Nov. 12, 2020

Want to predict the future? Look to gaming

You might not know it, but the video gaming industry has long been the harbinger of life-changing, widespread tech we almost always take for granted.

Now that the gaming industry has gone all in on metaverses—the alternate realities built online complete with social experiences and their own economies—what does it mean for the future of consumer tech? 

If you’ve ever pondered a future in which your online life is just as rich and fulfilled as your IRL one...which it probably will be in due time...listen to this episode with gaming expert and consumer tech investor Ethan Kurzweil, partner at Bessemer.

This is a good one. Don’t miss it.

Check out more about Remote Works


Transcript

Kinsey Grant, Morning Brew business editor and podcast host [00:00:08] Hey, everybody, and welcome to Business Casual. I am your host, Kinsey Grant, and by the end of this episode, I might just be a gamer. So, let's get into it. [sound of a ding]

 

Kinsey [00:00:18] Last episode, long-time Xbox vet Larry Hryb explained why gaming really is the next frontier in our attention economy. We are spending an [chuckles] ungodly amount of time on video games, and nearly 40% of the world's population is expected to be active gamers in the coming years. It's both cause and effect of our increasing propensity to live extremely online. 

 

Kinsey [00:00:39] We are approaching the junction at which we'll have our physical lives, but we'll also have lives online that are just as rich, delivered straight to us care of the gaming industry. We'll be living in what the pros call the metaverse. I'll define exactly what that is, or better yet, my guest will define exactly what that is, in just a second. But, think about the money you spend and the friends you make online. Really, you're helping to build this metaverse world already. 

 

Kinsey [00:01:04] And much of that is thanks to the gaming industry, which has been an accelerant of tech for ages now. And Travis Scott playing in Fortnite was really just the beginning. What I want to know now, though, is how we got to this point. When did we make the jump from playing Tetris to creating full and fulfilled lives in engineered universes with their own economies and social structures? And what are these new worlds mean for the future of the gaming industry, and all other media, for that matter? 

 

Kinsey [00:01:30] To help me figure all of that out, I am excited to welcome to Business Casual Ethan Kurzweil. Ethan, welcome to the show. 

 

Ethan Kurzweil, partner at Bessemer Venture Partners [00:01:37] Thanks for having me, Kinsey. Good to be here. 

 

Kinsey [00:01:39] We are excited to have you here. You are a partner at Bessemer Venture Partners out in San Francisco. You focus on consumer tech and these kinds of really sexy, cool startups that really shift the ways that we interpret entertainment and gaming and so much more. And we have a lot to unpack here with this whole metaverse conversation. I mean, it has the word meta in it, which has to mean something, right? [laughs]

 

Ethan [00:02:02] It's a very meta concept. 

 

Kinsey [00:02:04] Very meta concept. 

 

Ethan [00:02:04] We can go meta on the metaverse in that we might never end this podcast if we did that. 

 

Kinsey [00:02:09] Seriously, we really could. We really could. And I'm excited to get started with it. Let's have a little fun. Are you ready to go? 

 

Ethan [00:02:14] Absolutely. Hit me. 

 

Kinsey [00:02:16] All right. Here we go. So this is the word that brought us together here, this metaverse. I want to know what it is and how we have come to associate the metaverse with the gaming space. Can you help me do that? 

 

Ethan [00:02:28] Yeah. I think the concept has its roots back in sort of, you know, popular fiction—Neal Stephenson [indistinct], "Snow Crash," around this concept of everyone coming together around a virtual experience that's separate from real life. That's a meta take on real life. 

 

Ethan [00:02:46] And while I don't think it necessarily necessitates anything to do with gaming—because you can have metaverses that cover all different topics, you can have a metaverse for living your life, living lots of different aspects of your life—it tends to pick up first within the gaming industry because that's where a lot of the sort of future consumer application trends tend to get adopted first. 

