Activision Blizzard, Intellectual Property and the Metaverse
As we move toward a Metaverse future that likely involves many parallels with the Metaverse in Snowcrash or Oasis from Ready Player One, companies are engaged in an intellectual property arms race reminiscent of the Console Wars to own the building blocks of said Metaverse. When you think of who the early adopters will be, there will obviously be a big overlap with the gaming community, and anyone looking toward the Metaverse knows it. After Mark Zuckerberg announced his move to Meta, gaming companies may be competing to claim intellectual property with renewed vigor considering the additional options of exploiting them.
At its core, the Metaverse is almost entirely constructed out of intellectual property (IP), i.e. the copywritten Nike NFT shoes an avatar may be wearing or blockchain code that it may run on. IP, i.e. the copyright for Spider-Man, has been trading at a premium with an eye toward conjoined media that provides a universe, whether that be the Marvel Cinematic Universe, the ensemble of characters mashed together for a Smash Brothers game, or any number of other media that is linked in some meaningful, synergistic way.
Looking to the IP landscape, the purchase of Activision Blizzard by Microsoft, the largest gaming industry merger ever, will have deep implications on gaming today, and who owns what in the Metaverse tomorrow. While everything is still speculative, the Metaverse could potentially be a web of interconnected intellectual property set in an immersive environment valuable enough to make the current Marvel Cinematic Universe wail over their comparative poverty, with most of the media available in this Metaverse being controlled by only a handful of big players, i.e. Microsoft and Disney.
Disney is actually a good comparison to Microsoft right now: as the makers of X-Box, Microsoft already has a deep portfolio of intellectual property from titles like Halo, and are snatching up gaming properties the same way that Disney is buying up all the Marvel properties. In expanding their IP portfolio by acquiring Blizzard, Microsoft just acquired titles as influential as World of Warcraft, Crash Bandicoot, Diablo, and Overwatch. While these games are undeniably a bit past their prime, they are still some of the most valuable franchises in gaming, can easily be relaunched under new ownership, and have additional markets they tap into.
Some of these markets are obvious: sequel games like the next Diablo; spin-off media like cartoons and movies for streaming services; merchandise like official Overwatch cosplay. Zoom in, and there’s also the broader E-Sports market for Overwatch, a rapidly-growing sector of the gaming industry that produces its own IP like logos and merchandise for the Overwatch League (OWL), as well as its teams and players. These players then provide additional value as celebrity E-athletes in promoting the game, as well as their teams, selves, other games, and NFTs in podcasts, YouTube videos, and Twitch streams. These are all lucrative aspects of gaming that are derivative from the game itself, and there’s no way of telling the complicated ways in which they become monetized, though one of the more obvious ways is tokenization of merchandise or items, i.e. the golden gun that is awarded to Overwatch players at a certain level of accomplishment.
Now let’s be honest: NFTs today are usually tokens that relate to images that, frankly, I don’t think are worth much and will likely lose their value when some catalyst pops the NFT bubble (update: I was right), and then we pick amongst the survivors to see what has any value like when the .com bubble popped: when that happened we lost a lot of businesses like Pets.com, but we kept Amazon, and something analogous will likely happen there.
The games incorporating NFTs are not yet competitive with AAA gaming standards: as a gamer since the ’80s and someone hodl’ing about 75% of his savings on the blockchain, I feel confident in saying there is no NFT game that can compete on the same level as the latest Nintendo, Blizzard or Playstation games. While there has been one AAA gaming company, Ubisoft, that rolled out NFTs, it was instantly met with a tsunami of nerd-rage.
The technology needs to mature, the games need to get better, and the crypto nerds need to figure out a way to incorporate NFTs in a way that is less environmentally damaging and won’t exclude those without a blockchain wallet willing to pay for NFT items: it’s the same issue that South Park so skillfully lampoon’ed in the episode Freemium isn’t Free, and, unfortunately for the crypto industry, winning by outspending your opponent via microtransactions is an obvious way to profit, but royally pisses off gamer communities.
South Park was Right: Freemium ISN’T Free
That being said, especially in our current fractured entertainment landscape, having a deep portfolio of IP to draw on as these technologies mature and develop room to put in NFTs seems like a good long-term investment. This has been shown to be workable as players spent billions on dances, skins, and other in-game, monetized products that don’t affect gameplay in Fortnite, illustrating the potential of monetized in-game features (NFT or otherwise) that do not offend gamers and could easily form the on-ramp to get NFTs in mainstream gaming.
It’s hard to summarize a concept as complicated as the Metaverse, let alone foresee how it may interact with the still-emerging technology of NFTs or how that will be integrated into a game run on some future device that brings us all into a speculative, virtual world of intellectual property; the closest analogy to theorizing what the Metaverse will be would be trying to read a crystal ball in 1990 to predict where the electronic Wild West of the internet would ultimately take us, i.e. identifying the jump to mobile apps before the first iPhone.
As a final thought, however, I’ll leave you with this: should Microsoft do a post-Metaverse deal with Disney, this deal could potentially involve roughly 50% of all the media we all loved as a child. With every indication showing likely further consolidation in media moving forward with a strong trend of FTC and Congressional inaction, I see no reason why the Metaverse would be any different than the media competition we have over streaming between Netflix, Amazon, and HBO today, or the Playstation/Sega/Nintendo console wars of yesteryear.
This is exciting as mergers like this were what allowed cinematic universes and games like the Smash Brothers franchise to bring together some of our favorite characters from across genres: we’re one deal away from seeing Halo’s Master Chief get into a cage fight with Darth Vader refereed by Wolverine.
I have no idea where this will all lead, outside of the fact that Microsoft will probably end up with even more of my money, and I will likely be pretty eager to hand it over under the right conditions.
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