Insights What does the future hold for the video games industry in the race to create the Metaverse?


While there remains a healthy debate as to what the metaverse will ultimately be, there is consensus that video games such as Fortnite, Roblox, Minecraft and Second Life are currently the closest thing we have to a metaverse type experience.

Over the last two decades we have seen video games evolve from linear, single player packaged goods experiences to become connected, multi-player, digital experiences. This has in turn meant that games have become more social experiences, and closer to a metaverse experience. However, to create a true metaverse, this evolution needs to continue and games companies will need to overcome multiple challenges.

When we think metaverse, we think completely immersive digital words for us to experience and explore. To evolve current video game experiences to a true metaverse experience, games will need to utilise new hardware such as Virtual Reality (VR) headsets, Augmented Reality (AR) and other wearable technologies. These technologies are being developed, but only a handful of games companies are currently experimenting with or developing for these technologies. Whilst some games have already capitalised on the potential of these new technologies (such as the AR based game Pokemon Go), we haven’t seen a critical mass of games developers embrace these technologies yet, due in part to limited take up of these technologies by gamers. For example, the public take-up of VR hardware has been lukewarm, hampered by high costs and some users feeling nauseous when using VR headsets. This is despite companies such as Meta (with its Quest VR headsets), and Sony (with its VR headsets for the PS5 console) making significant developments to address these concerns.

Video games do not currently appear to be the catalyst that will drive wider public adoption of these technologies. But if mass market adoption is driven by other catalysts, such as business adoption of VR for more immersive remote meetings and improved remote collaboration, more games companies will undoubtedly start to develop for these technologies.

Two of the key features of the metaverse will be interoperability and decentralisation.  For the metaverse to be truly interoperable, common standards will need to be adopted, such as Universal Scene Description, to allow developers to create content to the same rendered standard, thereby making it possible for consumers to take an item, such as their avatar, from one metaverse experience and use it in another. Decentralisation, the taking away of control from a single entity and placing it in the hands of its community is another key tenet of the metaverse.

These are two of the most difficult challenges for any tech companies to overcome, and particularly for larger games publishers who have not historically embraced interoperability with other publishers or been in favour of relinquishing control of their games to their communities.

Despite this, some companies such as Epic are placing themselves in prime position to tackle these issues. Epic’s Unreal game engine can run real time, 3D simulations with AI training capabilities, and is being widely used across the games industry (as well as other industries, such as film, defence and architecture). This provides the foundation to create a common ecosystem across multiple games with interoperable standards and a shared content library.

Whilst not touting it as a metaverse, Random Games has come close to a decentralised, interoperable platform for its community of game developers with its new franchise, the ‘Unioverse’. In the Unioverse, each gamer plays as a unique sci-fi hero, purchased using NFTs, travelling through a virtual galaxy in which they visit and enjoy the different experiences created by its community of developers. Random Games describe it as a ‘Roblox, but for AAA game developers’, and provide Unity and Unreal SDKs and a library of assets, such as art, character models and music, for developers to use for free on the platform, allowing for interoperability between experiences. There are no rules as to the types of experiences that developers can create within the Unioverse (provided it works with the hero characters), and game developers retain all the revenue they receive from the platform, making it one of the more decentralised platforms available today.

Microsoft recognises the value of video games as a gateway for consumers to enter the metaverse, publicly stating that their acquisition of the games publisher Activision Blizzard would give them “building blocks for the metaverse”. Microsoft is not the only company who sees games companies as the builders of the metaverse and it is expected that this won’t be the last large games company acquisition that we see for similar motivations.

When it comes to metaverse-like games, Microsoft has already acquired Minecraft, a game that some describe as a ‘mini metaverse’ with over 140 million active subscribers simultaneously engaging with the experience. It also acquired Zenimax, whose games are social experiences with communities of modders who are actively changing and growing the games, thereby giving them an individual sense of presence, immersion and personal investment in the games.

For Microsoft these games, together with its Game Pass subscription service provide it with a ready-made audience for a ‘Microsoft metaverse’.

Whilst it will take the video games industry time to overcome these challenges, it will also take time for gamers to truly embrace these new experiences. There is currently scepticism from many gamers about some of these new experiences –  the poor reception of NFT based games being a recent example of this.

As younger gamers grow up, this scepticism will naturally fade. The current generation of children are making friendships in the physical world in school playgrounds, and then deepening these same friendships as they jump into digital worlds, such as Roblox, with those same friends once they get home from school. As this generation of digital natives grow up with this hybrid way of living as part of their everyday life, they will more readily embrace the metaverse and the blurred lines between the physical and digital worlds.

There will undoubtedly be a lot of trial and error in the race to create the metaverse, but it’s clear that games companies and gamers will be one of the foundations upon which this new hybrid world is built. Building the metaverse will in turn drive a lot of change in the video game industry over the next decade and those games companies that get it right have the potential to shake up the current order of things, but those that are unable or too slow to adapt to these new challenges risk falling behind.