 

Ethan [00:03:09] If you think about it, when people play games, they want to become a different character, usually. You don't usually run down the street shooting at people or, you know, nobody drops you onto a desert island ever and makes you play a Hunger Games-style survival game of can you kill 99 other people. That's not real. That's a different—you're taking on a different character. You're assuming a different metaphor when you play those games. 

 

Ethan [00:03:32] And so naturally, metaverses lend themselves to gaming environments where you're already in this artificial construct, you're already in a different place. You're already assuming a different character. You've got different challenges than you have in real life. And so that's how I think the two come together. 

 

Ethan [00:03:47] Naturally, they can make being in a different metaverse where you can experience a concert, like you mentioned, Travis Scott, play a game, have an objective, learn something, be trained for a particular industry. They have all the elements of this sort of fantasy that people associate with gaming. 

 

Kinsey [00:04:06] Yeah. It's really interesting to think about the metaverse as, in some respects, could become this mirror of the world that we live in, but just virtual, existing separately from this physical world that we occupy right now. 

 

Kinsey [00:04:16] But, there's also the way that you're alluding to, that this is completely separate from what our [chuckles] real physical world realities are. We can assume a different character. We can follow this entirely different and, at times, unrealistic, trajectory of events that would never exist in our real-world lives. 

 

Ethan [00:04:35] And I think it has a sort of roots in human psychology, if you think about it. If you think about how we spend a lot of our non-work, non-family hours, entertainment has always had this element of fantasy to it, of watching a movie or watching a TV show where you sort of go into a world that's created for you, inhabited by other people with different needs. And that's kind of fun release for folks to be able to step outside their lives and be able to go into the lives and the objectives of other people. 

 

Ethan [00:05:03] I think metaverses maybe tap into that same psychological need in a way, that same desire to be able to live in a different way. But they make it even more realistic. It's some of the same human need that playing games taps into, that going on vacations taps into. Taking trips and having sort of different experiences taps into this need to be able to do something else and step out of ourselves. And so metaverses may be using technology to be able to make that even more realistic. 

 

Kinsey [00:05:33] Absolutely. And we have ways of escaping our everyday lives all around us all the time, whether that's reading a book or watching Netflix or what have you. But I think the reason that we often associate this so much with gaming, and why, on this show, I wanted to talk about it in terms of the gaming industry especially, is because of the sheer volume of hours that are being spent in this gaming metaverse, or in these multiple gaming metaverses that exist. I mean, Fortnite has been, by some [laughs] studies, been played longer than human ancestry has existed on Earth. That's an insane stat like —

 

Ethan [00:06:06] Wow. 

 

Kinsey [00:06:07] The volume of number of hours here is crazy. And I think that's why I want to talk about this metaverse conversation in the context of the gaming world, because the time being spent is crazy and this is still an incredibly new concept. 

 

Ethan [00:06:22] Yeah. Fortnite has been around for two or three years in sort of the popular cultural way that it is now. And I think it only existed for four years or so. I don't think that those stats would be as high if it was just a single track, linear game without a broader world concept to it. Because the challenge historically as a gaming investor, or for folks that did not know the industry well, the challenge has always been, how do you keep the game fresh? 

 

Ethan [00:06:47] How do you keep the game interesting? How do you give people more and different objectives to be able to achieve in the game beyond kind of the linear path from A to B that most games have in terms of their rewards sequence. And metaverses allow for sort of multiple degrees of freedom. They allow for experiences that the game designer didn't necessarily intend. 

 

Ethan [00:07:06] They allow for people to be able to riff the game and mod it to their own specifications—to be able to do things that may not be germane to the objective of the game, but maybe equally fulfilling for the player. And so I think part of what's captured attention lately and has created some of this growth in gaming is that it's fulfilling a broader need than just solve this riddle. You know, get this objective. It's solving this sort of human need for connection, which obviously is accelerated during this moment when we're in a global pandemic. 

 

Ethan [00:07:37] But the pandemic didn't start this need that we would love to be able to connect with other folks online and be able to play together and have experiences together. And so I think the games that take advantage of that and have some metaverse-like features in them are poised to do really well. And that's kind of what you're seeing with some of the stats on Fortnite.

