Oct 7, 2024

Epic's Metaverse Vision is Blurry

The company is going to need more carrots and fewer sticks...

A few interesting elements of this report from Epic's Unreal Fest last week. First and foremost, as Jay Peters reports, while Epic isn't quite profitable yet, they're seemingly in a much better place than burning a billion dollars a year. This matters for the goal they're laying out:

Epic has ambitious plans. Right now, Epic offers both Unreal Engine, its high-end game development tools, and Unreal Editor for Fortnite, which is designed to be simpler to use. What it’s building toward is a new version of Unreal Engine that can tie them together.

“The real power will come when we bring these two worlds together so we have the entire power of our high-end game engine merged with the ease of use that we put together in [Unreal Editor for Fortnite],” Sweeney says. “That’s going to take several years. And when that process is complete, that will be Unreal Engine 6.”

CEO Tim Sweeney frames this as the platform to build and deploy anywhere in the future – presumably including, of course, iOS and Android (more on that in a minute). And it sounds like the Disney/Epic partnership is an early test/showcase of such capabilities:

The upcoming “persistent universe” Epic is building with Disney is an example of the vision. “We announced that we’re working with Disney to build a Disney ecosystem that’s theirs, but it fully interoperates with the Fortnite ecosystem,” Sweeney says. “And what we’re talking about with Unreal Engine 6 is the technology base that’s going to make that possible for everybody. Triple-A game developers to indie game developers to Fortnite creators achieving that same sort of thing.”

He goes on to talk up the possibility of Fab, the marketplace for digital assets that Epic is about to launch, which, notably, will allow for assets not just meant for Fortnite, but also for rivals Roblox and Minecraft. Of course, talking that up is easier than making it all work. And it only points to the real "metaverse" hope for all of this:

But for an interoperable metaverse to really be possible, companies like Epic, Roblox, and Microsoft will need to find ways for players to move between those worlds instead of keeping them siloed — and for the most part, that isn’t on the horizon.

Sweeney says Epic hasn’t had “those sorts of discussions” with anyone but Disney yet. “But we will, over time,” he says. He described an ideal where companies, working as peers, would use revenue sharing as a way to create incentives for item shops that people want to buy digital goods from and “sources of engagement” (like Fortnite experiences) that people want to spend time in.

If the Disney/Fortnite implementation is a massive success, Epic will gain some leverage in such discussions. But Epic doesn't have the best history in such discussions with rivals – see also: they're on-going war with Apple, Google, and now Samsung too. Right or wrong, Epic and Sweeney are simply not good at keeping things civil and out of the press. Maybe that's a strategy with the mobile platforms, but it has to give you pause in believing in their lofty vision here where Fortnite + Roblox + Minecraft all come together to create a seamless Metaverse.

“The whole thesis here is that players are gravitating towards games which they can play together with all their friends, and players are spending more on digital items in games that they trust they’re going to play for a long time,” Sweeney says. “If you’re just dabbling in a game, why would you spend money to buy an item that you’re never going to use again? If we have an interoperable economy, then that will increase player trust that today’s spending on buying digital goods results in things that they’re going to own for a long period of time, and it will work in all the places they go.”

Again, that sounds great on paper, but they need real leverage to make this happen. At the end of the day, this is a business for all these companies. Perhaps Disney provides the leverage, but more likely it's a situation where it's increasingly clear that broader metaverse visions are going nowhere, and in a last-ditch effort to make it work, two of these companies band together. But that assumes either Roblox or Microsoft (for Minecraft) want that interoperable metaverse, versus simply controlling their own massive properties. Epic needs to showcase that combining is a much bigger business opportunity – a carrot. But again, this is a company with a history of using sticks.

To that end, it will be interesting to see in what way they leverage Unreal Engine. Microsoft, for one, now seems awfully wedded to it for Halo. "That's a nice Master Chief you got there, would be a shame if something happened to him..."

Perhaps there's a future where Meta buys one of these players to drive towards that metaverse vision. But, name aside, it's not clear that the company hasn't moved on to other opportunities in AI and AR. That will all come down to Mark Zuckerberg. Well, and a regulatory environment that will allow such deals to happen. Right now? Not a chance.

One more thing: I'm still waiting on Bob Iger to be some sort of mediator between Epic and Apple. Perhaps when Disney's Epic world is ready to roll, he steps in to make sure it's available on iOS? But the blood between the two is so bad now. Signs of thaw are met with ice storms.

Fantasy or not, I'm still proud of this closing line: "A Bob bridge may have to connect the two Tim towns."