Sports has always felt like the polar opposite of virtual reality. One is physical and tactile, the other is perceptual and intangible, one is mainstream, and the other's still pretty niche. But more and more, they're becoming intertwined. I think it's time for my workout.
You seem like a natural. Whoa! That's a little too realistic. Athletes, fans, and people just trying to get in a good workout are discovering that the virtual world holds new possibilities, and companies like Meta, the corporation behind Facebook, are hoping they can draw new adopters by getting physical virtually. So we think, just generally speaking, there's a huge application for sports in the metaverse and in virtual reality. And I think it's truly gonna enhance the way that fans, players, everyone just experiences sports going forward.
And for the world's most valuable leagues and teams, can these new digital ecosystems allow fans to not only consume but participate in their favorite pastimes? Or will they not even make it out of the starting gate? That virtual selfie we saw of Mark Zuckerberg, that's a $10 billion selfie. That's what $10 billion buys you. That's where the criticism's coming.
So if you wanted to think of what is the hardest thing we could possibly do in the metaverse, it's probably in the area of sports today. Oh. Uh oh. Don't tell me I drowned the ball. I'm as bad in here as I am in real life. Whoa. This is Jason Rubin, or at least his avatar.
He's the vice president of metaverse content at Meta, the company formally known as Facebook. He has a long history in games from creating "Crash Bandicoot", to forming the gaming studio Naughty Dog. However, that experience hasn't translated to virtual basketball. Somebody in the background is coding furiously to make sure I don't miss at this point.
This basketball hoop is part of Meta's "Horizon Worlds," a sort of digital meetup space where you can build your avatar and connect with others in virtual reality, doing everything from work meetings, concerts, or casual conversations near a digital beach. Is this the metaverse? Are we in that right now? Or what would you say this is right now on the scale? We are in the metaverse in the same way that if you're on a webpage, you're in the internet, but you are not the internet, right? It's gonna take a while for us to build a massive metaverse that feels like a metaverse should be and you'll never see every corner of it. I mean, that's part of the fun of it.
Now, the metaverse is a buzzword we've heard a lot in the last year. The metaverse, the next frontier of the internet. Big tech, big brands, big ambitions, people and companies are pouring hundreds of millions of dollars into the vision of the metaverse.
That reportedly is a place where we can all go and hang out and do business and pretty much live our lives, or at least our avatars can live their lives. If you go back to the '80s, there was a movie called "Tron." Who's that guy? That's Tron. He fights for the users. People started to imagine, "What would it be like if I was inside of the arcade or what if I was inside of the computer?" What would happen in that world? What kinda opportunities would get created? This is Ben Grossman, the CEO of Magnopus, who worked in the VFX and film industry for years before starting to work on bridging the physical and digital worlds. The internet right now is like a newspaper. It's words. It's pictures.
You click on the words, it goes to other things. You click on the pictures, they move into videos. So the internet is connected pages. What we're moving towards now is more the way of the world works: connected spaces. If each of those spaces can exist between the physical layer that we all live in and a completely virtual layer, consumers will be able to interact with content the way that they want to, in the context that they want to, and probably moving towards one universal device that helps them do it. Building out this new form of navigating our digital and physical lives is something the largest tech companies in the world are dedicating vast amounts of resources towards.
Meta, Apple, Google, Microsoft continue to make long-term investments in hardware and software to bring consumers and companies into immersive 3D worlds. I sound like a boomer, even though I'm not, but I'm like, "I'll just hang out in the real world for now." I am a boomer and I'm gonna say, "I just wanna hang out in the real world."
The term metaverse is pretty problematic because it originates in science fiction and it's associated with a little bit of a dystopian vision that not everybody would think is, you know, something we should all be aspiring towards building. Unfortunately, all the other terms that people have come up with haven't really taken traction, and then courtesy of Mark Zuckerberg's decision to change the name of Facebook to Meta now we have metaverse. Starting today, our company is now Meta. Now, we have a new North Star to help bring the metaverse to life.
Meta has invested billions into this space, including reporting a $10 billion loss last year on its virtual and augmented reality arm Reality Labs. This move to the metaverse started back in 2014 with then Facebook's acquisition of VR headset maker Oculus for $2 billion. So they were really kind of in a very vulnerable business position with Google and Apple effectively controlling their access to most of their customers. So Facebook needed to kind of say, "Well, I need something that's next that we can control in its entirety." They would argue that that's in order to drive a better experience, or in order to create something that you couldn't have done while working through the plumbing of the traditional internet.