 

Kinsey [00:07:54] Right. Absolutely. And I want to talk more about the COVID impact. But before we do that, this, I imagine, this infinite number of possibilities has to be both on behalf of the gamers who are participating in, for example, a Fortnite, but also for the people who are building these games. I imagine from the developer perspective, there are a ton of opportunities to do new things, to build new things, to create these, you know, subindustries within the metaverse to make money. 

 

Ethan [00:08:20] Oh, totally. I think what I would love to see happen, and what we're starting to see happen is where you don't have to necessarily create a game or a metaverse to be a game developer to take advantage of this. You'll be able to create experiences on other people's metaverse. 

 

Ethan [00:08:34] Back, actually, before I was a venture capitalist, I briefly worked for this company called Linden Lab, which developed Second Life, which was like sort of a first attempt to commercialize a non-gaming metaverse. It was a place where you could be anything you wanted to be and do anything you wanted to do. 

 

Ethan [00:08:49] And one of the things that I thought was quite innovative about it was that they enabled a whole class of entrepreneurs to be able to build businesses in that metaverse. They didn't work for Linden Lab, the parent company. They worked for themselves and they were effectively entrepreneurs that could sell things and buy things and transact business inWorld, as we called it, in the metaverse. 

 

Ethan [00:09:10] And so I think that was a little early. It was perhaps way ahead of its time. But I think now that there's a lot more societal comfort, it's not so weird to do things like online dating. It's not so weird to play Fortnite. It's so weird to go to a concert in Fortnite. That's just sort of more broadly being perceived as the future. There'll be a developer ecosystem created around popular metaverses, perhaps like Fortnite, perhaps like other things, perhaps Steam and Twitch and other folks that are part of this ecosystem will create opportunities for others to build on their platforms. 

 

Kinsey [00:09:42] Yeah, it is exciting. It's a great word. And I think part of my difficulty in understanding this big metaverse concept is that it seems pretty outlandish when you think about existing in this other sort of universe. But to your point earlier, it's not like this is entirely new and fresh. 

 

Kinsey [00:09:59] This has kind of been happening. We exist more and more online all the time. Online dating is a fantastic example, where now way more people are meeting partners and spouses in that way than organically at a bar or at work or a setup or what have you. So maybe it's not quite so meta. 

 

Ethan [00:10:15] And it's no longer taboo. And it's no longer a cliche. I remember when we first invested in Twitch. It was 2012. People perceived that trend the same way you might have perceived online dating a decade or two ago, where it was kind of like weird. And you didn't want to talk about it. You didn't admit to it. That was how kind of watching other people play games was perceived only eight years ago or so when we first were looking to make that investment. 

 

Ethan [00:10:38] And now I think people broadly understand, maybe not 100% societal acceptance, that this does fulfill the same human need as going over to your friend's house and watching them play games or connecting. You know, my kids played games together on Fortnite and Roadblocks and other things with their friends when they were locked up at home for a few months during the pandemic. And that fulfills the same human need as them going over to their house and doing a very similar activity. And I think it's less taboo and more normalized. 

 

Kinsey [00:11:05] Next question is how the gaming industry is monetizing all of this. Can you talk a little bit more about the ways that they're making money off of this new metaverse concept? 

 

Ethan [00:11:14] The gaming industry is amazing at monetizing this kind of a thing. [Kinsey laughs] You set up for it. And then people are used to paying money for games. [indistinct] paying money to play games for a [laughs] long, long time since they bought Monopoly at the local Toys R Us or what have you. That concept is not new. It's not different. 

 

Ethan [00:11:32] And it's not—it doesn't require some of the attention that you see with other business models where you're trying to monetize someone's time and attention and you're doing it in ways that may be at odds with what they would perceive as the business model behind the company that they're engaging with. Most gaming companies, the business model is pretty straightforward. 

