Hollywood’s best strategy for the metaverse: License freely

If anyone knows how Hollywood should prepare for the metaverse, it’s Matthew Ball. The former Amazon Video executive has become the number one expert on the next version of the internet, thanks to a series of essays on the subject.

This month, Ball is publishing his book, “The Metaverse: And How It Will Revolutionize Everything.” The work explains in detail what the metaverse is all about and which shifts in tech, business and culture need to fall into place for it to come into existence.

A few days ago, I chatted with Ball about the book, the rapid pace of change and the biggest misconceptions about the metaverse. You can read all about that in my Q&A with Ball, but there was one more subject I was curious about:

How will the metaverse change Hollywood? In his book, Ball argues that people tend to underestimate the changes new technologies will have on media and entertainment.

• Ball cites the way newspaper publishers approached the early days of the internet as an example. Not too long ago, those publishers assumed that people would want to subscribe to a PDF edition of their daily paper, which they would print out and read front to back.
• At the time, the idea that the internet could make printing presses obsolete was downright revolutionary. A few years later, we’ve all adapted to a 24/7 news cycle, and the daily paper itself seems quaint. Plus, who prints anything anymore?
• Ball argues that the same is true for the notion that we’ll watch linear content in AR or VR.
• Instead of just seeing a movie play out in 360 degrees around us, we’ll want to be part of the movie and play a more active role.
• One way to achieve that is through games, which have long blurred the lines between storytelling and interactivity. But Ball also predicts there will be a wide range of adjacent content experiences, from virtual Tinder dates in the “Star Wars” universe to Peloton rides through your favorite movie sets.

Virtual production will be key to enabling this future, according to Ball. Studios have been embracing real-time production technologies, including game engines and LED walls, to speed up productions while also giving directors more tools to find that perfect shot.

• A side effect of this approach is that studios are increasingly amassing digital assets, which can be repurposed for future projects.
• “Much like we think of a physical backlot today containing the ‘Seinfeld’ set from the ’90s, which can be pulled out at any point, we start to talk about virtual props,” Ball told me.
• These props could be sets, characters or even small 3D-rendered objects, which movie studios could then license to companies like Tinder or Peloton, or use to populate their own metaverse worlds.
• However, with most studios having a poor track record in gaming, Ball believes that licensing this content will be key.

Which studio is best positioned for the metaverse? Ball’s money is on Disney. “We are likely to underestimate their fit into this next-generation internet,” he told me.

• One reason for this is the strength of Disney’s IP. “Star Wars” and the MCU alone could be the backdrop for countless metaverse worlds.
• Disney’s ILM has also been on the forefront of virtual production, which has been used extensively for shows like “The Mandalorian.”
• And Disney isn’t just using third-party tools, but actively driving the development of both in-house tech and industry standards.
• This includes the USD file format, which came out of Pixar and could be key to the future of the 3D internet. “That file format is the HTML of the metaverse,” Ball said.

— Janko Roettgers

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Soul Machines co-founder and CEO Greg Cross and his co-founder Mark Sagar, Ph.D., FRSNZ are leading their Auckland and San Francisco-based teams to create AI-enabled Digital People to populate the internet, at first, and soon the metaverse.

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Netflix’s surprise advertising announcement

Netflix took the media world by surprise Wednesday by announcing it had selected Microsoft to power its ad-supported plan. Under the deal, Microsoft will both sell and serve ads on Netflix worldwide when the company’s cheaper plan launches later this year.

• Netflix had also talked to Google and Comcast about this role, according to The Wall Street Journal.
• Netflix COO Greg Peters touted Microsoft’s record on privacy as one of the reasons for the tie-up and said the company had “offered the flexibility to innovate over time on both the technology and sales side.”
• In reality, Microsoft likely gave Netflix a sweetheart deal. Microsoft has long been trying to make inroads in media, both with its cloud and advertising businesses, and having Netflix on board as a tentpole customer can only help with that quest.

Microsoft does have some experience selling ads. The company’s ad business surpassed $10 billion in 2021, and it spent a reported $1 billion on the acquisition of ad tech specialist Xandr (formerly known as AppNexus) from AT&T.

What do the experts think? Many were still rubbing their eyes and scratching their heads after the announcement went out.

• Lightshed Partners analyst Rich Greenfield, for instance, admitted on Twitter that he “did not see this coming.”
• Former ad industry reporter turned consultant Mike Shields had this analysis to offer: “If you can combine Netflix ads, plus Xbox, plus some ActivisionBlizzard stuff, plus whatever other CTV you can get your hands on, plus some search data - um, that's a baller ad player.”
• CNBC’s Alex Sherman pointed out that Microsoft doesn’t operate a competing video service; Comcast and Google do.

What does this mean for Netflix’s gaming business? Given that Microsoft is better known for games than ads (and its decision to acquire Activision Blizzard for $68.7 billion), many wondered Wednesday whether gaming was the real motivator for this pairing.

• It’s unlikely this played a big role in Netflix’s considerations. Netflix’s game business is still very small, and it’s unclear whether the company has any plans to monetize games via ads in the near future. (Netflix’s games are given away for free as part of its subscription.)
• Netflix is, however, feeling the heat on the video subscription side, where it desperately needs to return to growth. The company is betting a cheap plan with ads will help with that and wants a partner that can hit the ground running.
• Still, in the long run, it wouldn’t be surprising to see the two companies partner on gaming projects as well. Maybe we’ll see Netflix games come to Xbox first, if and when the company decides to expand beyond mobile gaming?

— Janko Roettgers

In other news

Netflix may have to pay more for ad-supported content. Netflix is eager to launch an ad-supported tier this year, but Hollywood studios may require the company to relicense their content for a premium to do so.

GameStop launches its NFT marketplace in beta. The struggling retailer’s NFT marketplace went live this week, featuring hundreds of collections and thousands of NFTs, with prices for individual tokens soaring well into the hundreds of thousands and even a select handful listed for multiple millions of dollars.

BBC iPlayer usage is up 8% year-over-year. The public broadcaster’s free streaming service is now being used by 12 million people per week on average.

Unity will merge with ad company IronSource. Both companies’ stocks have tanked lately due to the economic downturn and Apple’s mobile privacy changes. Now, they’re merging in hopes they can weather the storm until mobile gaming revenues recover.

HBO in talks to return to Amazon Channels. HBO opted out of Amazon’s subscription video marketplace to fully own the customer relationship. Now, the company may be changing its tune.

Magic Leap starts selling new headset in September. The enterprise-focused Magic Leap 2 headset will become available on September 30, with prices starting at $3,299.

VR documentary lands on HBO Max. “We Met in Virtual Reality,” a dating documentary that was entirely filmed in VRChat, will land on the streaming service on July 27.

Fraud TV

Leave it to criminals to finally make sports streaming interactive: A group of Indian fraudsters came up with an elaborate scheme to make some easy money through sports betting. They set up an entire fake cricket league, complete with staged games that were streamed on YouTube. Depending on the bets, the participants of the fake tournaments were told how to perform, the BBC reported this week. However, someone tipped off local law enforcement, putting an end to the entire operation. All that’s left now is a YouTube page with a bunch of videos showing lucky players always beating the odds.

— Janko Roettgers

A MESSAGE FROM SOUL MACHINES

Soul Machines is at the cutting edge of AGI research with its unique Digital Brain, based on the latest neuroscience and developmental psychology research.

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