TechCrunch Newsletters - Week in Review - Metaverse M&A

Saturday, January 22, 2022 • By Lucas Matney

Hello friends, and welcome back to Week in Review!

Last week, we talked about why gamers hate NFTs and how they’re dealing with what seems to be the industry’s inevitable push towards market-pegged in-game items. This week, we’re taking a gander at Microsoft’s “metaverse” M&A and whether their strategy will beat Meta to the punch.

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the big thing

This metaverse hype ain’t it.

As someone with a burgeoning collection of progressively dusty virtual reality headsets, I can confirm that the industry’s problems are not due to a lack of Facebook-branded social spheres or a plethora of disappointingly fungible assets. Every time you hear “metaverse” I want you to think of a cackling Meta communications executive or a marketing manager at a rando company trying to give his aging corporate parent shell the impression of being “innovative.” The term means nothing, but that’s not to say it isn’t representative of an interesting (albeit philosophically distinct) gaming trend.

People aren’t hanging out as avatars in wholly 3D places for fun; this is an incredibly niche habit. People are hanging out in 3D places because video games are amazing. Sure, the monetization of modern games are frustrating and the industry could certainly use some young blood to shake up tired practices that gamers hate, but massive multiplayer titles are getting deeper and more intoxicating and that’s a trend worth betting on.

It’s a trend that Microsoft bet big on this week when they made the surprising move of acquiring Activision-Blizzard for an eye-popping $68 billion.

The deal, if ultimately approved by regulators, would bring a wealth of gaming franchises to Microsoft including Call of Duty, Overwatch, World of Warcraft, Guitar Hero, StarCraft and Candy Crush. The deal would add to an already-growing wealth of Xbox Studios assets. Microsoft already snapped up ZeniMax Media properties including The Elder Scrolls series, Doom and Fallout in a 2020 $7.5 billion deal.

Like the web 2.0 properties before it, the “metaverse” is all about owning a user’s time online. In some terms, what the metaverse really seems to be, is the idea of users spending time online doing increasingly dull things, but as an avatar in a 3D virtual world. Gaming is focused on keeping things far from dull, but as MMOs grow more lifelike, the hope is that these separate worlds all bleed into each other and that users begin thinking about their online presence as something more cohesive.

Consolidating all of gaming’s titles behind a single user interface has been one of the more unbelievable elements of “metaverse” promises, but with money comes options and Microsoft has proven its willingness to spend its way into dominance. Xbox was a firm second-place finisher in the last bout of the console wars, with PlayStation exclusives providing a boost to Sony’s efforts which enticed gamers towards the PS4. With Game Pass, Xbox is making a bet on a subscription plan that can bring gamers access to the most popular titles with a single monthly transaction.

Building a 3D online home which gradually encroaches on what users do in the real world, is a decidedly weird future, but it’s clearly at the end of a road that many people have already been on for a while. Facebook (Meta) is taking the hardware route aiming to provide an experience that isn’t possible on consoles, but Microsoft is spending its way there with its substantial cash reserves. It’s hard to imagine that Microsoft doesn’t have more luck.

How leading brands streamline collaboration and design

Here are a few stories this week I think you should take a closer look at:

European privacy regulator calls for ban on political ad microtargeting
Europe’s top privacy regulator, the European Data Protection Supervisor Wojciech Wiewiórowski detailed that the government body should be strengthening regulation targeting political ads to include “a full ban on microtargeting for political purposes”.

With sweeping antitrust legislation that breaks up massive companies proving to be a task too laborious for politicians to handle, it seems that regulating the mechanics of the digital ad market has become a new global interest for politicians. While officials stateside look at whether tech companies should be able to microtarget at all, I’d imagine that political ad microtargeting will indeed get a critical mass of regulators pushing against it soon.

Crypto.com gets hacked
If you’re an American crypto investor, your familiarity with Crypto.com is likely more linked to having seen one of their advertisements with Matt Damon or hearing about them spending $700 million buying naming rights for the LA Lakers stadium, but this week they garnered headlines for reasons they didn’t like so much. Hackers broken into the accounts of hundreds of users on the platform and lifted about $34 million worth of cryptocurrencies off the platform. Crypto.com notably took the hit themselves and reimbursed the impacted users but the hack raises some major questions about the platform’s security.

Facebook and Instagram eye NFT market
If you thought “web3” would free you from the influence of “centralized” tech giants like Facebook, it seems that Facebook has other plans. A report in the FT details that Facebook and Instagram are both piloting efforts to bring NFTs into their products.

added things

Some of my favorite reads from our TechCrunch+ subscription service this week:

How to build a product advisory council for your startup
“…By design, product advisory councils (PACs) are an invaluable tool that can provide direct access to the expectations of your customers. Once established, a good PAC will provide valuable perspectives on how to solve problems for a broader, evolving market while putting a real face and name to your customer personas, helping your teams feel more connected and motivated to provide tangible value…”

Why Microsoft’s Activision acquisition makes sense
“…Even if this $70 billion bet doesn’t pay out, Microsoft will come out on the other side fairly unscathed. That kind of financial power gives a company myriad options, even if it involves making one of the largest acquisitions in tech history…“

Inside the state of stock options
“…The 20 largest U.S. IPOs generated an estimated $41 billion in pre-tax value for employees who held stock options in those companies. Record public exit activity is good news for founders and investors, but what about the employees who were granted stock options in those companies?”