“It’s the next version of the internet…
Instead of static webpages, it’ll thrust you into an immersive world where you can go to work… learn… create art… shop… watch concerts… hang out with friends… and do dozens of other real-life activities.
It is THE next big thing. From an investing standpoint, we simply cannot ignore it.”
Back in February, RiskHedge Chief Analyst Stephen McBride introduced us to the metaverse.
As Stephen explained, the metaverse is a giant leap toward something futurists have dreamed about for decades.
Think of it as the first true fusion of the virtual and physical worlds.
But this isn’t some longshot “fantasy.” The foundation is being born right now. And some of the brightest minds in tech are “all in.”
Disney’s Chief Technology Officer Tilak Mandadi plans to turn Disneyland into a “theme park metaverse.” Nvidia CEO Jensen Huang says: “The metaverse is coming.” David Baszucki, CEO of Roblox, one of the biggest video game platforms, says, “The metaverse is materializing.”
Now, this whole idea of a new, virtual world is still hard to grasp for many people…
So I called Stephen to break down the metaverse and explain it in plain English. Below, I share our conversation…
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Chris: Hey Stephen… We’ve been getting a lot of questions about the metaverse. Can you walk us through what exactly is happening here?
Stephen: The metaverse is a virtual, 3D world where you, through an avatar (like the movie Ready Player One), can socialize with other people, work, play, create, and basically exist.
It sounds unusual, I know… And it’s hard to envision what it’s going to ultimately become…
But here’s the thing: You asking me about the metaverse today is like someone asking about the internet in the ‘70s…
Back then, the internet didn’t exist. It was an experimental technology hiding in the bowels of a Stanford lab.
We knew the protocols and tech behind the internet in the ‘70s… We knew what makes the internet actually work. But we never could have imagined how we'd actually use the internet. No one predicted anything like Facebook, Google, Snapchat, or Amazon.
Fast forward to today… Our lives revolve around the internet. It’s the reason life moved on over this past year while much of the physical world was effectively shut down. Heck, the internet is the only reason you and I even know each other. You’re in South Florida. I’m in Ireland. Thanks to internet, we work together every day.
Chris: So this metaverse is basically the “next version” of the internet?
Stephen: Exactly. More specifically, it’s a 3D, immersive internet.
So today we go online and look at Facebook, YouTube, and Google. These are static webpages. We see through our computer screens or phone screens. We use our mouse and touchpads to access them.
The metaverse is completely different. It’s an interactive internet.
And it’s important to understand that the metaverse isn’t just a virtual Disneyland or just a virtual Amazon Mall. It’s not one specific “world.” Instead, the metaverse is the infrastructure that will connect all these different worlds.
It’s similar to how the internet isn’t just Google or just Amazon. It’s a whole ecosystem where you can have Zoom meetings and buy cryptocurrencies and watch YouTube videos.
Chris: So how will people access the metaverse?
Stephen: It’s going to be through computers… It’s going to be through video games… VR (virtual reality) and AR (augmented reality) headsets will be a big part of it.
So, for example, I could say, “Hey, Chris, want to catch this concert together after work?” And we would put on our headsets, and be launched into the metaverse, watching the same artist perform on the same stage, live. But we’d be watching virtually.
Chris: Wow... and this technology already exists?
Stephen: Yes, and it’s improving rapidly. Last year, 12.3 million people watched hip-hop artist Travis Scott’s concert live in the hit game Fortnite. That’s about as many people as the average Monday Night Football audience.
But it’s not just concerts, Chris…
Kevin Péloquin is a history teacher who had planned a class trip to Greece last year. COVID scrapped his plans, but Péloquin had an idea. What if the class could explore Greece as it was thousands of years ago?
Assassin’s Creed is a video game series centered on pivotal times in history. A few years back, designer Ubisoft added an educational mode to the game. In short, it allows players to roam freely around famous historical sites. You can even chat with the locals about daily life.
Ubisoft granted Péloquin’s students free access to this tool. Instead of flicking through boring pictures of ruins, they were able to travel back in time and “visit” Ancient Greece:
Source: Ubisoft
Here’s another example. Berkeley students couldn’t have a normal graduation last year. So, they recreated the entire campus and held a commencement in the hit game Minecraft. It went on like a normal ceremony. The speaker was invited to the stage to give a speech. When the time came to hand out diplomas, graduates walked up to the stage, like this:
Source: UC Berkeley
The overarching theme here is more and more of the real world is shifting over to the virtual metaverse.
Chris: What do you say to those who’d call this just a fad?
Stephen: If you look at the past 40 years, more and more of our life has become virtual. And this trend is only accelerating.
You could fight it—or you can accept it, embrace it, and learn how to make money from it.
Already, many people earn their living through the internet and virtual existences. Whether that’s building games and earning money from them, or performing TikTok videos… Snapchat is paying some influencers $1 million per post!
History shows you’re much better off embracing transformational technologies. And there are mountains of evidence that the “virtualization of everything” is just in its infancy...
Did you see that a digital piece of art, basically a screenshot, just sold for $69 million? It’s part of the booming non-fungible token (NFT) market, which we’ll have to discuss in detail another day.
My point is... someone paid $69 million dollars for a piece of “art” that doesn't physically exist!
And have you heard of Decentraland? It’s a virtual platform where you can create, explore, and trade, and even buy and own land in a virtual world. Just two weeks ago, a patch of virtual “land” sold on the platform for $572,000.
Chris: So who are the key players working on the metaverse?
Stephen: The CEO of Nvidia is actively working to create a metaverse future. He partnered with BMW to create a digital twin factory in Germany. They use it to plan out new workflows before deploying changes in real life.
Epic Games, which is the maker of Fortnite, just raised a billion dollars to put towards building the metaverse. Investors include Sony and others.
You also want to look at Epic’s MetaHuman Creator, which is creating highly realistic digital humans.
Chris, these people look so real it’s almost scary. I encourage everyone to watch this short video here.
Source: Epic Games
A lot of people assume there will be a bunch of cartoon, “toy-like” figures walking around in the metaverse. It will certainly start out that way. But eventually, you’ll be able to create yourself exactly how you look right now, to live in the virtual world.
The gap between virtual reality and reality is closing at a very fast pace. In five years or so, most things in the metaverse will be indistinguishable from reality.
Chris: Well, we’ve covered a lot of ground here today. Thanks, Stephen.
Before you go… how can readers profit off the metaverse?
Stephen: My top metaverse pick owns the world’s most successful game engine. This disruptor is the first choice for companies launching into the metaverse.
This company is the builder that will help firms “break ground” on their digital existence. Disney already uses this disruptor to create new worlds and virtual characters.
The 10 largest carmakers use this disruptor, too. So do many of the world’s largest engineering and design firms like Skanska and Nike.
I detail this stock, and two others I believe will thrive during what I’m calling the “Millennial Melt-up,” in my brand-new briefing.
Chris Reilly
Executive Editor, RiskHedge