 

Ethan [00:11:49] You're paying them either to play the game or increasingly so, the game is free and you're paying them to be able to advance in the game, or dress up your character in the game, or unlock different things in the game. It's pretty transparent as to what you're paying for. There's no deception there. There's a potential issue there in that some of these games can be very addictive and oftentimes they can suck people into paying more than they realize. 

 

Ethan [00:12:14] But there's usually a pretty tight linking between what you believe you're paying for and what you're getting. And I think that's sort of a nice feature of the industry. If you can get people to play more and longer and enjoy it, you can usually monetize them better just as a result of merchandizing. Just like a retailer—get them in your store for a longer time period. There's a better chance to sell them something. 

 

Kinsey [00:12:37] Right. Of course. And that's a byproduct of making a good product. [chuckles] If you don't have a good game to get people interested in in the first place, you're never going to be able to get them to level up, or buy something else, or buy a new outfit, or any of your examples before. 

 

Kinsey [00:12:52] But there's also—part of the metaverse concept is that they can create these economies within the metaverse. There are ways to make money as well as spend money within the metaverse. Can you explain how that works? I guess, is it only the developers who are going to be making the money? Can we have someone who goes in and designs, I don't know, there has to be another way, right? [laughs]

 

Ethan [00:13:12] Design is fashion and ways for people to be expressive. Designs—digital products that people can resell in metaverses. Yes and yes. I think all of that is possible. And I think it will come. I think there'll be a day where there's sort of a third party, and maybe it'll be Epic, the publisher of Fortnite, that does this. Maybe it'll be someone else. 

 

Ethan [00:13:29] But I think there'll be robust third-party ecosystems where both developers as well as just creative people can monetize their craft on top of metaverses. That was one of the original visions behind where Second Life was headed and worked. There are people making millions of dollars a year in that economy. And I think there largely will be in many settings in the future as well. 

 

Ethan [00:13:49] Most of what people pay for in Fortnite is skins, this ability to dress themselves up. And so why isn't that broadly available to other folks to be able to sell? And presumably in that world, the game developer, the platform host, would take a cut of that. That's a very ready business model that can exist in the same way that Apple helps mobile casual gamers, which is also experiencing a resurgence right now, even in spite of the fact that people are spending more and more time at home. 

 

Ethan [00:14:15] Mobile gaming, mobile casual gaming, is—I think we have some stats to show—it's up 30% from Q1 to now. And they take a cut of getting you closer to the games through running the App Store. 

 

Kinsey [00:14:27] Yes, notoriously so. [laughs] They take that cut. 

 

Ethan [00:14:30] Yes, as is very well understood at this point. [laughs] And that's probably headed down. 30% is a high number. But, from my standpoint, I think we'll have more and more platforms for folks that have our time and attention, or sell us devices, or provide a social network for us, and the folks that get it right in terms of opening up that ecosystem to other third-party people to be creative and work their own expressions into the games or metaverses or whatever people are spending their time doing—those platforms will win. 

 

Kinsey [00:14:58] So let's talk about the way that the pie has increased during 2020. In some ways, it's not hard to imagine that the metaverse could just totally explode because we can't physically be together in a lot of cases, or at least we're not supposed to be together in close physical quarters. So what is then the impact of COVID-19 on the gaming space and the development of the metaverse on the whole? 

 

Ethan [00:15:21] Well, I think the games that happened to be in the right place at the right time experienced like a two- to three-year accelerant, is my estimate, in terms of just how much of an outlet of people's time they got all of a sudden. Because one of the first things that was cut off was human contact, and continues to be cut off depending on where you are in the world and how careful you're being. 

 

Ethan [00:15:41] And games, specifically the games that have this feature that we're talking about, of having some metaverse component, are as good an online substitute as any for sort of getting together. If you think about it, when you get together with your friends, usually there's some construct around which you're socializing. Usually. You don't usually just sort of say, hey, let's just stand there and look at each other. Usually you're going to eat, you're taking a walk, you're whatever. 