I think renaming themselves Meta is probably an indication that they are tripling down on this idea that the metaverse is the next big idea. Companies like Google, Valve, Sony, and Microsoft have all introduced products to the VR and AR space. Even Apple is rumored to be developing its own device.
Meta has been one of the more visible companies in this space, aiming to create products and content, not just for gamers, but for everyone. However, early versions of what the metaverse inside those headsets look like have not always been met with excitement. There are larger issues here outside of Mark Zuckerberg posting a really weird baby-like selfie from the metaverse and his time on the Rogan Podcast. It really goes down to whether or not people can even figure out what they want a headset for. If corporations want headsets to be the next smartphones, they're going to have to make virtual reality more accessible and fun.
One way to do that, sports, even simple ones, like throwing a basketball in a hoop. Next time I do an interview, rule number one, gotta learn how to do the basketball before you're doing it, right? There it is. Okay. There it is! Oh! There it is. All right, now I can go home and sleep. Yeah.
But that just gave us something to do. Like, we're talking, right? This is what you would do with a friend doing something. It doesn't have to be basketball. It could be whatever.
But this is very different than sitting on VC with your hands in your lap talking. Meta's really excited about sports and fitness inside VR, inside the metaverse, for a lot of reasons, but one of the main reasons is it tends to be a social activity, and VR and the metaverse are social activities. We're excited in a lot of aspects of sports. We're excited in people's ability to see professional sports, that they might be stuck at home alone, you can see it with other people, more excited about people playing sports together, whether it's recreations of real-world sports and virtual reality, or it's new types of sports that only exist in virtuality, only exist in the metaverse.
And there's also aspects like training that are starting to work now where people are training to become baseball players inside virtual reality, inside the metaverse. All right, we're ready? Okay, watch my bun there. Drill of the goal is to score as many touchdowns as you can. Show me how it goes, so I'ma need you to show.
How many you got? Yeah, I got the high score. Um, alright. So you got your play call. Tap the break button. Boom. Now you got that, you're good. Hit break. Okay, cool. Boom, and then you gotta find your guy and throw.
This is "NFL Pro Era," a newly released virtual reality game that puts you in the helmet of your favorite NFL quarterback. You can select your team, pick your favorite play, and then just like a QB either hand the ball off to a running back, find an open receiver, or take off running, but with a joystick. Oh, you got sacked. Oh, dang. You gotta get that ball out. You gotta get the ball out. Ball two!
The game's available on a couple headsets and made by developer StatusPRO, founded by former NFL wide receiver Andrew Hawkins and former Division 1 quarterback Troy Jones. The pair started with developing training products for pro teams that used augmented reality so athletes could practice with both real and virtual teammates. Now. they wanna bring that experience to a wider audience. Football is such a unique game because it's something that you can enjoy and watch and spend time with your family doing, but to get on that field and see it from the player's perspective and actually play it, I do think you'll gain a deeper appreciation of what goes into what you see on TVs on Sundays, and that's something that obviously as two former players we're passionate about.
We kinda had this vision of "Man, this technology was going to be the future, right, and how do we find our space in that?" We're both former athletes, so we have a specific way of looking at it, and we felt like there was a way for us to kinda create an experience that everybody could participate in from athletes, to coaches, to front offices, to fans. And in my demo, the immersion factor was believable. It felt like I was actually taking a snap at Acrisure Stadium. The sounds of players running at me made me afraid to hold onto the ball for too long. It wasn't perfect, however. While fans of teams might recognize their offensive line by their numbers, their faces aren't as realistic, and occasionally you'll see some players defy some laws of physics.
But even when things went wrong, the game still felt fun. You see the guy to the slot right here, number three, again? He's gonna break inside in the middle. Let's try to hit him in the middle when he breaks.
Oh my god. Oh, you got the wrong hand? Uh oh. With a left-handed touchdown? "NFL Pro Era" is not the first American football simulator to be created in a VR headset. There have been arcade-like games like "2MD" and "MVP Football," as well as what is essentially immersive advertising from Gatorade that features Peyton Manning. Before we get you back out there, we need to talk about hydration.
