Virtual worlds – then, now and next

Virtual worlds are a fascinating topic for us at Remagine Ventures. Perhaps their appeal has to do with the escapism we all need during lockdown, or the ability to teleport ourselves to a different, utopian, virtual reality. This post is an adapted version of my talk at the Media and esports online conference we hosted earlier this week.

Let’s first start with a definition:

A virtual world is a computer-simulated environment^[1] which may be populated by many users who can create a personal avatar, and simultaneously and independently explore the virtual world, participate in its activities and communicate with others. These avatars can be textual, two or graphical representations, or live video avatars with auditory and touch sensations. In general, virtual worlds allow for multiple users but single player computer games, such as Skyrim, can also be considered a type of virtual world.

Wikipedia

Virtual worlds aren’t new. As a matter of fact, one can argue they exist for as long as the internet has. The first virtual worlds were simple chat rooms & communities. These then developed into more elaborate MUDs (Multi-User Dungeons). In the 90s these MUDs in turn became MMORPGs (Massively Multiplayer Online Role Playing Games), which took another leap forward in the 2000s when more sophisticated 3D graphics and virtual currency-based economies were added – laying the groundwork for games like Second Life. 

Virtual worlds and commerce

The first major economic transactions in virtual worlds started around 2007 when the City of Amsterdam inside Second Life was sold for $50,000 or when someone bought a unique elf on World of Warcraft for $9,500. In 2010 Jon Jacobs built & operated a virtual nightclub inside the game Entropia and sold it for $635,000! 

But these were certainly more the exception than the norm. That said, we at Remagine Ventures believe that social & economic activity inside virtual worlds is becoming mainstream. Specifically, we see 3 key drivers:

1. The number of participants has tremendously increased. As a proxy we could use the estimated number of gamers out there, which is around 2.5 billion according to Newzoo. 
2. Advancements in Technology: Game engines like Unreal or Unity, which are available for free to developers, have reached an incredible level of illusion (see video below). In addition, Cloud infrastructure makes game streaming possible, increasing the reach even further and reducing the costs (as no expensive hardware is needed to play). And finally, micro-transactions, which are key to monetisatioin.
3. Changes in consumer behaviour: Already before Covid-19 we spent an average of 6 hours and 42 minutes online – each day. The more time we spend online the more important these activities become. 

Unreal Engine 5 Feature Highlights | Next-Gen Real-Time Demo Running on PlayStation 5 from Unreal Engine on Vimeo.

As the time and availability of virtual worlds has grown, so have the transactions within these environments. The global virtual goods market is expected to grow from $38 billion in 2017 to an estimated $190 billion by 2025 (based on market research firm Adroit Market Research). 

Towards a Metaverse

The concept of Metaverse deserves its own deep dive. If you want to learn more about it I highly recommend reading Matthew Ball’s excellent article, “The Metaverse: What It Is, Where to Find it, Who Will Build It, and Fortnite“. In short, the metaverse is taking the virtual worlds to a next level, more than just a virtual theme park, where people can play, hang out, shop, consume content etc. A good example of this is Fortnite and in all likelihood also the thought behind facebook’s acquisition of Oculus Rift. 

In any case most of these theories are still early, we there are many open questions still to answer. We are only at the beginning of what potentially could be a new version of the internet. We are confident that virtual worlds and the metaverse can create massive economic opportunities to build new brands, drive commerce, and form the entertainment companies of the future. 

25+ examples of what’s next

I want to leave you with a few examples of recent trends we have seen that I am sure you will enjoy learning about and hopefully will inspire you to build your own ideas. If you are building a startup in these spaces, please come see us :)

Recent examples of the trends in virtual worlds, in no particular order. You can see the convergence of movies+games, fashion+games, commerce+games, and generally how entertainment is blending within these virtual experiences.

#1 JJ Abrams premiers Star Wars trailer inside Fortnite:

#2 Travis Scott’s performance attracts 12 million viewers inside Fortnite:

#3 Drinks inspired by Animal Crossing

#4 Riot Games League of Legends partnered with LVHM to create luxury ‘skins’

#5 When social distancing prevented Hong Kong protests, some took their protests inside Nintendo’s Animal Crossing:

#7 The bank of Nook in Animal Crossing cuts interest rates for savers (an alternative economy)

#8 Fortnite Party Royale – a combat-free zone to chill out, watch movies, or go fishing. Yesterday, Epic games announced that it will air three different Christopher Nolan movies in the island’s theater on June 26th

#9 Fortnite’s Diplo & Major Lazer Live Concert – we see concerts inside games becoming more and more popular

#10 MIT campus inside Minecraft:

#11 Roblox birthday party during lockdown have proven popular

#12 Virtual wedding in Animal Crossing – Janna and Stefan, from Maryland, US, walked down the aisle and made vows during the ceremony.

#13 Funeral on Animal Crossing: The life of a New York video game enthusiast who died from complications of the coronavirus was celebrated with a virtual service

#14 100 thieves makes its apparel available for Animal Crossing:

#15 Designer Sandy Liang—the downtown darling known for her “clout fleece”—held an extremely exclusive pop-up sale. Only six people were allowed in at a time, with some attendees waiting in line for two hours inside Animal Crossing:

#16 Valentino and Marc Jacobs shared outfits with players on Animal Crossing

#17 Moschino collaborated with The Sims

#18 Fortnite partnered with Nike on Air Jordan outfits

#19 World’s first Animal Crossing interior design service launches, offering consultants £40 an hour to perfect in-game homes

#20 Nookazon, a fan-made online retailer for trading Animal Crossing:

#21 Fan-made tools to help you get the most out of Animal Crossing, from price calculators to design tools

#22 Extensive items catalogue for AC.

#23 Fans turn to online retailers like eBay and Amazon to purchase unofficial Nook Miles Ticket bundles for as much as $70.

#24 Virtual Nature project, which explores how digital experiences of the natural world can impact health and well-being. 

#25 Block by Block West music festival in Minecraft:

#26 Live Tonight Show on Animal Crossing: Gary Witta opened up his own talk show in the game, attracting celebrities and fans

#27 Animal Crossing fashion show by Reference Festival in Berlin

#28 Fable Studio, the virtual beings company, created a knowledge friend for children

We are excited by the possibilities these trends open up for startups as the virtual and physical experiences come closer together. If you’re starting a company in this space, we’d love to hear from you! Get in touch via the Remagine Ventures website or on social media (Linkedin/Twitter/Facebook/Instagram). We might start hosting virtual office hours in Fortnite or Animal Crossing soon ;-)