Chapter 1: Microsoft's Bold Move

You may have heard about Microsoft's staggering acquisition of Activision Blizzard for a whopping $68.7 billion. This figure is so astronomical that it positions Microsoft as the third-largest gaming entity globally, trailing only Tencent and Sony. However, is this merely a maneuver to eliminate competitors?

While there's certainly an element of competition, the underlying strategy goes deeper. Under CEO Satya Nadella's guidance, Microsoft has transformed into a more competitive and profitable organization by embracing openness and generosity with its once-proprietary products.

Take note of another impressive statistic: there are over three billion gamers around the globe, and only a mere 8% are devoted console users. This indicates a broader trend—people prefer gaming online, unrestricted by time or location.

But let's not limit our perspective to just gamers; at their core, they are individuals. What is the most valuable asset these individuals possess that businesses covet? It's not just their finances or time; it's their attention.

Understanding the Metaverse

Before diving deeper, let’s clarify what we mean by "metaverse." Merriam-Webster defines it as "a highly immersive virtual world where people gather to socialize, play, and work." However, this definition focuses primarily on the virtual realm itself, neglecting the critical factor of motivation—why people engage in these activities.

To me, the term "metaverse" represents a digital space where individuals divert their attention from the physical world to connect with others. Nadella highlights the significance of gaming in this context:

"Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms. We're investing deeply in world-class content, community, and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive, and accessible to all."

Nadella’s perspective is shaped by personal experiences, particularly his advocacy for empathy and human-centered design after his son was born with cerebral palsy. The metaverse embodies inclusivity and decentralization, aligning with his vision of safety and accessibility.

The Future of Creation

The metaverse signifies a significant advancement for everyday creators, liberating them from the limitations imposed by Web2 platforms, where platform owners can manipulate algorithms to disrupt businesses. However, large corporations like Microsoft still have a vested interest in capitalizing on this burgeoning space.

If you view this as merely a land grab, you’re missing the point. It’s about claiming a stake and swiftly developing solutions that people seek—be it entertainment, functionality, or value—while embedding your business within others.

The Monopoly Analogy

Disregard the term "Monopoly" for a moment, even though Microsoft's acquisition of Activision Blizzard could be likened to a strategic play in the game. In Monopoly, acquiring valuable properties early on leads to greater wealth over time. As tech giants like Facebook and Microsoft lead the charge in the metaverse, smaller companies must also consider how to establish their presence.

The metaverse's development is intriguing for numerous reasons, notably that the essential infrastructure—blockchain and cryptography—is already in place and decentralized. This means no single entity owns it. Yet, centralized services will undoubtedly emerge. Chris Dixon reinforces this idea, suggesting that using blockchains to create networks can ensure that benefits flow to public goods rather than solely to service providers.

Capturing Attention in the Digital Age

"Where attention goes, energy flows" has never been more relevant. Investment and innovation are increasingly directed towards Web3. Notably, Sunny Jain from Unilever and Ryan Wyatt, formerly of YouTube Gaming, have shifted their focus to capitalize on these technological megatrends.

Wyatt's new role at Polygon Studios highlights a crucial aspect: the need to attract and maintain core audiences' attention. To achieve this, companies must immerse themselves in the ecosystem, not by dominating it but by equipping creators with the necessary tools and support.

The aim is to "hack the attention graph"—to identify areas of limitless potential for growth and seize opportunities. The key lies in enabling creators to thrive, which in turn draws audiences to engage, support, and invest. This model echoes what Steve Jobs accomplished by democratizing tools for creative expression, leading to industry disruptions and the emergence of new revenue streams.

Metrics Beyond Dollars

If the price tag of Microsoft's Activision Blizzard acquisition has you puzzled, you may be miscalculating its true value. It’s not just about acquiring an impressive portfolio of intellectual properties. What truly matters is the vast audience of gamers who dedicate countless hours to these experiences.

Microsoft's investment in cloud-based solutions is crucial for supporting this growing community. As noted by Kiplinger, the acquisition provides Microsoft with an additional avenue to leverage its robust cloud services.

The gaming industry's revenue skyrocketed to $155 billion by 2020, a tenfold increase over 15 years. While some view Microsoft’s acquisition as a bold gamble, it can be seen as a calculated move in the evolving landscape of Web3.

What are your thoughts on Microsoft's strategy in the metaverse? How might it influence your own business? Share your insights in the comments.