But importantly, it's the first to have the official license with the NFL, and it's the first NFL branded video game of any kind outside of "Madden" to debut since 2004. I think the NFL, you know, just to be clear, they are the most powerful sports league in the world, and I think for them it's about making sure that if they're going into any partnership with someone it brings value to their fans and to the league. And when you sit, even people who work for the NFL on the 50 yard line of the Ravens stadium, or the Eagles stadium and on the Giants stadium are like, "Wait, I even realized that I've never been in this position."
I think when that started to circulate around the league and they started to see how this could potentially change their fans' experience, they immediately saw the value. Traditionally, fans of the NFL have been able to have this experience already through the "Madden" video game, a yearly release that sells millions of copies despite lackluster reviews over the last five years. "Madden," from publisher EA, has the advantage of launching on all the major gaming consoles as well as for PC and mobile devices. Sales for StatusPRO, however, will be limited to only owners of virtual reality headsets. We don't know exactly if VR is ready per se.
That's not something we can determine, but what we know is we can bring an experience that your fans have never had. And our goal and our hope is to be one of the experiences that continues to contribute to the upward tick of VR and make it more ubiquitous. All right. Let's roll. This is 2369 warm up, take one.
Mark. Ah! Okay. Whenever you are ready.
All right. Outside of the draw of major sports leagues, like the NFL, one area that is bringing a larger and more diverse group of users to VR has been fitness. This is 236900 bagatali and your warm up is in New Zealand. What's up, athlete? I'm Coach Leanne. Welcome to Sweat Symphony.
Shake everything out. At first glance, this might sound like the start of any instructor-led workout. But from inside a headset, it feels more like a mixture of a Peloton class and "Guitar Hero." "Supernatural" was essentially created by two people who hated working out and wanted to find a way to make working out something that was actually fun instead of dreadful. This is Leanne Pedante. She's the head of fitness for "Supernatural," a VR app that feels more like a fitness studio than a traditional game.
You put on this headset and you're transported to a beautiful immersive location, like a Galapagos Island or The Great Wall of China, and you're smashing or boxing to targets that are flying at you to music that you know and love while being coached by a coach like me, who is guiding you through the experience and reminding you what an amazing athlete that you are. "Supernatural's" also structured more like a fitness studio. You buy a membership for around $20 a month, and you can choose from a list of workouts like boxing, flow, meditate, and stretch, and new workouts are added every day. Launching in the spring of 2020, the app gained popularity as many people were searching for ways to work out while under lockdown, and notably people who didn't traditionally visit gyms. Myself, I've been a "Supernatural" athlete for just over a year now.
Fitness presents a lot of barriers for a lot of people. A lot of people feel left out of fitness or they feel unwelcome in gyms, and "Supernatural" has the most diverse community of users and members that I've ever seen in my career. We have members from their 20s to their 80s and 90s. We have members who are using this to train for ambitious sports, and we have members who have never worked out before in their life and are doing it for the very first time. Growing and expanding that user base, especially to an older and more gender diverse audience, is incredibly important to companies hoping to profit in the metaverse. On October 28th, 2021, Facebook rebranded as Meta.
The next day, it announced plans to buy "Supernatural's" studio within for a reported $400 million. But in July of 2022, the FTC sued to block that purchase saying Meta is trying to buy its way into a monopoly over virtual reality. In a statement, Meta claimed their purchase would only benefit the industry saying attempting to bar Meta for making acquisitions at all benefits no one, especially if the goal is to encourage innovation and competition.
While many studios are hard at work to find what could be the killer app when it comes to virtual reality, the other question that remains is if this new spatial internet does materialize, how will companies profit from it? And that leads to the bigger existential questions around the intimate, some say invasive, role big tech companies like Meta and products like Facebook play in our lives. Right now, there are a lot of companies that work under a surveillance capitalism model. It's not the greatest word, but it kind of accurately describes the fact that the people who were once consumers are actually the product and their data gets sold to businesses who then advertise products to them, and that's the economic engine. This advertising business is massive. In 2021, Meta brought in $116 billion in revenue and $57 billion in profit from online ads. In the past, Facebook has drawn blistering criticism from across the private sector and government regulators about its collection and role in spreading disinformation and hate speech.
