a little bit to, to keep it running. But uh, yeah, I'll be doing that. I'm, I'm talking with some companies about building the next great metaverse platform. So hopefully I'll have more news to share soon. 

Barbour: Fantastic. Well, thanks so much for your time, James. Wow, a great summation of the opportunities and challenges in the metaverse.  

Hughes: Well as I told you, it would be interesting. Anyway, with that, this is Data & Dimensions: insight across every reality. See you next time.