CES 2022 Relatively Quiet on the Metaverse Front, but Microsoft Makes Noise in January, Acquires Activision Blizzard

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By Michael Inouye | 1Q 2022 | IN-6440

Though the hype surrounding the metaverse is still abuzz, the long-term expectations overlook the short-term steps required to advance Augmented Reality technology, such as Microsoft’s acquisition of the gaming studio Activision Blizzard.

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Microsoft's $68.7 Billion Acquisition of Activision Blizzard Transcends Metaverse News from CES 2022

NEWS


By most accounts, CES 2022 was another comparatively quiet year for the conference (pandemic related) and the metaverse news reflected these conditions; although there was some notable activity on the AR/VR front (IN-6432). This isn’t surprising since some companies like Meta pulled out of the show, but many (Meta included) also made metaverse headlines in the preceding months to close out 2021. Samsung generated some metaverse headlines by partnering with Zepeto (a metaverse platform) to offer attendees a virtual/metaverse showroom experience—it received mixed opinions, largely due to the lack of realism, but it does speak to the continued importance in virtual alternatives (or supplements) so long as COVID-19 remains a factor. NVIDIA’s Omniverse platform launched of beta into general release, highlighting its continued advancements and opportunity from the enterprise side. The biggest news in January 2022, however, came from Microsoft, post-CES when it announced its intention to acquire Activision Blizzard for US$68.7 billion.

The announcement sent shockwaves throughout the gaming industry, pushing Microsoft’s Game Pass service to the head of the pack, but there are also implications for the metaverse, which is the focus of this insight. Relatedly, Sony more recently announced (January 31, 2022) its intention to acquire game developer/publisher Bungie for US$3.6 billion, which is responsible for one of the most successful live service games (the Destiny franchise). Like Microsoft, Sony’s deal is more than just the pre-existing video games, especially since Bungie’s activities will remain multi-platform. For Sony’s part, this will help the company better support multiple platforms (an essential for the metaverse) and it will extend content to its other media activities (i.e., film and video).

Meta continues to receive more metaverse attention than other large tech companies, but that may start to change, at least for Microsoft. In truth, companies like Microsoft and NVIDIA have already been doing significant work on the metaverse front, but these activities have been less consumer facing and therefore outside the eyes of many mass media outlets, but the acquisition of Activision Blizzard changes that dynamic.    

Activision's Metaverse Impact Likely Less Overt than a New Virtual World

IMPACT


The early benefit to Microsoft will come from gaming, but Activision Blizzard has a long-standing presence in the persistent online gaming market (and virtual goods) which lends Microsoft a solid foundation to leverage and build upon for future metaverse endeavors. This doesn’t mean, however, we should expect a unified virtual experience anytime soon that spans across Microsoft’s platforms, allowing avatars to move between World of Warcraft (from Activision Blizzard) to Skyrim (from previous Bethesda acquisition), and then a change of virtual clothing to attend a meeting in Microsoft Teams. One day this might become a reality and it would certainly speak to the interoperability prescribed by the metaverse, but this (full interoperability) will be a longer-term play. There is certainly opportunity for digital assets to cross-over between virtual platforms, but these instances will be more limited in scope.

On the metaverse front, Microsoft’s greatest benefit in the near-term will happen behind the scenes and in less overt ways than showcasing Activision properties. Microsoft, like many other companies, is exploring and experimenting with what this hybrid (real and virtual) future will look like; Activision’s experience in creating and maintaining virtual platforms and user bases will prove invaluable as Microsoft looks to employ some of these elements in other properties like Microsoft Teams. The enterprise side of the metaverse has seen more work on platforms (i.e., NVIDIA’s Omniverse) and interoperability, but often the user interface, referring to avatars and person-to-person interactions, are less developed or seemingly overlooked when compared to what is seen in the gaming industry. These features and experiences need to start coming together, which makes Microsoft’s acquisition of Activision as a great place to draw inspiration.    

Focus on the Building Blocks of the Metaverse, Not the Long-Term Vision

RECOMMENDATIONS


The metaverse, like other hot trends, receives a mix of coverage, some extol its wondrous potential while others criticize it as another likely hype machine destined to fail. The problem with both extremes is the near exclusive focus on a long-term vision of what the future metaverse might look like and not on the foundational pieces and the implications of the build-up to this future. From a metaverse angle, Microsoft’s acquisition of Activision Blizzard has largely been evaluated through this (consumer centric) virtual world lens and questions were raised if a broader metaverse play exists at all and if the acquisition was purely gaming related.

Taking this narrow-focused view of the metaverse fails to adequately assess to near-term value and broader implications. For example, this ignores the potential influence the acquisition has on Microsoft Teams, virtual offices, and events. As stated earlier, there is an element of catching up needed by the enterprise side to leverage the opportunities offered by the virtual half of the metaverse equation. NVIDIA’s Omniverse platform use of Pixar’s Universal Scene Description (USD) as its backbone is a prime example where the enterprise side is leveraging the expertise generated working with virtual worlds from the M&E space to benefit other industries and verticals. Unity and Epic Game’s Unreal engines have similarly moved well beyond their M&E/gaming roots and have a strong and growing presence in commercial markets as well.

The metaverse speaks to so much more than just virtual worlds and assets. Opportunities brought by 5G advanced and eventually 6G (especially when coupled with smart glasses), for example, portend changes to how and where and how consumers will interact with services and consume content. Too often we lose sight of the other half (the real world) and the critical importance of interoperability (of applications, platforms, and experiences). Even if something akin to Ready Player One’s Oasis doesn’t materialize in the future as that virtualized next Internet, the metaverse shouldn’t be viewed as a failure so long as the ensuing years brings additional interoperability to experiences, workflows, and processes. In the absence of this seamless real and virtual future the metaverse may not fully live up to its potential, but the steps taken to build towards this future has tremendous value itself and for those who choose to pass it over as pure hype, they will miss out on these opportunities.        

 

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