The Metagame — Part 1: Origins
Origin story
I have been playing video games for a long time, so much so that I can almost claim that I have been gaming since I was born.
One of the first games I played was The Lost Vikings, which I beat on my dad’s Super NES when it launched in 1993. This was a puzzle-based side scroller that required alternating control of three super adorable Vikings that have been captured by aliens in order to help them escape their captors.
I was about 3 years old!
I later played Wolfenstein 3D and Doom in 1994, and Shadow Warrior in 1997, all of which were literally mind-blowing for a kid at that age. I was exposed to such indiscriminate and obscene levels of gore and violence that ESRB raters would probably be shocked at how balanced a human being I turned out to be in spite of my experiences.
Case in point: In Shadow Warrior, you can decapitate an Orc Guardian, stick your fingers into the back of its severed head, and use said head to spit fireballs at your own enemies. Many things were burnt, including the following image in my mind:
Fortunately and contrary to popular belief, exposure to violent games does not a sadistic wanton murderer make. I grew up pretty okay, and am today a self-proclaimed normal-functioning member of society, although in retrospect I wonder from time to time if all that sadism was manifested as masochism when I chose to start my career in investment banking.
These games did not turn me into a monster, but what they did was to kindle an obsessive passion for video games from a very young age. My bar for video games was so low it was practically underground, and I spent most waking hours of my childhood glued to any console and game I could get my hands on, much to the ire of my stereotypically disapproving Asian parents. Over the years, I have amassed a colossal repertoire of video games under my belt.
All this is to say that I have an inordinate trove of video gaming experience and knowledge accumulated over the last 30 odd years, upon which I can apply my investment principles to formulate theses on the space.
Looking back, one of the inflection points in my career was in 2017 during my stint in Temasek’s TMT investment practice, where I worked closely with two ex-colleagues-turned-friends to build the video gaming thesis that culminated in a number of video gaming investments for the firm, including Temasek’s participation in Roblox’s Series D round.
At the time of investment, the implied per share price was roughly ~$4 per share, and today it is hovering at ~$120. Friends and family reading this would recall me fervently pitching to buy the stock at IPO reference price of ~$45. Seems strangely long ago when we used the word “pitch” instead of “ape” to recommend the purchase of financial securities.
We did other video gaming investments as well but this was the crown jewel. Not everyone gets to make a 30x MOIC investment in their lives so please let me have my moment.
Fast forward another year, and I’ve now started my role as Principal covering video gaming investments at Sea Capital. This is pretty much a dream job for anyone as passionate as I am in investing and video games, and it is here I have found myself working in my “zone of genius”.
I pretty much work non-stop now, except it doesn’t always feel like work. I’m perpetually glued to my phone reading blogs, listening to podcasts, and devouring any source of video-gaming news and insights that feed into my mental library of gaming knowledge. Drinking from the veritable fire hose so to speak.
Perhaps it's not so much “working” as it is “thinking”, because apart from my day-to-day work I spend most of my leisure hours consuming and synthesizing information around me to inform my thesis on the space.
So what have I been thinking about recently?
What will Video Games look like in the future?
If you think this is a basic question, then you are half-right, because this is in fact not basic enough.
One of the favorite mental exercises I learned in the past couple of years when trying to figure something out, is to engage in Aristotles’ “First Principles” thinking. This is a physics-based mental model wherein one seeks to break down a complex problem into its most foundational elements that cannot be deduced from other propositions and reason up from there.
Here is a real-life example — Consider the proposition that my wife used to make all the time before she met me:
All men are pigs
Thinking from first principles, this is how one would break down the statement into modular parts:
- All men are pigs
- Jonathan Huang is a man
- Jonathan Huang is a pig
As the last axiom cannot be further deduced from the other two, it is the underlying first principle of this (highly fallacious) statement.
Why is this important?
The web3.0 gaming space is moving along very quickly, and there is tremendous value in having a serious reassessment of all our underlying base assumptions of video gaming in order to rebuild an updated perspective of the space. If you tear away all the jargon, buzzwords, and fancy novel concepts inherent within blockchain games today, what are you really left with and where is that actually going? Do the P2E games today represent a paradigm shift in what the future of gaming should look like or is this another transitory phenomenon?
I leave you with these questions and will come back to you in my next post, with my view on what the space looks like in the future, starting with a deconstruction of the current state of video games.
In the meantime, I invite you to participate in the following mental exercise to think about (yet another) fundamental question:
What is the Metaverse? How do you think about this from First Principles?
Today, one of the most viral metaverse narratives that has been fed to the mainstream, is an online 3D world where users are represented by their choice of a unique personalized avatar.
This is probably what most people envision when asked to imagine a metaverse. My view? This is probably the wrong way to think about the metaverse, and in fact, I actually think that the above narrative doesn’t go anywhere in the next 5–10 years. Pretty bearish opinion, given the r̶a̶m̶p̶a̶n̶t̶ ̶a̶b̶u̶s̶e proliferation of the term “meta” or “metaverse” over the past year or so.
The concept of the metaverse is actually not a new one, for it has been written about as early as 1992 in the book “Snowcrash” and later popularized by the movie “Ready Player One”. A dissection of the term metaverse deserves an entirely separate post by itself, but if you don’t have time to trawl through endless tomes on the topic, consider the following:
In Snowcrash and Ready Player One, the world is one of a dystopia. As the physical world has become undesirable to live in, people abandon their physical selves in order to role-play in online virtual worlds via alternative representations of their selves known as avatars.
This is why others have also made a similar realization that the metaverse may not actually be a place, but a moment in time. Once people spend more time as their digital selves as opposed to their physical selves, then we would have crossed the rubicon known as the metaverse.
Here is another take on role-playing in the metaverse: Children love role-playing and taking on different identities when they are young, but as children get older, the desire to abandon one’s identity that has been formed over an entire lifetime, is probably not that common.
In fact, the people who actually crave such experiences are probably a very limited subset of the entire population, which was one of the key learnings by the founders of one of the earliest metaverse games, Second Life, in a recent podcast.
People who seek escapist realities are probably living in their own versions of a dystopia (e.g. If you were living in North Korea), outside of which I struggle to believe there is any latent desire to abandon reality for an online self.
If the world is a dystopian one per the image above, then yes the current narrative of “metaverse” might be where we are headed, but let’s face it, 6% inflation itself is not enough to call the world we live in a dystopian one.
All this is to say there is a fundamental mésalliance between the current definition, understanding, and hence value proposition of proposed metaverse narratives vis-a-vis the target market they seek to address, and in turn, informs my thesis that most metaverse natives today will probably transition into something entirely different in the longer term.
So how do we think about the metaverse?
The definition of a metaverse is a “persistent, online environment where users may interact with the environment and other users”. Now that you’re equipped with the basics of first principles thinking, how do you think of and about the metaverse?
Chew on this while I carve out time to flesh out the next part of this series, where I will write about my thoughts on the video gaming space.
[From time to time I also tweet incoherently about thoughts distilled from my random streams of consciousness. If you are keen, you can follow me here]
