Metaverse Industry Special Report: Large factories have successively deployed to promote the development of the industry

1. Metaverse overview

1.1 Metaverse: A virtual world parallel to reality

The Metaverse was first proposed by Neil Stephenson in his science fiction novel “Avalanche” published in 1992. The work constructs a virtual world that is parallel to the real world – the Metaverse. The description of the Metaverse in the book is a virtual world composed of computers and networks, in which humans can live together with virtual humans through VR devices.

1.2 Technical Support of the Metaverse

1. Computing power technology: including spatial positioning algorithm, virtual scene fitting, real-time network transmission, GPU server, edge computing. It can support a large number of users online at the same time, improve accessibility, and reduce network latency. 2. Artificial intelligence technology: AI can reduce the threshold for user creation and improve the scalability of the Metaverse by optimizing processes and methods. Computer vision, machine learning, natural language processing, etc. provide the Metaverse with a combination of reality and reality, enhancing the diversity of the Metaverse.

3. Video game technology: game engine-related 3D modeling and real-time rendering, digital twin-related 3D engine and simulation technology. Games are the first field of the current Metaverse, and players can rely on video games to obtain virtual identities in the Metaverse. 4. Interactive technology: Through VR, AR, XR, etc., the user’s immersive experience is continuously improved. Building a virtual immersive reality experience ladder through technological upgrading is expected to realize the somatosensory interaction between the real world and the virtual world. 5. Blockchain technology: A virtual currency based on a decentralized network to achieve digital ownership and verifiability. NFT is the value carrier of digital assets in the Metaverse, enabling users to own the ownership of virtual items, and is expected to achieve multi-platform interoperability. 6. Internet of Things technology: NB-IoT+4G+5G, which meets the requirements of access in various ways anytime, anywhere. (Report source: Future Think Tank)

1.3 Metaverse’s Industrial Chain

The Metaverse industry chain can be divided into a technology end and an application end. The technology end is supported by hardware and software technology, and the application end is driven by user needs. The technical side needs computing power technology, artificial intelligence technology, interactive technology, blockchain technology, video game technology and Internet of Things technology to support the access and operation of the virtual world. The application side is guided by user needs and develops new applications by grasping the pain points of users. The applications that are created can achieve the substitution effect of the real world, and these applications make up the ecology of the Metaverse.

On the application side, games are the first field that Metaverse has tried to implement. Interactive technologies such as VR and AR are used to enhance the immersion of users participating in the virtual world, and NFT technology is used to build the economic system in Metaverse games. In the game, users can obtain virtual identities and socialize with other players. At the same time, developers build a diversified game world for users through continuous innovation. The applications in the other three aspects are also quite rudimentary: the entertainment aspect is committed to the ultimate immersive experience of personal entertainment, blurring the boundaries of traditional online and offline entertainment. Use 3D technology and holographic technology to create virtual people, and create virtual KOLs and virtual idols to realize monetization. The social field explores game-like interaction scenarios, uses virtual identities to socialize in the Metaverse, and realizes new social modes and approaches. In terms of office work, VR and other technologies are used to create remote office interaction scenarios. Facebook has launched a VR conference APP; BMW uses Nvidia Omniverse as the base of its technology platform to build a digital factory.

2. The application of the Metaverse in the field of games

The original charm brought by the game meets the human fantasy to try things that cannot be done in reality, and the Metaverse will go further to meet and expand this need. Under the high immersion brought by VR equipment and the vigorous development of the UGC game community, some products in the game field have appeared basic Metaverse underlying logic and virtual experience, which is one of the first areas of the Metaverse.

2.1 Prerequisites for game products to access the Metaverse

1. Editor The editor is a tool that encourages players to be creative. The function of the early editor is more inclined to the level editor, which includes the classification of game maps, game plots, and game scenes. In general, editors are software designed for level creation in video games, and developers are happy to open editors to players for free, attracting potential players and encouraging players to create games together.The launch of the editor provides players with more creative space. The digital world of the Metaverse game needs to be filled with things to do and content to consume. Players can create and edit freely. Ideally, the virtual world can be continuously created by AI. Players will focus on self-realization in the Metaverse.

2. Social function Social function refers to simulating a certain environment, satisfying the needs of players with high frequency or high quality, so as to make players feel different. Establish various interpersonal relationships between players, such as friends, mentors, husband and wife, enemies, etc. In a mature game system, players can interact with real friends through games, and can also make unfamiliar friends through game platforms. Game products with social functions can introduce more players through players, and at the same time, social functions make players more closely connected and increase user stickiness.

