Apple’s Metaverse
Last week I ventured to describe what could happen to Twitter under the new management of Mr. Musk. I posed that Twitter could become the next payment processing behemoth in this new era of eCommerce.
This week, I will continue with another crazy prediction. Why? Why not! Trying to imagine the possibilities, playing the what-if scenarios, helps me when analyzing my own business problems.
This week's idea. Apple will buy Electronic Arts.
Video games arrived with the dawn of computers. Actually, computers were meant to be gaming devices. Nobody in their right mind would spend so much energy on building technology just to use it for writing emails or calculating numbers using spreadsheets. From video consoles to arcade games, PCs, mobile devices - all that was meant as means of entertainment, not a tool for work. Soon, the video games industry became a major industry. Just in 2021, it generated over U$118 billion in revenue.
People buy games to play. Then they buy ‘things’ inside the game to enjoy it even more. And for the ultimate enjoyment, you need the best hardware. For some, even that’s not enough. They don’t just want to play the game. They want to live in it.
Books and movies are full of examples of that. Do you remember Tron or Ready Player One? Or the book Snow Crash (Yes, that’s the book which coined the term Metaverse).
Unfortunately, some take these things too literally. Some even rename companies based on this, or even rename themselves. Crazy? What about Kim Dotcom?
Now that we are saddled with this vague, ambiguous Metaverse term, everyone wants to be there. People and companies are buying land there, building properties, opening bars and waiting for the crowds to come. The idea seems to be: If you build it, they will come.
But where do you go? How do you get there? You have to build it and you have to have a device to take you there. And, you have to have lots of money. Just because it is virtual, doesn’t mean it is cheap.
In January, 2022, Microsoft announced that it was buying the Activision Blizzard game studio for almost USD$70 billion. Microsoft already has a console and many games are played on its Windows OS. The integration to the Azure cloud is already underway.
Who’s next with a major OS platform and plethora of devices? Who is spending billions of dollars to provide entertainment to millions of people? Who is the one who really doesn’t like Meta (Facebook) and wants to badly disrupt its business model?
Yes, that someone is Apple.
By buying EA (Electronic Arts) Apple would increase its reach immensely. The number of new customers it could market to directly would nicely add to its bottom line.
But that would not be the whole story. It would be the usual boring, Microsoft-type of story where a big company acquires what it can’t build on its own. If Apple can successfully integrate these pieces, it can literally change how the game is played.
When you play a game today, each game lives in its own universe. You either play football or hockey or drive fast cars or you fight or you shoot. Now, just imagine that you are in this multi-universe, the Metaverse. Inside this Metaverse, you can seamlessly move from one game to the next.
Imagine you’ve just finished playing a FIFA World Cup game in a virtual stadium. What if you could stay inside this virtual world, leaving the stadium and wandering through town to go to a shopping mall? There, you can watch a movie (Apple+) or experience a concert (Apple Music). You could buy things and easily pay for everything with Apple Pay while on your Apple device. Why not?
The road to the Metaverse runs through entertainment and through the devices we use to get there. Apple is the one company which can pull it off. It is a plausible recurrent pattern.