-Andrew Macken
Sir Tim Berners-Lee devised the concept of the World Wide Web in 1989. Since then, the “internet” has become completely ingrained into our daily lives, in all of its various forms. We wake up each morning and read our smartphones or ask our voice-assistants for real-time updates on news, weather and traffic conditions. At work, we rely on a vast array of connected software applications which are based in external cloud networks. Even our phone calls increasingly run over the internet. We shop online, message friends online and stream music online. We pay for our coffee, book flights and bet on sports on our smartphones. At night, we order our home-delivered meals on our smartphones and stream video on our connected smart TVs.
Back in the 1980s, it was nearly impossible to imagine what the internet would become by 2021. The “Metaverse” is really a concept of what the internet will become over the coming years and beyond.
The vision for the Metaverse is that humans will increasingly live in a growing collection of spaces – both physical and digital – that mesh together seamlessly. Similarly, our social lives will increasingly span the physical and real-time 3D digital realms, as will our economy. And importantly, the Metaverse requires everyone to be able to create and contribute content and experiences.
On the one hand, this vision sounds futuristic. On the other hand, it sounds like it is already here. This is certainly the view of John Riccitiello, CEO of the leading games engine Unity Software and former CEO of games publisher Electronic Arts: “I’m already in the middle of the of the Metaverse…” But what’s going to change over the coming years, according to Riccitiello, is that “… the Metaverse will increasingly be real-time 3D.”
That is, it will rely heavily on 3D, virtual reality (VR) and augmented reality (AR) content. And the generation of this content relies on sophisticated games engines – of which, there are really only two with long-term viability: Unreal Engine, owned by Tim Sweeney’s Epic Games, which also owns Fortnite – the video game and virtual world that has taken Generation Z by storm; and Riccitiello’s Unity Software – a Montaka portfolio holding – whose engine is today responsible for the creation approximately 70% of all global AR content, and approximately 90% of all global VR content.
We are already starting to see these high-quality 3D digital experiences creep into our lives. The Mandalorian movie was created using a 3D world generated by Unreal. And Alphabet’s machine learnings business, DeepMind, rapidly trains its AI models using 3D worlds with defined physics created by Unity’s engine.
We are also starting to see AR-based advertising and products. Gucci has started to sell AR sneakers, for example. (Indeed, Unity has separately observed that their AR-based ads were so engaging that game publishers refused to use them because they took players away from playing their games for too long. Other digital ad platforms will happily welcome such engaging ads).
And, of course, much has been written recently about Facebook’s efforts to build the world’s next computing platform using VR and AR technology. Apple is naturally pursuing this ambition as well.
This is where the human experience is heading. And it has been named the Metaverse.
While we continue to build our understanding of the Metaverse, we are confident that owning large swaths of its critical underlying elements will help us achieve our long-term investment return objectives. Today, Montaka owns Tencent, Unity Software, Epic Games (via our Tencent holding), Facebook, Spotify, Microsoft, Alphabet and Jio Platforms (via our Reliance Industries holding). All of these businesses are making meaningful contributions to the emerging Metaverse and we expect will grow structurally and profitably with this evolution.
Andrew Macken is the Chief Investment Officer at Montaka Global Investments. To learn more about Montaka, please call +612 7202 0100.