And devices that would allow you to access digital worlds also have the ability to access more data about you, your location, your interests, and down the line, potentially even your emotions. So a lot of concern has been put into can we create a healthy economic model in a metaverse that isn't requiring advertising? And so the reality is since the metaverse is really just a mirror of physical society by digital means and the spectrum in between, you can take any way that you can make money in the physical world and you can just do it digitally. Some of the biggest sports leagues in the world are already testing this theory, starting with maybe the most obvious selling tickets to virtual games.
Jaylen Brown took it in. That's a three from Al Horford. The new era of technology with the metaverse AR, VR is really just the latest chapter in an effort the NBA has been making for years, which is how to connect the game with fans, and more fans then can fit in the arena. This is Jen Chun, head of partnerships for the NBA, who have been an early adopter of VR technology. Back in 2015, the league was capturing a VR courtside experience, at a time when 360 cameras were still held together with tape.
The actual capture technology of the cameras has improved, but I think also it's the experiences around where you find those games. So for example, this last season, in addition to being able to go into "Horizon Worlds" to actually see a game in VR, you could experience what we built called NBA Lane which celebrated our 75th anniversary. So instead of just being able to watch the game, you could go into the virtual amusement park and actually yourself participate in slam dunk competitions, firing t-shirt cannons, and walking around in VR with your friend or other NBA fans.
This last season, the Brooklyn Nets and the YES Network released what they called the netaverse, a glimpse at what is possible in the future of viewing sports. While far from perfect, you could view the game from any perspective on the court. And just like going to a game in real life, proponents of a digital economy believe you'll be inclined to purchase merchandise, maybe a virtual hat or jersey for your favorite team that your digital avatar can wear. The NBA has also experimented in the NFT market with digital trading cards based on highlights. But I think what it really comes down to is the emotional attachment that fans have to the games, to particular moments in the games, and so to give fans the opportunity to have a sense of ownership of certain moments in the games is an incredible connection directly to the fan.
See what we got here. Door number two. It's unclear whether this emotional connection to teams or players is enough to create real digital values in these spaces. While Top Shot cards gained popularity early, their sales have since declined drastically. But for the NBA, creating these digital experiences in merchandise are more testing grounds for how future consumers may behave. Innovation has to have a lean forward, bold, testing, take that first step mentality to it.
It's a build it, they will come kind of attitude, but I think it's most important for us to continue to make sure that fans can connect to the NBA. After all, leagues like the NBA or NFL are slow to change, especially when it comes to how we watch. Sports commands some of the largest media rights deals in the world, and changing them, even to popular streaming sites, has been a slow process.
But for Meta, they have high ambitions for how future fans will engage with sports. The ideal scenario for me is that sports gets to a point where in order to truly experience the fandom of the league you're most passionate about, or the team you're most passionate about, you have to do it under quest. The history of new technology being rolled out certainly supports sports helping drive audiences. We saw it with Fox becoming a major network by going out and acquiring NFL rights. We saw direct TV go after NFL rights as well in order to get audiences to pay for their products. Football? Up to 13 NFL games every Sunday if you want 'em.
I love you. I know, sir. What we're excited to see with VR in the future is the ability for this to become a part of your common behavior, the best way that you could watch, express, and really engage around a live sports event. But as Ben Grossmamn explains, having the metaverse, whether that's an AR or VR experience, be the primary way we consume sports from a technical perspective is still a long way off. Sports is fundamentally one of the few things left in society that is very dependent on the power of live. Latency, the time it takes between I did something and I received input in the metaverse is extremely critical and very difficult.
In sports, it's the difference between win and loss, and in the metaverse it's one of the hardest things to achieve. We're gonna take things up a level and talk about defense and footwork. Fists in front of your face.
The metaverse can feel fun at times, but also frustrating and empty. The idea of watching something inside of it with friends often still requires a lot of time and effort, and there's almost always some kind of bugs in the experience. I think for people who are trying to tackle sports specifically in the metaverse, the rewards that are on the table are pretty significant.
There's a lot of money in that area, and there's a lot of complexity, and the solutions to those problems are pretty ubiquitous. They apply to so many other things. If you can solve the problems in sports, well, then you can work backwards from that. You can do movies and television type content. You could also get into education and a million other things. It is an argument to be made that you find those things that have the biggest economic opportunity, you work at solving those problems, and then you use those solutions to kind of go after the things that have less treasure at the end of that hunt, so to speak, and I think sports is one of those sectors.
2022-09-23