Metaverse Industry Special Report: Large factories have successively deployed to promote the development of the industry

3. Economic system The economic system in the game includes the behavior of output, transaction, accumulation and consumption, and virtual currency will be introduced when the economic system is possessed. The output of game resources corresponds to the production behavior of economic activities in the real world, the transaction of game resources corresponds to the exchange behavior of real life, the consumption behavior of game resources corresponds to the consumption behavior of real life, and the game virtual currency and reality are realized through the consumption behavior in the game. purpose of currency exchange.

4. Decentralized content does not serve a unified goal. All users are both participants and creators, ensuring the independent and efficient content creation of UGC and the stability and transparency of the economic system. The feature of Metaverse content creation is that UGC has no threshold and efficient creation. On the basis of decentralization, content creation with huge amount of data created by people can be reflected in the Metaverse in real time. While centralized content creation is similar to the current game world, there is always an invisible hand restricting the possibility of people’s creation, thus losing the same creativity as reality in the Metaverse. If the Metaverse becomes a centralized operating system, the organizer will be able to obtain additional resources and become a monopoly, and the monopoly has the right to charge fees for any transaction, thereby stifling efficiency and innovation, and deviating from the original intention of the Metaverse. Ideally, a decentralized clearing and settlement platform and value transfer mechanism can better ensure the attribution and transfer of value, and achieve stable, efficient and transparent operation of the economic system.

2.2 Game product types applied by the Metaverse

Open-world MMORPGs, sandbox games, and UGC game platforms are all prototypes of the Metaverse. At present, UGC is the closest direction. 1. Open-world MMORPG Compared with stand-alone games, MMORPG has a continuous virtual world; after the player leaves the game, this virtual world continues to exist in the host server provided by the online game operator, and continues to evolve. In order to improve the interaction of players, MMORPG establishes various interpersonal relationships between players. Open world MMORPGs generally have higher picture quality, but there is still a gap between them and VR immersion, and the content is produced by the official, but the gameplay is limited by the official game developers and only supports the internal circulation of virtual currency, social interaction is mainly to add friends and online.(Report source: Future Think Tank)

2. Sandbox games turn players into the game to change the world with their own power. Most sandbox games have no main storyline. Generally, players’ survival is the first goal, exploration and construction are the second goals, and finally, they change the world to achieve a certain achievement. For the ultimate goal, such as “Minecraft”. Sandbox games have UGC features and open-world exploration functions, but the sense of immersion is weak, and social interaction still remains in adding friends and online.

3. The UGC game platform Roblox has a high degree of freedom in content creation. The Roblox platform enables developers to output more content by providing platform infrastructure and technical support, thereby attracting more users to pay for content and more developers to settle in, thus forming a positive cycle. As the economic system forms a closed loop, players can use currency to consume content in the game, and can also exchange for real currency, with online meetings, Party Places, virtual concerts and other social interaction methods. It is expected that in the future, XR+engine+AI+UGC will help the game to continuously upgrade to the Metaverse. The UGC game platform is currently the closest content product to the Metaverse, but it lacks in immersion. XR technology enhances the sense of immersion, and the clarity, immersion, fluency, interaction, and comfort of the device determine the popularity. AI can automatically generate and edit supplementary related content, and the engine provides content producers with various tools needed to write content, greatly reducing the production cycle and cost of future content.

3. The exploration of the Metaverse by industry giants in the game field

3.1 Roblox: The Pioneer of Practicing the Metaverse

David Baszucki and Erik Cassel founded Roblox in 2004, the first company with the Metaverse as its main attribute. Roblox by introducing a new model of social interaction (“human co-experience”), where users use the engine provided by the platform to develop, publish, and run self-designed content, inspired by but not limited to games, entertainment, social media and even toys , so that the imagination and creativity of users that cannot be realized in reality can be realized in the virtual world, and at the same time, a business closed loop connecting the virtual world and the real world is constructed. At present, more than 50 million users from all over the world use Roblox to play, learn, communicate, explore and expand friendship every day, and there are more than 8 million active developers forming a development community. and developed 3D digital world. At present, the Roblox Human Common Experience Platform consists of Roblox Client, Roblox Studio and Roblox Cloud.

