Creator Economy of the Metaverse - Roblox, Unity, Unreal and more!

Unknown: In this video, I'm going to be talking about the Creator Economy for the Metaverse.

Jon Radoff: Now, in previous videos, I've talked about what the Metaverse is. It's about real-time activity. It's the next generation of the internet, and it's powered by a huge increase in the number of creators. So, that's exactly what I'm going to be talking about here. Doing this means supporting creators with tools that simplify the creation process, but also makes it possible for them to earn a living in the Metaverse. That means giving them systems that turn their creations into a sustainable business. So, what I'm going to be covering in this video is, first, how have Creator economies evolved up until now? Because it didn't begin with the Metaverse. It's everything from desktop publishing to game development to everything in between. So, I want to talk about that because I think that informs how this is likely to unfold in the Metaverse. And then I'm going to talk about three of the most important Creator Economy companies in the Metaverse. And that's Epic, Unity, and Roblox. I'm going to talk about their different approaches that they have to Creator economies, what they have in common, and what we can learn from them. So, let's talk about how Creator economies tend to evolve. This is played out in a similar pattern in almost every Creator-led industry within computing. We can see this going back to desktop publishing, to web development, e-commerce and now game development, and in the future, the Metaverse as it continues to unfold. Now, I see it going through a few very distinct eras. It starts with the Pioneer Era. The Pioneer Era is all about being first to the market, really. It's about showing up at the right time when there's enough of a market and building an early market lead. Now, when you're a pioneer, you have to build an awful lot of the technology yourself. So, it means bringing in engineering teams, creating some of the basic infrastructure, really doing everything. And the reason it's worth these massive R&D investments a lot of the time is because you are earliest. Now, some of the companies that were like this, there are some of the real household names today. That's companies like Amazon, Pixar, Zingha, Electronic Arts, Supercell. These are brand-name companies that have built enormous businesses by being early enough and really pioneering with their own R&D and building it from the ground up. The next era is what I call the engineering era. Now, once these companies have arrived and they're having a lot of success, they attract a lot more capital, a lot more competition, lured by the opportunities in the space. This is often accompanied by a diaspora of engineering talent into new companies, but there's a problem. There's not nearly enough engineers who have expertise in this. There's not enough product management expertise to go around. It's just not enough hands-on experience. So, the whole industry that tends to evolve at this stage in this engineering era is the developer frameworks that help people optimize the needs of engineering teams. So the common themes here are that most of the experience is being created, tend to be sustaining innovations rather than truly disruptive, meaning they're learning from and building new businesses that are subtle changes away from some of those really big successes. Sometimes they're disruptive, but more often than not, they're cash-on-cash businesses. They're more about effective execution than innovation and there's enormous innovation going on though, and that's the tools and technologies that are enabling this. Remember, in the engineering era, it's largely about engineers needing to be a lot more productive so that they don't have to build all of the same services that they can create more scalable systems. There's been a huge number of winners in this. In games, examples of this are APIs like DirectX and OpenGL, which enabled some of the first 3D graphics systems. More broadly, it includes things like MySQL, MongoDB, Financial Transaction, Gateway companies like Stripe, Application Frameworks like Ruby on Rails and Node.js. That tends to be the companies that really succeed in the engineering era because what they're doing is building technologies with broad applicability to a lot of different problems that engineers are trying to solve. Now the third era, and this is where it truly becomes disruptive, is the creator era, and that's because individuals and very small teams suddenly are able to compete in very large markets that were previously involved very massive engineering investments or engineering centered approaches, like we were talking about in the engineering era, where the teams were engineers with a lot of tools and they were building things from the ground up. Development in this stage is very different than that, whereas in the engineering era, things tended to be building blocks assembled from the ground up. The tools here tend to be more visual, they're top down, they're more geared towards productivity and workflow than assembling components together. This is where the most truly explosive growth can occur, not just for individual companies, but across entire industries. So some of the companies that have built some of these things, their companies like Adobe, Shopify, Wix, Roblox, Twitch, YouTube, Unity, these are the companies that have really figured out how to enable entire industries to grow and flourish. Unity I think is a really great example of this. Unity came along and made it possible to build games much more easily. So you got a game like Among Us for example. Among Us was built by three people. One of the largest games that existed in the last couple of years. Even big publishers like Blizzard, they used Unity to build Hearthstone, which is a billion dollar plus product today, built with a very tiny team by the standards of Blizzard or Activision. So this is what the Creator economy is really about. It's about creating that Creator era where far more people, smaller teams, even individual people get to participate in the business of creating content and experiences for people. It's happened to desktop publishing, it's happened in e-commerce, it's happened in website development, it's happening in games and it will be happening in the metaverse. Now there's three companies that I really want to explore in a little bit more detail because they're companies that have investments in many layers of the metaverse. I've talked about the experience layer, discovery, spatial computing, the Creator economy which we're talking about.

