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Epic Games VP: Metaverse interest is waning

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Yahoo Finance tech editor Dan Howley joins the Live show to discuss Epic Games Vice President Marc Petit's take on the metaverse, the timeline of virtual reality development, and how companies like Meta and Apple are working on new technology.

Video Transcript

AKIKO FUJITA: The global Metaverse market is estimated to reach nearly $400 billion in the next two years, but the lack of content in real life use cases raising questions about how much runway the digital or virtual rule world has for now. Even Epic Games Vice President Marc Petit said that people have kind of lost interest in the Metaverse. For more on this, let's bring in Yahoo Finance's Dan Howley. And Dan, this is a conversation we have a lot. First of all, let's define the Metaverse. What are we even talking about?

DAN HOWLEY: Good question. Nobody really knows. It's like, the Metaverse is either going to be something where we're wearing headsets, VR, AR, interacting with the real world with digital overlays, or something where it's like a windshield that has a digital overlay for when we're driving, something like that. Or it's scanning QR codes in the real world and then getting data from those. So who knows? It's really this kind of vast, weird, amorphous definition--

BRIAN CHEUNG: Concept, man.

DAN HOWLEY: Yes, it really-- just a concept, man. Yeah, I mean, so, really, we're still trying to figure out what this is and, you know, what it means for consumers. And that, I think, in turn, has turned some people out, as Marc Petit had kind of said.

BRIAN CHEUNG: Now, I guess, what does this mean for the Metaverse going forward? Because a lot of people are wondering, is this investable? Is this something I can put my money into?

DAN HOWLEY: I mean, it really is hard to tell at this point, right? We're seeing companies from Facebook to Microsoft to Google to Apple to-- you name it, everybody's looking into it. We have big game companies like Sony, Epic Games, obviously. They're all talking about the Metaverse. I think the big deal that we're looking forward to now is what Apple is going to do with its own AR headset. I think-- AR, VR headset. And I think that's going to be what really helps drive the industry if it's a success. Now if it's a failure, who knows?

AKIKO FUJITA: Well, that's what we keep hearing, is that the technology is advancing so quickly that the use case will change along with that. A lot of people are looking to Apple and their headset. Obviously, Meta has got some headsets in the pipeline as well. What did Epic Games tell you specifically about how they view the future? Because they've really been at the center of it with gaming.

DAN HOWLEY: Yeah, so they see it as, right now, what we are getting is, basically, think of it as like 1993. And we're not even at, like, video streaming yet, right? So we're that early in the buildout of this kind of technology. And so the idea is, over time, we will start to see some improvements, some real use cases outside of Meta's weird, legless avatars that you run around and do--

AKIKO FUJITA: Not just Meta, by the way.


AKIKO FUJITA: I mean, Metaverse, in general, has no legs.

DAN HOWLEY: Right, I think there's--

AKIKO FUJITA: They don't, yeah.

DAN HOWLEY: --a real issue when it comes to developing things--


DAN HOWLEY: --that really count.

BRIAN CHEUNG: --I guess that gets to the bigger question of, anyone that's used in Oculus so far or anyone that's played around in any sort of Unity Engine knows that it's better now than it was, let's say, even five years ago. But it's still hard to keep that headset on for longer than 10 minutes without wanting to just throw up. So, like, is the technology even there yet? I mean, I know you said it's early, but it seems like there's still some development to be had.

DAN HOWLEY: It's still not there, and I think we have Marc Petit basically explaining that in this interview that we had done with him.

MARC PETIT: So customers actually have been disappointed. I mean, if you look at the past six months, people have kind of lost interest in the Metaverse because characters that look like cartoons with no legs, I mean, who wants to be that? I mean, this is not attractive. But to some extent, it is the current state of technology. And again, the timing for me is the critical factor, you know? I'm confident to say it's going to take a decade to figure a lot of things out. I don't know where we're going to be in three years.

You know, and so, for a business person entrepreneur or even for a consumer, this kind of have that anticipation, but I do believe, like, look at "The Matrix Awakens." I mean, look at that photorealistic scene. Look at those characters that are indistinguishable from real characters that we know, Keanu Reeves and Carrie-Anne Moss. So, that is, for me, the benchmark for the Metaverse. That's what the Metaverse will be for everybody tomorrow.

DAN HOWLEY: Yeah, I think that's really the important thing to take away from this, right, is that you're trying to build this new world that everybody wants to explore. I mean, you know, Mark Zuckerberg, when he showed off the big unveiling of Meta, had had himself surfing next to somebody. Or even better, he had an AR version of himself with a blue person that he was kind of working with that was almost photorealistic, except for the fact that they were blue, you know, that he was doing fencing with or fencing with.

And so that's what Marc Petit is really talking about there, is that there are photorealistic graphics now that are coming. Unreal Engine 5, I've seen some stuff that, I mean, it looks-- it's crazy. You don't even realize that it's not real. That's what we're going to have to get if we're going to see real progress in the Metaverse. And the technology, it's there, to a degree, but it needs to advance by leaps and bounds still.

BRIAN CHEUNG: As a side note, I feel like Metaverse, the word itself, I could see a lot of companies maybe coming up with new terminology for that because it's essentially Facebook. That's what that means now.


AKIKO FUJITA: Well, Facebook popularized the word, right?



BRIAN CHEUNG: Well, and then they changed their name. But now you wonder, like, if we're going to call everything the Metaverse, even if it's not actually made by Meta, then will other companies be complicit with that?

AKIKO FUJITA: And you can argue a lot of companies that have talked about it don't even know what it is. And, like, worth pointing out, as we've said before, it's not just the VR headset. That's not the only place where the Metaverse exists.


DAN HOWLEY: Yeah, it's really-- I mean, in my most cynical view, it's a way to sell VR headsets that did not sell originally because people didn't care about VR. But that's my most cynical view. And the best case scenario, it's going to be something that's really awesome. What that is, we don't know.