1. Roblox Studio: It is a tool for users to build, publish, run and operate self-designed content, developed using Lua language. The engine emphasizes ease of use and convenience. Zero-based developers can also use the engine to develop content, with a very low threshold for getting started. 2. Roblox Cloud: It is Roblox’s self-built data center. Currently, all Roblox games are running on its own servers. Roblox’s hybrid cloud server architecture based on its own infrastructure provides users with stable and high-speed connections.Combined with Roblox Studio, Roblox Cloud provides a convenient game experience at any time, and provides developers with a convenient development environment, allowing developers to focus on content production, thus attracting many developers. 3. Roblox Client: It is an application for users to explore and experience the content of the 3D digital world in Roblox. The platform supports multi-terminal intercommunication such as mobile, PC, host, VR, etc., and can adapt to the access of various types of terminals and systems.

1. Core Strengths Roblox’s core strengths are primarily derived from two complementary network effects: content and social. Originally built by Roblox’s first developers (users), user-generated content powered the platform’s development. As developers publish more high-quality content, the platform attracts more users, and the more users on the platform, the higher the development engagement, and the more attractive Roblox is to users and developers. With the increase of users, more and more high-quality content will be available on the platform, which will further encourage developers to design more attractive content, and encourage new developers to start building on the platform to achieve content-incentivized content. A virtuous circle.

Platform developer revenue will reach $538 million in 2021, a nearly five-fold increase from $112 million two years earlier. At the same time, the Roblox platform is social. When users join, they often choose to play with real friends, which turns their friends into Roblox users, who in turn invite their friends, driving organic growth. The more friends each user has on the platform to play with, the more engaged and valuable the platform is. More new users are attracted to the platform through word of mouth from existing users on the platform.

Metaverse Industry Special Report: Large factories have successively deployed to promote the development of the industry

Roblox has a large user base, active users have a long average daily usage time, and user stickiness is outstanding. According to the company’s financial report, the average daily active users of Roblox in the fourth quarter of 2021 will be close to 50 million, an increase of 33% from the fourth quarter of 2020, so as to maintain a relatively stable growth under the premise of a large base of users. In terms of per capita daily usage time, driven by the epidemic in 2020Q2, the average peak reached 2.9 hours, and then gradually stabilized to about 2.5 hours, with outstanding user stickiness.

2. Business model When users register Roblox, they can explore some of Roblox’s functions for free, and the rest of the functions require users to experience by purchasing a specific “currency” of Robux. Users buy Robux with real-world currency, enjoy developer-built content, or use Robux to buy items like clothing, accessories, and emotes from the platform’s Avatar Marketplace. Roblox takes a portion of each Robux transaction as a fee and sends the rest to developers. Robux can only be purchased from the platform at the price set by the platform and can only be used within the platform. Apart from daily and monthly limits to prevent fraud, there is no cap on the amount of Robux a user can purchase. Robux has no currency or intrinsic value outside the platform and can only be exchanged for USD through the platform’s developer exchange program.

Users can purchase Robux in two ways, normal purchase or purchase through Roblox Premium. The latter is a monthly subscription service that includes discounted Robux, some exclusive experience offers, discounted marketplace items, and the right to buy, sell, and trade certain avatar items. Roblox accepts payments via app stores, credit cards, and prepaid cards. In the fourth quarter of 2021, there were an average of 11.9 million monthly consumer users, and the user repurchase rate reached 89%. By earning Robux, that is, developers receive payments as users for virtual goods through the Roblox platform, there are currently four mechanisms for developers to earn Robux:

(1) Selling their creative experience; (2) Consuming users’ experiences in the developer’s virtual world; (3) Selling creative content and tools between developers; (4) Selling items to users through the Avatar Marketplace. Among them, when a user purchases Robux and then experiences consumption in the developer’s virtual world in Roblox, the developer will receive 70% of the user’s cost in the experience as a reward; when the user purchases the developer’s products in the Avatar Marketplace, the developer will receive Receive Robux for 30% of the purchase cost. Earned Robux will be credited to the developer’s virtual account, and they can exchange Robux for USD at the rate determined by Roblox in its sole discretion.Developers aren’t all about cashing out their Robux into real-world currency, some choose to reinvest Robux into the Studio Marketplace’s developer tools, promote their wares by purchasing Roblox’s internal ad network, or use Robux like a user buy items.

3. Future Layout Roblox aims to change the way people around the world express themselves, socialize, play, learn, work and trade. The key growth strategy expansion of the platform in the future is divided into platform expansion, user age group expansion, international influence expansion and monetization extension. (1) Platform Expansion: Revenue continues to invest in hardware development of the Roblox platform, including investments in high-fidelity avatars, 3D spatial audio technology for more realistic experiences, and other social features. These investments will enable Roblox to support a significantly enhanced user experience for entertainment, learning and work. For example, in the future developers will be able to host virtual concerts on Roblox, and office workers can use Roblox for work meetings.