 

Ethan [00:16:06] Games provide a good social construct to get people together. We're going to go play this game together. We're going to go explore this metaverse together. We're going to go to this concert together in the Travis Scott way that you described. And so it stands to total reason that more and more people would just come in and adopt this kind of style of play than the natural trajectory that we were on. 

 

Ethan [00:16:29] And there's been some winners established from the pandemic. Among Us is kind of the star of COVID right now. They're number three in terms of Twitch viewership. I think there's something like 150 or 200,000 people a day are watching other people play Among Us on Twitch right now. And so that's just one example of something you can do together that is having its moment. And I think there's just more and more of these things happen faster and faster. 

 

Ethan [00:16:53] I remember when we started looking at the Steam charts of the most downloaded games on Steam, that's sort of a PC gaming platform. It was unusual that there were new things popped up and stayed there very quickly. I remember PUBG, which was like this kind of precursor to Fortnite. It was a battle royale-style game of, you know, you get dropped on an island and one person has to survive. 

 

Ethan [00:17:12] That was like the phenomenon of the year three or four years ago. And it was all folks talked about. Now you see these phenomenons pop up very quickly, and they get adopted very quickly, and people all rush to play them very quickly. And then sometimes they fade, sometimes they stay prevalent. But they're just that pace of people trying new things, spending a lot of their time in it, and as a result, watching these things to pretty high numbers of concurrent users and popular culture zeitgeists really quickly. 

 

Kinsey [00:17:39] Yeah. I mean, Congresswoman Alexandria Ocasio-Cortez streamed herself playing Among Us and it was insane. More than 400,000 people watch that. 

 

Ethan [00:17:48] And I don't know if folks remember. It think it was two years ago. Drake and Ninja played Fortnite and that almost broke the internet. That was sort of like two years ago, where suddenly Ninja is like one of the most followed gamers out there and a popular Fortnite player, played with Drake. And that—that almost broke the internet. [laughs] And — 

 

Kinsey [00:18:05] Yeah. 

 

Ethan [00:18:05] That was kind of the event of the year I remember for gaming. Now we have little things like that all the time. 

 

Kinsey [00:18:10] The question to me is, does any of this have staying power—this incredible acceleration of development and just penetrating new audiences and getting to people who maybe you didn't get to before? Does it have staying power post-COVID? 

 

Ethan [00:18:24] I think so. It's kind of the $64 million question is like, is there going to be a reversion back to how the way things used to be? Now the way things are doing now, it accelerated things, but suddenly there's fundamentally new activities that we weren't doing before. All the stuff that we're talking about was happening. It was happening a lot, it had been happening for over a decade. 

 

Ethan [00:18:41] And so, more people got into it. More people that were already into it got more into it. The hours, the cumulative hours spent on the stuff went up. But it's only [indistinct] like invented these new behaviors that we couldn't possibly have imagined before. And so once there's a return to more normalcy, whatever that means, sure, the growth rates will kind of revert probably back to some normalized level. But, I don't know that we're going to dip back down to the way things were before. 

 

Ethan [00:19:07] I think once new behaviors get established, sometimes people discover that they like those new behaviors and they become part of the way we spend our time. And if anything, just the normalization of this kind of behavior isn't something that I think is going to revert. 

 

Kinsey [00:19:20] Right. Right. It would be impossible to do so. And to your point, it's a more normalization of growth. It's not like this growth just gets taken away. And we can make that argument, I think, for so many different industries in this, whatever this post-COVID world will look like. It's hard to imagine that we do go back to the way that we all interpreted the world around us, you know, 12 months ago. It's just probably not going to happen that way. 

 

Ethan [00:19:43] I think it's instructive to sort of look at the way Twitch grew because that's a good proxy for a lot what we're talking about. They always grew through, you know, there'd be a certain event that opened them up to new audiences. They would hit a certain level of viewership and then there'd be an event that opened up to new eyes, and they'd spike up and then they'd come back down a little bit, but not all the way to where they were before. They'd stay in the middle of the spike and the previous baseline. 