Unknown: Now, these three companies are Unity, Epic and Roblox.

Jon Radoff: These are three companies that have a huge role in many of these pieces and in the Creator economy in particular, but they're very different companies. So let's explore them in a little bit more detail. Now Unity is a company that makes a technology called a 3D engine. What is a 3D engine? A 3D engine is what allowed us to go from this world of graphics programmers building up the 3D graphics experience of a game to now making it a visual system where storytellers and artists and game designers actually are much more actively involved from a top-down perspective. Things to have to do very low-level programming down APIs called DirectX, an OpenGL to actually create a game. Today, you've got a visual environment which helps you coordinate the art, the animation, the game experience, the features that you want to have. Most of the time, you don't have to really be too concerned with the hardware and the GPU and all of the systems that exist underneath. The new Unity comes from the platform that they've created, the 3D engine, but actually most of the revenue at Unity today comes from their ad network. So I think it's important to understand that when we're talking about Unity, yes, it's a 3D engine, but the business model is to take that ad network, aggregate it across a huge number of games that they have enabled the creation of through the Unity 3D engine and then also allow game developers to participate in that ad network as a means of generating revenue for themselves.

Unknown: That's Unity.

Jon Radoff: Next there's Epic. Now, Epic and Unity compete with each other for the 3D engine technology. They have an engine called Unreal. They're also very well known for Fortnite. That's probably how the general public really thinks about Epic. This makes them very unique amongst the three companies I'm talking about because they're the only one of the three that actually has made investments in the experiences themselves. Fortnite is a world-beating success. Huge numbers of people play Fortnite every day and that makes Epic a very different company because not only are they creating the economy for people to make more games, they themselves make games. They're in the game business. Now, the 3D engine that I was referring to unreal, it's very popular with what's called AAA games. AAA games are those big Hollywood-esque game productions as well as many other games as well, but that's sort of where they have found their biggest opportunities because these are the companies that need really advanced visualization and really advanced 3D and even ray tracing, which is where Epic has invested a lot of their R&D. Like Unity, they're also in the discovery business, by the way, but instead of doing it via an ad network, they built something called the Epic Game Store where they charge a revenue share to anybody who sells a game or an ad purchase through it. They also earn royalties from use of the Unreal Engine, so you can build on top of the Unreal Engine and then pay them a portion of your revenue as you go to market and earn some success with customers. The last of the three companies that I want to talk about is Roblox. Roblox is like a large multiplayer universe entirely populated by the content created by the builders in Roblox. That's an important thing to understand. Some people think of Roblox and they think it's a game. Roblox is not a game. Roblox is a whole metaverse of its own. I talk about there being lots of metaverses. The metaverse is not just one thing. It's a multiverse of metaverses. Roblox is one of those. They are not a game. The games are made by the people who go and set up shop, essentially in Roblox. Part of Roblox is like a YouTube for games. It's a way that if you're in Roblox, you can discover all of the other stuff that you might want to do. You can see what your friends are doing. You can jump from game to game experiences. You see that your friends are doing something else. You can see what else is popular. It's the whole development framework that they provide, which is built around their own 3D engine and their scripting environment that makes it very, very easy for people to build content for this. No much about Roblox. Talk to almost anybody under the age of 20. They ought to be able to fill you in. You'll see what the next generation does with this. My own kids attend. They have built Roblox content. Along with Fortnite, Roblox is one of the major use cases of pocket money for young children in the metaverse. What are the challenges? That's what I'm going to talk about in a future video. I want to leave us thinking about it a little bit. A lot of the metaverses that are being built today, they provide you development tools, discovery mechanisms. They provide you with a walled garden where you can set up shop. I think one of the biggest opportunities for the metaverse is really giving that ease of development, making it easy to build a game or an experience as it is in Roblox right now. But really with the freedom to build a live game or a metaverse experience anywhere you want, distribute it however you want, monetize it however you want without asking for permission or necessarily having to fit into a particular kind of community. That's the big opportunity of the metaverse because that's what's going to really make the creator economy for the metaverse huge, is enabling everybody everywhere to participate

Unknown: in it.

Jon Radoff: So in conclusion, look for an influx of tools and technologies that are going to make it a lot easier to participate as an experience or a game creator in the metaverse or to mod and extend the experiences made by other people. That's what the creator economy is all about. And I'm really eager to see us go from the five million people that are on Unity today, the couple million builders in Roblox to an exponential increase in creativity all over the world as that number gets bigger and bigger and bigger and real time activities and experiences just become part of our society. Alright, if you enjoyed this discussion on the creator economy, please subscribe, click that notification bell or follow me on Twitter where you can stay up to date on the enormous innovation happening in the metaverse. Until then, thanks for watching, I'm very grateful for your curiosity on this and I look forward to the next time.