(2) User age group expansion: The current users of the platform are mainly teenagers. In 2021, users over the age of 13 will grow rapidly. In the third quarter, the number of DAUs over the age of 13 will exceed those of users under the age of 13. In the future, it will further promote the expansion of the age population and achieve user Age breaks. As the platform expands, developers can build higher-quality experiences and content to appeal to all age groups and even the elderly, with the ultimate goal of becoming a platform that serves all age groups. In 2021, 40% of the top 1000 games will be adult users. (Report source: Future Think Tank)

(3) Expansion of international influence: In 2021, overseas DAUs will grow rapidly, among which DAUs in Asia-Pacific and other regions will grow significantly, reflecting the trend of globalization of users. Future plans come through word of mouth user and developer growth in markets such as the US, Canada, and the UK. In addition, the development brought about by investing in technology will also contribute to the growth of international influence. For example, features such as automatic translation and built-in regional compliance will enable the platform to expand in global markets, allowing developers to publish content in multiple languages. And built-in translation software to achieve barrier-free communication between users in different languages. At the same time, it has seized the Chinese market through Robles, a joint venture company with Tencent.

(4) Monetization expansion: First, cooperate with developers to help them improve their profitability; second, launch the subscription service Roblox Premium, which is committed to increasing the conversion rate of free users to paying users, and ultimately retaining paying users; Finally partner with leading brands to build unique marketing opportunities on the Roblox platform. Warner Bros. Pictures, Netflix, NFL, WWE, Marvel and FC Barcelona have all introduced branded content on the Roblox platform.

Metaverse Industry Special Report: Large factories have successively deployed to promote the development of the industry

3.2 Tencent: Deploying the Metaverse with Social Advantages

1. Social ecology Tencent has the largest number of social platform users in China. In 2021, the scale of WeChat users worldwide will be 1.26 billion, an increase of 1.6% month-on-month. At the same time, Tencent has a strong foundation in social, gaming, corporate office and other fields. Cosmos reliable user drainage guarantee. Tencent launched the QQ show function as early as 2003. It is a pioneer in domestic virtual characters, which can give users virtual images and has the potential to combine with the Metaverse.

2. Technological construction Tencent currently focuses on three major components: underlying architecture (development engine Unreal Engine), back-end infrastructure (cloud services, big data centers), and content and scenarios (various types of content products and a mature social network interconnection ecosystem). The above all focus on the layout of the Metaverse. The underlying architecture: Unreal Engine renders the virtual world, and Snap creates the mirror world. XR (VR/AR/MR) is the first entrance to the Metaverse world. Although Tencent does not directly deploy XR hardware, it has invested in Epic Games and Snap to occupy a favorable position in the VR/AR ecosystem. Unreal Engine helps render virtual worlds, Snap helps create a mirror world. A series of development tools represented by Unreal Engine help developers render the entire virtual world.

Back-end infrastructure: To build a cloud game ecosystem, IDC will be the “infrastructure” of the new infrastructure. To C side creates a full-cycle cloud gaming industry solution, providing users with a full-link cloud gaming platform and ecosystem. Tencent Cloud Cloud Games relies on Tencent Cloud and adopts Tencent Cloud’s deeply optimized video transmission technology Tencent-RTC. It is the first platform in China to realize “full-end access and seamless update” without custom SDK. Game manufacturers, platforms, and game developers provide one-stop cloud game PaaS solutions for terminal games + mobile games.

To the B side, Tencent Cloud deploys full-scene IDC capabilities, with the goal of “infrastructure” for new infrastructure. In 2018, the company adjusted its strategic direction—Tencent Cloud connected the C-side consumer Internet resources to the B-side industrial Internet through a pivotal connection, took root in the consumer Internet, and further embraced the industrial Internet. In 2020, Tencent Cloud announced a number of technical and business plans for its ultra-large-scale data center cluster management, automated operations, and the construction of green and reliable data centers. Facing increasingly complex business scenarios, Tencent Cloud has built a family of IDC products including integrated cabinet, T-MDC, T-Block, customized IDC, Tencent Zhiwei, training and certification, consulting, etc. Meet the diverse needs of customers with a full-scenario IDC service ecosystem.