 

Ethan [00:20:05] And then something else would happen and it would spike them up. And that's kind of been the nature of the growth of a lot of these platforms, where there'd be big activities, a big thing, a big [indistinct], and some people would come check it out and be like, that's not for me, I'm out. And a lot of people would check it out, be like, oh, this is something I could do now, and then they'd stay. And I think COVID just accelerated that checking it out process. 

 

Kinsey [00:20:24] Yeah, absolutely. All right. Ethan, we are going to talk about competitive threats in just a moment, because when you have something as revolutionary as what we've been talking about today, surely there're going to be people calling for it. But first, a short break to hear from our sponsor. —

 

Kinsey [00:20:41] And now back to the conversation with Ethan Kurzweil. So, Ethan, we've spoken at length here about what a metaverse is and how these new ideas and economies and social constructs have cropped up, especially in the last several months. But, I want to know what this means for gaming as an industry that has to kind of fight for our attention in this, quote unquote, attention economy. 

 

Kinsey [00:21:04] So how do you see these new metaverses, universes, gaming industries, what have you, winning people's time when they could just as easily spend that time on, you know, Netflix or watching TikTok. What insulates the gaming industry from these other forms of time [chuckles] we can spend consuming media in some way? 

 

Ethan [00:21:24] Fundamentally, nothing, because we can, as all sorts of experiences get interactive, the gaming industry faces a threat from other types of entertainment. What it means is that I think no longer is a great game design enough to insulate yourself from competition from other game developers and other forms of things you could be doing. 

 

Ethan [00:21:43] You need a good game design. You need a good metaphor for the game. You need, depending on what it is, ways to express yourself in the game that allow people to feel, you know, release their creative energy and whatever that is. I remember, growing up, you'd pick do you want to be Mario and Luigi? And that was your choice. 

 

Ethan [00:22:00] That's probably not enough [chuckles] now. And then, maybe it went to, OK, you're going to pick your character and you can pick, you know, how long was your hair? That's not enough now. I was just pitched on something where you could take a picture of yourself and you become the character that you're playing in the game. 

 

Ethan [00:22:13] That was a little creepy, but I think beginning [laughs] with more and more avenues and more and more things they can do and extending the metaphor of the game beyond just whatever amount of time that you're playing it, I think it's going to be more and more important. 

 

Ethan [00:22:28] And giving people passive modes of play as well as active modes of play, giving people an opportunity to just witness, either through like a Twitch stream or in a game, being able to watch a game, setting our game environment play out before you're actually on the quest or whatever it is, that's another differentiator. 

 

Kinsey [00:22:46] Yeah. It's interesting to think about this in the context of non-gaming entertainment media, though, because you think about, let's say Instagram, for example. We can project whatever we want on Instagram. We can be a different version of ourselves. We have pretty well-curated Explore pages. We can buy things on Instagram. And all of these things kind of suggest that this is heading in that sort of direction of a metaverse. 

 

Kinsey [00:23:11] And then you think about something like Netflix, with the choose your own adventure "Black Mirror," is giving people more agency to make decisions about the content that they're consuming and have an active role in creating what that content looks like. So it kind of makes me wonder if, like this gaming industry certainly has a head start and has this first mover advantage, but this is going to become something that seeps into far more avenues of our lives, and maybe we, and by we I mean like [chuckles] the casual consumer, anticipates. 

 

Ethan [00:23:41] Absolutely. I mean, you see game design working its way into all kinds of things, including business apps, by the way. You'll see, you know, that little slider, you've probably all experienced, where it says, complete your profile. You're one out of three steps and two out of three steps—that comes sort of fundamentally from the game industry. 

 

Ethan [00:23:56] And there's all sorts of little hacks and little things that game designers figured out in order to get us to take the next step or go to the next level that are kind of working their way into the way we engage with popular entertainment content, business apps. It sort of has its roots, [laughs] to some extent, in popular psychology of getting people to do things. 

