"At the end of the day, is virtual reality dead? The answer is no. It's alive in the hearts of Generation Alpha who will really drive it to peak usage. The ones who are going to build and monetize it are the millennials and Generation Z.” - Jeremy Au
In this episode of BRAVE, Jeremy Au discusses the dynamics of the metaverse. He explains the parallels between the development of AI and VR in terms of generational adoption, the bullish market of VR in the long run, and the rise of whales in the next generation.
Jeremy Au: (00:50)
Is VR dead? There was a time when VRs felt very inevitable. I mean, obviously, there was the Oculus there was the PS VR. And of course, you know, we all remember when Mark Zuckerberg kind of promoted the Metaverse and how everybody would be part of a seamless dimension where we'll always be in virtual reality.
Now we're all cracking jokes and obviously, Facebook stock is dropping because a lot of folks don't believe that a metaverse is happening anytime soon, at least in the context of the stock market dynamics. For myself, you know, I think about it obviously at different layers, right? The metaverse is a very big phrase. One concept is about virtual reality, and the other aspect is about augmenting current reality. The third is the fact that as a single operable and interoperable universe people can interact with each other. And lastly, uh, the fact that there is economics involved with that universe.
For me, when I think about those individual concepts, VR, augmented reality, interoperability, and economics, for myself, I'm actually bullish about three of those four dynamics: virtual reality, augmented reality, and the economics of it. The part that is least believable to me is the fact that there's interoperability, at least in the magnitude that is done in science fiction. In science fiction, the multiverse, for example, in Ready Player One is one where everybody else is in it, and everybody can play it effectively, it's free to a giant extent. And I think there's a lot of truth to it, where I think you can imagine monopoly power or monopolist companies able to provide that at scale with economies of scale, and obviously making it as wide with as much IP possible, plugged in so that you could be modeling any avatar or character or storyline you want.
That's why it was such a joke, and also very believable when Facebook said, hey, we want to be Meta because the truth is for so many folks, you know, even if you're not using Facebook, you're probably using Instagram or WhatsApp. And so, the fact that most of our human communications happen within this platform actually makes it viable, I think, for it to happen on something like Ready Player One.
That being said, the reality from my perspective is that it's most likely that the metaverse will become the multiverse. There'll be multiple metaverses that are each championed by a specific big player. For example, Apple or Meta, or some future company. There will be limited interoperability between each network, but full operability within those networks. And so brands will have the power to choose which universe they want to be part of. For example, Marvel may want to be part of one or two of the universes. Some may choose to be open access. Some may choose to be exclusive. For example, Halo is only on the Microsoft system for Xbox and PC. Other games may choose to be Steam-like, that they're available on multiple universes.
I understand the bearishness because, within a short timeframe after the Metaverse was announced and popularized by Facebook, there was an epic stock market crash. And so I think people just look at it as cause and effect. That being said, you know, I think I'm obviously bearish on this in short term. For example, within the next five years, if I'm actually bullish on this over the next 50 years.
So why am I bearish for the next five years? The reasons are clear. The computing power isn't really there yet for comfortable headsets. There's a lot of iteration needed on the hardware side for you to get better and better and better. And lastly, there are a lot of people who just don't get it. They get motion sickness. They're just not used to the user interface. Yet, I'm a true believer. I've owned the Oculus Go the Oculus Quest One, and the oculus Quest 2. I still remember my first experience using the Oculus Go. And what was interesting was I was in Boston and I put it on, obviously I was playing around the different mechanisms and the different UX and the different apps, and I ended up in basically Google Map Street View, and basically I was going home to my childhood home in Singapore. I went to Petra, Jordan, obviously popularized by Indiana Jones and the lost arc, and traveling down a valley, I was walking around in Germany in Go Street view. Um, suddenly like two hours passed by. Right? And, and I came out and I was talking to my housemate who was doing VR back then.
Shout out to Luna Yuan, miss you, uh, for being my housemate and being the earliest believer in VR. And I explained to her like, oh, I was just using this app and, you know, Google Maps and just looking at street view and looking around, you know, the landscape. And she was like, oh, you are traveling. And I was like, oh yeah, you're right. You know, I was traveling. I mean, because I was traveling back home, from, uh, my bedroom. I was traveling to Jordan from my bedroom. I was traveling to Germany from my bedroom. I think the sense of presence and immersiveness that you get is really unbelievable and you have to try it in order to really understand it and believe it.
Technology has only gotten better since then, obviously. And you know, we see that everywhere, right? For me, the key insight is that next-generation technology is adopted by the next generation. I remember as a kid that, you know, I grew up with really bad desktops, right? So there's like Pentium 1, Pentium II, Pentium III, and you know, back then it was like amazing to have a gigabyte of memory space and hard drive and it was, wow, we had a graphics card and we would just tinker of our own PCs, right? My parents hated us playing desktop computer games, right? They hated us playing Utopia, which was a turn-based, kingdom-building simulation. They hated us playing Counter-strike. They hated us playing StarCraft.
