A Metaverse will allow for individual validation within a corporate environment through the association of four key capabilities:
Digital Built Environment. The digital built environment is the representation of the physical surroundings that provide the setting for human activity. A Metaverse provides a powerful, online, 3-D and 4-D representation of the physical workplace.
Interaction. Inhabitants of a Metaverse are known as avatars or residents. They can be representatives of staff or customers; and personalise an individuals’ interaction with the information being sought.
Navigation. Natural search occurs when the capability exists to spatially move an avatar through a digital environment. Today, the power of spatial search is self-evident and highlighted through applications such as Google Maps.
Collaboration. Social and information networks are created when two or more parties can openly and freely exchange information. They are also the basis of contemporary, decentralised digital economics (e.g., blockchain). Organisations are increasingly moving to incorporate emerging social technologies into traditional collaboration environments for decades.
The choice of a Metaverse would seem obvious for large organisations looking to move away from a process view of information. Building or construction analogies are already used to deal with the abstraction of information within their complex physical environments. It is, for example, a key principle of enterprise architecture. As a result, the decision to utilise a metaverse as a channel is ultimately not a big call.
The Metaverse will Require a Paradigm Shift
As a presentation layer, a Metaverse makes navigation and discovery easier and more intuitive. Adopting this new approach would allow a completely social and familiar way to interact with information. It would provide organisational benefits beyond the current capabilities of traditional data and process-driven environments and become the catalyst for major differences in the treatment of enterprise information. The interactive context of a Metaverse will also require differences in the way information is expressed.
Although the tech industry is strewn with concepts of “exchange” and “collaboration”, such terms are really actions that occur after an audience has engaged with the content. The Metaverse approach potentially addresses this challenge by first getting users comfortable with their environment before encouraging them to interact in it with others. Using these differences as key drivers, the creation of a Metaverse can focus on delivering a platform for personalised information discovery, specific to the responsibilities and opportunities for individuals within an organisation or broader ecosystem.
This is just one example of the Metaverse and enterprise. There are many others. For example, think about fully integrated asset management platforms used by retail property groups or airport corporations. The Metaverse will now allow these organisations to commercialise their full physical retail assets in a digital metaverse by offering tenants both a physical store and a digital store. Or even offer the digital space to a whole new portfolio of different tenants. The commercial upside of such models is significant and sure to drive investment.
Overcoming the challenges of introducing a new information delivery channel seems like a difficult transformation choice today. Ultimately, this is the transition choice of Web 3.0. It is one that acknowledges that existing process-oriented channels will fail to meet the primary drivers and demands underpinning the growth of the new Web 3.0 world: individualism, personalisation, and decentralisation.
Yes, virtual reality environments are a super-appealing channel because of their immediate visual gratification, but behind that façade, the monetisation of physical, commercial data and the continual rise of infonomics is what it is all about.
Microsoft announced their intentions to acquire Activision Blizzard for USD 68.7 billion, creating quite a buzz in the Gaming and tech industry. The acquisition is set to be completed in 2023 and according to Microsoft is well set to fuel “growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse.”
There have been a few animated discussions at Ecosystm on Microsoft’s potential monopoly in the Gaming industry, whether it is aligned to their ‘Metaverse plans’ and the challenges that Microsoft is likely to face with the acquisition. Here is what our experts have to say.
Impact on the Gaming Industry
Activision Blizzard is the publisher of some of the most popular games around – loved by both hardcore and casual gamers. The acquisition of franchises such as Call of Duty, Overwatch, Warcraft and Diablo – as well as mobile games like Candy Crush and Hearthstone – demonstrates Microsoft’s commitment to what is now the largest medium of entertainment.
Microsoft is clearly focusing on growing their software revenue. But most importantly, they will be able to integrate these popular titles within Game Pass. This allows them to compete more actively with Steam and Epic Games Store but as a subscription-based model. The Game Pass model has proven extremely popular with gamers (with approximately 25 million gamers spending USD 10 per month to subscribe to the service), so this will continue to bolster their market position and increase users and revenue.
The latest Xbox Series X/S are the fastest-selling Xboxes ever – even with chip shortages and logistics challenges. The majority of Microsoft’s gaming revenue comes from hardware now. This acquisition will inevitably drive hardware growth, as well as increase gaming software revenue from both a subscription on Game Pass as well as outright purchases.
Microsoft’s Bigger Play
Microsoft made a great start by acquiring key titles like Doom in 2020. The go-to-market strategy through subscriptions and gaming as a cloud service is well managed. Last year when Microsoft relaunched Flight Simulator, the Ecosystm review spoke of how Microsoft wanted to be the “Netflix of Gaming”. They just fired another big shot in that battle by announcing their intention to acquire Activision. With a USD 69 billion price tag, it is probably more of a ballistic missile than a shot!
There has been a lot of conversation (including at Ecosystm!) on how this acquisition makes sense. Microsoft’s revenue from gaming sales is said to be USD 11.5 billion on an annualised basis – and Activision’s revenue is estimated to be USD 7.7 billion. The combination will obviously be huge, but is it worth so much? It is!
The reason for that is today’s leading buzzword – the Metaverse. As people live more of their lives in an online world and interact more with their peers online, being a leader in that “universe” is the key to the future. The Metaverse occupies the spaces of work, play and socialisation which have all gone increasingly virtual.
For Microsoft, this really translates into how relevant their cloud is to the Metaverse. This is a world where one can play using Game Pass, work on Office 365 and store everything on OneDrive. This pervasiveness is key to Microsoft’s consumer strategy. On the enterprise side, they have a dominant share, especially with Office 365. This will see them gaining strength in the consumer business.
Challenges for Microsoft
What a bargain for Microsoft! When Microsoft made the USD 95 per share offer this week Activision’s market value was about USD 51 billion. While the premium that they are offering was almost 50% of the share market close on the previous trading day, they are getting market-leading content for about 10% less than what Activision was worth in February 2021. A year in which the pandemic continued to increase demand for online gaming.
However, this leaves Microsoft with three significant challenges.
First, they have to get regulatory approval in the different markets in which the two companies operate. Microsoft has advised they expect the deal to close in late 2023, so it looks like they are expecting some interesting discussions over the next few months. This acquisition is a significant consolidation of the Gaming market, so regulators will look at the deal closely.
In addition, regulators will also look closely at the privacy implications, with Microsoft gaining access to millions of gamers’ personal details to add to the personal information they already hold from their other divisions.
Second, they have the challenge of addressing the sexual harassment issues that caused the drop in Activision’s market value. There are court settlements under appeal, and reports talk about 40 people leaving Activision since July. Integrating the large teams into Microsoft will need careful attention.
Third, retaining the talent in Activision may be a challenge for Microsoft as I would expect their competition to be actively approaching Activision’s key creatives.
Unless these challenges are handled well, the company they bid on may not be the company they acquire.