 

Ethan [00:24:16] And there's no reason that—I'm actually surprised that, like the interactive television apps that we all use to watch don't have more of those tricks embedded in them. And I'm sure that's coming now that a lot of the stuff that's being provided is over the top services digitally. You know, why can't we watch a football game and be able to look at different camera angles in real time and be able to, you know, engage with a community of users in real time, in a metaverse-like kind of way? 

 

Kinsey [00:24:43] Yeah. It's the age old-question of where are the flying cars? [chuckles] We think that these tools, or at least what we need to build these tools, all exist and [chuckles] theoretically is at our fingertips. Where are they? I have to wonder what else, quote unquote, big tech would borrow from the gaming industry when these things, these, you know, the status bar and like all of these tools created to keep people on platform for as long as possible and appeal to their human psychology, what else are the big tech people going to borrow from the gaming industry? Do you have any thoughts or ideas? 

 

Ethan [00:25:14] It's a great question. I think one of the things that's already being borrowed is the kind of componentization of things. The way the game industry is really good at getting you into the environment of a game and then being able to have a sort of "choose your own adventure" style mapping of where you go, what you do, what you buy for your avatar, what boosts you buy, what other advantages you buy to be able to ultimately have a better time and achieve whatever objectives are there. 

 

Ethan [00:25:45] I think a lot of that stuff is going to be coming into more popular tech as well as business tech. We see it in the developer ecosystems that we invest in for other products, where there's kind of a componentization of technology stack, where you have companies selling communication services, security services, testing services, in kind of an a la carte way. 

 

Ethan [00:26:07] I think as far as, like, consumer psychology and things like that, the merchandizing of games tends to be a pretty core skill that a lot of folks have learned basically since the iPhone was invented and before that, social gaming, where a lot of what drove the monetization of the sort of casual games was how well they could be merchandised, what things you could buy in them. 

 

Ethan [00:26:29] And I think that skill will see big tech companies adopt it, especially as some of the business models around advertising get scrutinized more highly and this data becomes more sensitive as to what data you can take. Again, I think it's a much more aligned business model to have kind of a merchandising of applications, where if you want to do this activity, that costs you X and people understand it. Like, I pay $2 a month for more iCloud storage to back up my photos, you know, things like that where you componentize all the things that you charge people for. 

 

Kinsey [00:26:59] Yeah. It's so interesting to think about, as a self-described non-gamer, [chuckles] like the things from gaming that the apps or the tools that I interact with on a daily basis have their roots in. And I have to wonder if maybe, in the grand scheme of things, for as impactful as Facebook, for example, has been on the world and democracy and [laughs] what have you, it's still pretty young in the history of tech, whereas video gaming has been around for a longer time. Is that why video gaming tends to be on this sort of cutting-edge, and that's where the ideas come from first? Or is there another reason? 

 

Ethan [00:27:34] It's a good question—why gaming developers tend to be more experimental and they tend to commercialize these technologies more quickly. I have a hard time ascribing it to anything other than maybe they don't have loftier aspirations than entertaining us. That's the goal. 

 

Ethan [00:27:48] And so, they don't have to go out with a big premise of we're making the world a better place because of X. We're making the world a better place because you have fun playing our game. That's enough. And so, as a result, I think they get a little more leeway from everyone. And it's not, hey, you tricked us into this. You manipulated our attention for this reason. It's pretty clear what the goal is. 

 

Ethan [00:28:12] The goal is to get you to play and have a longer engagement with platform, the game, the service that's providing the entertainment experience. Full stop. And so, I think the fact that the business model is so clear-cut and tethered to exactly what the objectives are so aboveboard, gives them a little bit more cover to be able to experiment and try new activities. 

 

Ethan [00:28:35] And I don't think any game developer would pretend that their objectives are any different. And so perhaps that constrains them a little bit in that, you know, connecting all of human mankind, I think that's Facebook's mission. That's a much bigger vision than connecting people that want to race a car around the screen. 