My sister and I really bonded playing Half-Life together. And the truth is that she's always been a better first-person shooter than me. My parents and other older folks, when they play desktop games, they get motion sickness, they can't play it, and they don't get a user interface. And guess what, that sounds very similar to virtual reality, right? Because, my parents didn't understand, computer games, but guess what? My parents’ generation was the one that was building and eventually monetizing from me as a kid playing it. Now that I'm older in middle age, I recently went to the Dota II championships, right? We used to play this game called Warcraft III, and basically, there was a mod that basically made it into Defense of the Asians, right? Which was the creation of the game format. And we were weirdos who went to the computer gaming LAN cafes to play it in groups of friends.
And, you know, our schools panicked about it, our kids who are like trance, and escaping class to play it. Fast forward 20 years, right? And I'm in this stadium with tens of thousands of fans. There are million-dollar prizes to be won for the grand championships. The two teams are walking in with their, fireworks and people cheering like sports teams. And I was looking at this eSports thing and I remember I was talking to my secondary school best friend.
He was there for me and we used to play this game together, right? And I know I laughed and I said, Hey, guess we nerds became cool, right? You know, the nerds became cool. And now, it's, it's a sport, right? It's an e-sport, right?
And now it's only getting more and more popular. Right? Because we see that for mobile games. You know, I never really got into mobile gaming, but when I walk around, I can see generation Z, they're all using mobile games. That's the first introduction to gaming actually, rather than desktop. And so now, there are mobile gaming championships, where people are fighting each other, and winning prizes. And to me that's kind of weird, right? Because I'm like, yeah, why would you play a mobile game and you can play desktop games, which are so much better, with so much resolution, but you know, there's always that generational gap, right? Which doesn't really make sense. The truth of the matter is that guess what, it's us. Right? I know friends who are working right at Epic Games and they are working at League of Legends, and they're the ones, our generation, millennials are the ones who are actually building the games for Generation Z to play these mobile games similarly, you know. A lot of folks don't understand TikTok and me. I grew up using Facebook and Instagram and I think TikTok is just like one bound too far. It's too addictive for me and I also don't want to use it. And so I'm not native to it, but folks of my age who are building this product for Generation Z, they use TikTok, right?
So coming to virtual reality, it's interesting because when I play virtual reality, I obviously played maybe about once a month. For example, when I had Covid, I was in isolation. I was playing virtual reality. When I was, during the Pandemic Isolation, I was doing more VR and I remember playing some great games, right?
You know, obviously, there were individual games like Supernatural, which is basically like dance, revolution, but before fitness, which is a nice way to do a studio workout. It's a beautiful environment and we have great music. Fantastic game. I remember I was playing Onward, which is like a military simulation game. There's Pavlov, which is basically Counter-Strike in VR. I was playing Demeo, which is basically Dungeons and Dragons, a tabletop that you play with other folks in a social format.
The thing that struck me, I remember was that I was playing, and obviously, there's other folks who are roughly my age, right? Millennials are playing because we can afford VR and there were kids, there were a lot of kids playing VR and they were playing it naturally and they were really good at it. So I had this flashback to myself, back as a teenager playing Counter-Strike with my sister. We were really good at it.
And back then, we didn't know each other's ages and we would write chat messages. And we all pretend to be old or older than we were because nobody wanted to say like, hey, we're 12 or 13 or 14, right? And people would be like, A-slash-S-slash-L right? You know, age, sex, location, trying to figure out what age, what gender, what location you are.
So you know, obviously you know you're playing Counter-Strike in VR and you're getting cursed at by kids and you can hear like the parents in the background and some dog in the background, and you're just like to yourself like, man, I'm getting crushed by these kids who have like faster than me, et cetera. So for me, I ended up drifting towards playing Onward, which is a military simulation, which is rewards, wisdom, and patience, which thankfully as a middle-aged person, I have more of than a teenager. And of course, I have Army training as well, so I play converse nicely to Onward as well. .
So from my perspective, the next generation always seems to be wasting their time on some new FanGo tech, but it's the current generation who's working, which understands that language, especially when it translates to cash. Our parents' generation, the boomers made Pokemon, which became intensely popular across millennials and it's continuously popular today. And I see generation Z folks and Generation Alpha folks playing Pokemon, using these mix between giant screens in the malls, uh, some sort of like mobile phone integration and you know, physical cards and they're enjoying themselves, right?
The down arrow is that when it comes to virtual reality, the truth of the matter is that it's not going to be millennials that make VR popular, and it's not going to be Generation Z that makes it popular because they've already aged out of that adoption curve. My kids' generation Alpha will be VR-native. They're going to grow up where virtual reality has always been there. They have always used virtual reality and there'll be great experiences with each other with it. The most popular games and apps in virtual reality actually tend to be skewed toward younger, actually. And if you go, there is a whole bunch of kids who are all running around talking to each other around the world, learning to play poker in virtual reality because their parents don't know how to play poker or they don't teach them to play poker.
And I'm just watching from the side, right? In my virtual reality character and I'm just like, wow. Like this is the internet. Back when it used to be with no control, no filters, banging the internet.
