Why building the metaverse is hard

Why building the metaverse is hard:

Games startups are more like a space tech or biotech startups than building an app

To build a v1 of a new game usually takes 2-3 years and tens of millions of dollars at the low end

Apps take 6 months and <$1m

In consumer tech, within the first year you’ll have a product and early retention metrics. If you’re lucky your launch will have gone great, and you’ll have a million users. That’s possible

In deep tech, or bio, or games – what can you actually deliver in a year?

It’s harder to show concrete progress, because it takes a TON of time to build. In games you might have recruited your early team and have some prototypes, but not have a real experience yet

For PC/console, the bar for a AAA title is just high. Characters, worlds, levels

If you’re building a new space tech company, you might need to raise 2-3 rounds without a product. It’s just all team and opportunity. The founder has to be an absolutely visionary storyteller and fundraiser

And what if you raise $100m and then your first rocket launch fails?

Same with gaming. Fundraising becomes a moat. And this is one of the ingredients for why Steam – the dominant AppStore for games – has 50,000 games whereas the iOS AppStore has 2m+! It’s just way harder to get started

There’s much to be learned from this constraint

First, this is why the games industry is so excited about generative AI. A lot of the $30m+ upfront cost is because artists have to make characters and worlds.

What if that could be reduced significantly in cost without sacrificing quality? Would be huge

Second, this is also why user generated content could be the next major wave in games. And modding of course.

There’s Roblox and Minecraft but frankly there could do so much more, if you give users the authoring tools. This is how you could avoid the big upfront content bill

Btw, I also think there’s a huge opportunity for scrappy younger teams to build out things that look like indies – think stardew valley – that aren’t as 3d and immersive, but prove out new mechanics. And use the growth metrics to raise more money, rather than just the idea
Finally, I think the corollary with deep tech tells you that the quality and pedigree of the team matters much more in this market. The better the initial backers, the work experience of the founders, etc, then the more likely they will be able to raise the 3 prelaunch rounds
Note on web3. This makes me wonder if one of the issues – ironically enough – is that web3 gaming companies aren’t actually raising enough money. To make a games that’s truly at the same level of what’s in the market, they might need to more games talent and build more content
And every games co – whether it’s web3 or a studio or VR – will need the runway to build for enough years

On the plus side, we now know there’s decabillion dollar outcomes when companies do build amazing new franchises. So it can work – it’s just not much like building an app

Follow: @andrewchen



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