3. Core Advantages Tencent has the top two best user aggregation tools in China: WeChat and QQ, and the largest number of users; using channels to gather users in its hands is a guarantee for Tencent to obtain high income steadily; organically integrating channels and games Combined, get high liquidity, and finally make money in the game. The Metaverse has a strong appeal to a platform-based economy like Tencent. Many of its products can play an infrastructure-like role in the Metaverse era, which can help Tencent achieve the goal of connecting everything, and transfer the film, literature, and music it has reserved. , IP and other products are injected into Tencent’s Metaverse. In 2019, Tencent and Roblox established a joint venture, Roblox China (Roblex), with the aim of creating a Chinese-based Roblex.

4. Business layout Tencent’s multi-channel layout, betting on various tracks of the Metaverse, and creating an ecological closed loop including live broadcasting and e-sports around games is a good foundation for the formation of the Metaverse. The company has strong R&D strength and is good at social + competitive categories of big DAU. The long-term performance of the head products “Honor of Kings” and “Peace Elite” has provided the company with rich experience. etc. have also invested and formed a rich product line around the Metaverse. The 2021 Tencent Games Annual Conference is centered on the strategic concept of “super digital scene”, conveying constructive thinking on game cognition and industry boundaries, and through the centralized release of more than 60 game products and content, showing that the initial Tencent Games brings players. rich experience and diverse values. Judging from this conference, Tencent Games is blurring the category boundaries. Competitive, leisure and dimensional fields are still the focus of attention. 4 of the more than 60 games are “Metaverse” concept games, which are more than 2020’s “Handmade Planet”. ” and “Iran Island” have 2 more models.

Roblox is a Roblox released by Tencent in the mainland. It is also the most important Metaverse concept product at present. It will be temporarily closed for repair in December 2021, and the specific opening time is to be determined. Roblox’s servers in China and abroad are not interoperable, so the national server of “Roblox” is still in its infancy, and the follow-up performance is worth looking forward to. (Report source: Future Think Tank)

3.3 ByteDance: Creating a Metaverse game that adapts to the domestic environment

1. Growth path In April 2017, Douyin launched VR social related products and functions, which can generate cartoon forms by capturing users’ facial expressions. AR scan, AR interaction, AR filters, etc. are widely used in Douyin, Tiktok and other products. Since 2019, ByteDance has successively invested in a number of Metaverse-related technology companies such as Shenji Intelligence, robot 3D vision technology service providers, vision and artificial intelligence service providers, and acquired Pico in August 2021. On the basis of enjoying the original services, more content support and technology upgrade services will be obtained in the future. Pico will be incorporated into ByteDance VR-related businesses, and the Pico Neo 3 store will be able to experience Douyin and Toutiao through an all-in-one VR machine. In the past two years, Byte has begun to lay out games. In April 2021, it will invest 100 million yuan in the game company Code Qiankun, which focuses on the concept of the Metaverse. In August 2021, “Restart the World” will be officially launched.

2. Core advantages (1) Using the same Lua language as Roblox, the difficulty of user development and creation is low. Using the idea of ​​short video production, the system provides tens of thousands of free materials, allows the import of finished models, and provides hundreds of interfaces, greatly reducing the creation cycle. Games launched on the UGC game platform do not need to apply for a version number, which greatly reduces the restrictions on creation. (2) The incentive system provides generous rewards: the signer system and the work subsidy system are introduced to encourage creators to continuously innovate content.Code Universe is willing to package excellent works on Apple’s shelves and enjoy a 50-50 share (Code Universe only charges about 20% of the share).

(3) Localization improvement: Compared with “Roblox”, “Reboot the World” has carried out localization improvements suitable for China. Due to the domestic requirements for minors’ anti-addiction restrictions, “Reboot the World” no longer uses Roblox’s audience positioning as Teenagers, and developed through the word of mouth of classmates and friends, turned to the Roblox mode, adding comment and room mode, increasing the possibility of communication with strangers in the game, and making it easier for users to find game partners. In order to maintain the enthusiasm for the game by meeting new people in the game. Byte can bring creators and players to “Reboot the World” through its good user positioning and data portraits, and make up for the shortcomings of the product in social and identity. As ByteDance’s first product to enter the Metaverse, “Restart the World”, with a mature team and product ecology and proper localization, this cooperation will most likely enable Byte and Code Universe to achieve mutual benefit and win-win results.

Metaverse Industry Special Report: Large factories have successively deployed to promote the development of the industry

(This article is for informational purposes only and does not represent any investment advice from us. For relevant information, please refer to the original report.)

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