So at the end of the day, is virtual reality dead? The answer is no, it's still alive. And it's alive in the hearts of generation alpha. And the ones who are going to use it the most and really drive it to peak usage would be generation Alpha folks. And I think the ones who are going to be building and monetizing, a lot of the folks are really in Generation Z, who are going to make it happen.
We see some of that adoption waves actually in Southeast Asia, where in the US, most gamers actually start to have desktops, right? Because our consoles, because you know, that was the first wave of gaming and this the predominant way. However, when I traveled to the Philippines or Vietnam, there are so many people, both boys, and girls who are playing mobile games.
Mobile games can be cute, they can be violent, they can be narrative, and they can be decision-making. Yet what I see is that most of them are playing mobile games, not just on the move, but also at home. It does make me think about where VR is going to be most popular. Obviously, it's a function of purchasing power because it's expensive to buy, like a console. It's also a function of gaming habits. It's a function of gaming properties and creators building for it. And you know, there's a bunch of science fiction talking about how virtual reality takes time away from in-person time. And it's a joke. It's a dystopian trope. And the fact is I have experienced it myself. I remember being unwell with a cough. I remember, uh, having a cough, and so I had to stay home. I had to cancel my social commitments, and so I ended up playing Demeo which is again, Dungeons and Dragons in VR. I was playing with an American middle age adult. I was playing with a Chinese lady, uh, you know, at least based on the language and accent. And lastly, I was playing with a European guy. And so we were playing our various characters to solve, go through this campaign that was a DLC. And so, I was playing for those two hours, right? And I finally got from the beginner stage all the way to level three and completed it.
Had a lot of fun. and I was really excited when I finally completed the last boss. What I didn't realize was that two hours had passed instead of like my 10 minutes or 20 minutes or 30 minutes because it was so immersive and so fun and so social that I ended up, you know, spending two hours on that and I had missed dinner with my kids.
So I ended up taking off my headset and shutting it down and I went down for basically the leftovers. And everybody else had already dispersed, my kids going to bedtime. I was like, oh, that's not exactly why I want, right? And so the next day I put my VR headset set and I moved it from my bookshelf.
In front of me and I moved it into a closet and closed the door so I don't see it all the time. It's cause I don't want to play so much VR because I have kids and I want to spend time and be present with them.
I'm a middle-aged adult with prefrontal cortex. Very big on producing, not consuming. I'm an early adopter. And you, yeah, I was absorbed and I loved the narrative of that campaign. We're going to see more of those moments, I think folks who are in VR for not just two hours, four hours, six hours, eight hours. And that's going to go up over time. In fact, I wouldn't be surprised if we go into the statistics from a product manager's perspective and probably see that similar to mobile games and other games. The truth is, that's probably a bell curve of folks in terms of usage patterns, right? From least usage to, you know, moderate usage to high usage, right?
But the high. I bet that they're spending a ton of time. It's like people playing World of Warcraft. Right. I tried it a little bit and I was like, nope, that's not for me. But I had friends who were there pretty much had their lives there. They played with their girlfriends and boyfriends there.
They made their best friends there at World of Warcraft. And that was a desktop game is a really bad cell count. And you had to be a desktop. You couldn't play with it. It wasn't immersive. You didn't have easy voice communications. It didn't have the current designer understanding of human psychology and the reward loops that make games really fun slash addictive slash liberating.
I think VR is going to become more popular in the next generation, and the popularity will also see the rise of whales. Folks who spend a lot more time than they would. I think that future, I think there'll become a time where we'll see newspaper articles about folks who spend too much time in VR, and there'll be that debate, cultural, and countercultural about what the right usage is. That being said, I believe that VR can only get better computing can get higher resolution, and can get more compelling, right? With better narrative social features, and even a monetization hook. And all those things will definitely make there be better production, quality games, experiences, and worlds, and that will also make it much more compelling for folks.
The truth is, I live a pretty good life, and so I want to spend life in the real world with my kids, you know, with my wife and my work, because I love my work. Yet there are so many people who are unhappy with where they live. They live in a small place, they don't have a great computer, and they don't like their job. And those folks are the ones that are really going to see, I think the rise, they're going to be the earliest adopters because the contrast between the real world and the VR world is going to be so much stronger and so much better, right? That will be an interesting future for us to live in. And it's already coming and is inevitable and it's already happening.
I think for decades we've laughed at the concept of hikikomori, Japanese individuals who are social recluses, right? They live at home, they're highly introverted. They are withdrawn from society, and they're often heavy users of computer games and internet technology, and online communication.
From my perspective, this is only going to become more prevalent over time. On the bright side, even though they are from a physical world basis, more reclusive and more introverted, we may actually find that they have a much more vibrant social life than many of us do because they're talking to 10, 20, a hundred, a thousand people online. So I think the definition of hikikomori is going to change over time, and broadened. And I think it's going to be a very big debate about whether we should be, you know, hikikomori-shaming or hikikomori-positive.
The one thing I'm also sure about as VR becomes more popular is that there'll be an increased counter-cultural phenomenon pushing back against VR, which also, again, what we talked about pushing back against AI and generative AI, which is that focus on in-person, that focus on humanity, the focus on authenticity. All those things will continue to be a very strong reaction by society against these forces of technology virtualization and online identities.