 

Kinsey [00:28:51] I know. Just imagine an obvious and transparent business model might actually afford more innovation, kind of like a no-shit kind of thing, right? [laughs] Shouldn't shock any of us. But, Ethan, we are going to take a quick break. And when we come back, an eye to the future. But first, a quick word from our sponsor. —

 

Kinsey [00:29:11] And now back to the conversation with Ethan Kurzweil. [indistinct] I don't want to overcomplicate things here, what is the future of gaming as far as you see it? 

 

Ethan [00:29:20] Wow, that's a bold question to ask. I think there'll be more of a blending between what's a game and what's entertainment. It's a little bit of what we've been talking about already in that, there's online experiences, there's entertainment, there's dating, there's all these different categories of consumer application. 

 

Ethan [00:29:38] And they're kind of distinct, but I think there'll be a merging of the different worlds in that, you know, why isn't there a module on Fortnite right now for a dating app? Shouldn't you be able to have a sort of hinge profile on Fortnite or whatever other platform people are playing? Or shouldn't there be a way for folks to connect in the context of a game or in the context of some sort of social experience? 

 

Ethan [00:30:00] It's not necessarily tagged as a game, but basically is about having fun. And so I don't think the sort of nice categories that iOS or Android or whoever establishes for all our consumer apps, there's apps for this purpose, there's apps for productivity, there's apps for this. I think a lot of it will be built on these shared platforms for expression. And maybe even some workplace productivity apps that connect to a certain persona that people have that they build up in a particular platform. 

 

Ethan [00:30:35] Facebook and Google have tried to have that vision of logging us in with their products and then hanging other things off of them. I think somebody will eventually get that right. And it probably is someone with a game, with a metaverse orientation, because just having a concept of identity is great. 

 

Ethan [00:30:52] I can log in with Facebook, you know who I am, who my friends are, my birthday. But there's no sense of place in that. And if you think about the social experiences we all have, there's usually a sense of place around what are we doing. What is the environment like? 

 

Kinsey [00:31:05] Do you think that there should be any concern that that sort of bundling would muddy the value prop of gaming as it exists today, which we were talking about earlier, is like, try this new thing and have fun doing it. If we bring in all of these other aspects of our life, does that get diluted? 

 

Ethan [00:31:22] Probably. There's probably a sort of point people pass over the final frontier, where game companies is no longer just about having fun. But there is this element of monetizing our time and attention through ways that are not necessarily perfectly aligned with what we think is happening to us. 

 

Ethan [00:31:40] And there'll be companies that probably step through that void more quickly than others, and then have all the same challenges that Facebook and to some extent, Twitter and other folks—where there is an element of a more community purpose—the backlash that can come with that. And so, I do think that probably we're headed towards a point where all this—where something is not so obviously a game anymore and there's going to be a temptation to be able to go beyond a business model that makes [indistinct] necessarily naturally make sense. 

 

Kinsey [00:32:11] And time will only tell who will be the winners in this future when the cookie eventually crumbles for the gaming industry. So, Ethan, we have covered a ton here. Thank you so, so much for coming on Business Casual. It's been such a fun conversation, and I loved tackling this very big and very broad question with you in a way that actually makes a whole lot of sense. So thank you for your insight and your analysis and mostly for your time. I loved having you on the show. 

 

Ethan [00:32:35] Thanks for having me. This is a pleasure for me too. 

 

Kinsey [00:32:45] Thank you so much for listening to this episode of Business Casual. As you heard this week, I came into our gaming episodes with very little gaming experience outside of maybe a few turns at Guitar Hero. 

 

Kinsey [00:32:56] But hearing about all the possibilities for gaming, especially what Ethan was saying about the metaverse, it's shown me that the world we live in might look unfamiliar in the future, but it's going to be cool as hell. And I, for one, cannot wait for what we might not see coming. See you next time. [sound of a ding]