LA Tech Week 2022: Building the Future of Games

To celebrate the LA community and the city’s growth, A16Z recently hosted Time to Build Los Angeles, an event where we invited LA-based investors, founders, and operators from across a diverse range of industries to talk about company building in LA. In this episode, David Banks, a former Riot Games executive who’s now the co-founder and CEO of Elodie Games, and Timmu Tõke, the co-founder and CEO of Ready Player Me, a leading platform for cross game avatars, join a16z General Partner and games investor Jon Lai for a conversation about where they think the metaverse is going and the future of building games. 

Transcript

Jon Lai: So, my name is Jon, I’m one of the GPs in the a16z Games Fund One. And I’m deeply honored to be here today with two founders building the future of games. Why don’t you go around and introduce yourselves briefly, maybe starting with you, David?

David Banks: Sure. David Banks, CEO of Elodie Games, we’re building the next generation of cross-play games. We really look to connect players around the globe through deeply engaging experiences.

Timmu Tõke: Hi, my name is Timmu, we’re building Ready Player Me. It’s a cross-game avatar platform for the metaverse. The metaverse is not one place, or one app, or one game, it’s a network of thousands of different worlds. So it makes sense for users to have an avatar that travels with them across many different virtual worlds. And that’s what we give to the kind of users of the metaverse. And from a developer’s point of view, when you’re building a virtual world or game, you have to build an avatar system or character system for a game. And we solve that problem and give them a character system they can integrate in a few days. And we work with like 3,000 different companies that are using our avatars across many applications in the metaverse.

Jon: Let’s talk about LA for a bit. So David, you spent most of your professional career here in LA and you’re also a Dodgers fan, I see.

David: We’re actually going to the game tonight as a team. So, we’ll squeeze that in somehow.

Jon: That’s awesome. So, you’ve worked at Riot Games, you’ve worked at Bird, you attended UCLA. And Timmu, you have many, many partners at Ready Player Me that are based here in LA. Maybe talk a bit about how you’ve seen the startup environment for LA, specifically, for game developers and metaverse builders evolve over the last couple of years?

David: Sure. I moved to LA for Riot in 2008. Activision was here and Blizzard was down South and there really wasn’t a lot of a landscape here at first and attracting. Of course, you have Hollywood and all the creative talent here. But for engineering, and game engineering, and back-end engineering, we were pulling in people from all over the place, all over the country, all over the world to come and work here in LA. And it’s evolved so much since then, I think Riot is a huge LA success story. Look at something like, you know, other companies like Snap are huge stories. And now there’s, games alone, you know this number better than I, probably 20-plus games startups in LA alone. So, it’s changed a lot.

Timmu: Yeah. I was actually based in LA, like, five years ago for a year. I went to LA Tech Week five years ago. It was a lot different. So, it’s definitely been a great development. And we have partners here, a lot of creative minds here. Both the kind of metaverse, the creative part of the metaverse, and Web3 comes from LA. So it’s definitely good to see how it’s changed.

Jon: And why do you think there are so many game developers here in LA? Like, what are the pros and cons of being a game developer here versus another city?

David: It’s a hub, it’s a center, right? You can come here, you can find the job of your dreams, you can find the exact game, or company, or role that you’re looking for here because there are so many opportunities. And so, I think it just sort of builds upon it, it becomes a snowball and just sort of builds on itself. That’s great. I think there’s a lot of opportunities here. I think folks like a16z have identified that and have really come in and helped nourish the environment, and that’s been helpful as well.

Jon: Let’s shift gears a bit and talk about a topic that I think has been the subject of a lot of debate and potentially controversy recently, which is the metaverse. So, as a game developer, as a platform developer, what is your view with the metaverse? What is it? How close are we to it?

David: Jon always says my answer is a very Web2 answer. I don’t know whether to be insulted by that or not. But we’ll figure that out later. But I feel like…I’m a lifelong gamer. I’ve been playing games forever. And as a gamer, I’ve always used gaming platforms and tools like VENT or even now Discord, to gather with my friends and interact. And, sort of, gaming has always been the excuse. But now there’s so much more for us to do in games, we can not only play games, but we can watch our favorite sports, we can listen to music, we can go to concerts. Like, we’re already doing all of these things, but they’re really geared around hardcore gamers. And I think that the folks who are looking in from the outside and they’re seeing all this stuff going on, without being controversial, I feel like they’re trying to give what they’re seeing a name. And I always say, “Oh, they’ve labeled it the metaverse,” right? And I do think that there’s potential to broaden that audience for creating experiences and excitement for people who aren’t the 1000-hour gamers like myself.

Timmu: Yeah. For one side, the metaverse is here. 2 billion people are playing games every year. We’re looking at what, like 10 to 15-year-olds do, they spend a lot of time in Roblox, and Fortnite, and Minecraft. A lot of their social interactions they have with their friends are actually in the metaverse, so in a virtual world already. And those kids grow up and they will start using products with avatars maybe for work and then so forth. That’s the behavior — the fact that people spend a lot of time in virtual is already here. What’s missing, from our point of view, is all those worlds are closed ecosystems, all those worlds are separated, closed, walled gardens that don’t exist together. The metaverse is not one game, it’s a network of thousands of different virtual worlds and games and so forth.

Jon: What you’re referring to is that if you play Minecraft, that you can’t pick any of your items over to another game like Fortnite or Roblox, and so on.

Timmu: Exactly. Like if you play several games, you have a different avatar for each game, you have different economy in each game, you can’t transfer between them. So it’s not a connective metaverse. And for the real metaverse to happen, there needs to be cross-game services and protocols and standards that link those worlds together. And avatars are a major part of that, that’s why we’re working on avatars. Anyone should be able to play an avatar within the cross-worlds. And that helps connect the metaverse a little bit more and push it to  the open metaverse centers.

Jon: What, in your view, are some of the benefits that you get from breaking down these walled gardens and enabling interoperability that we don’t see today? Since as you mentioned, we only have 3 billion gamers, it feels like they’re very happy playing Fortnite, Roblox, Minecraft, the games of today. What is it that’s missing that could be improved with interoperability?

Timmu: Very broadly, there are two paths to the future of the metaverse. One is a closed metaverse which is owned by one company or a few companies that make all the rules. And the other is an open metaverse, which is built by millions of different creators that are all collaborating, the worlds are interlinked, and everybody can take part and nobody controls the metaverse, nobody makes the rules. And it’s partly or mostly owned by the creators and the builders of those things, or it is owned by the builder.

Anyways, the open metaverse is a better future for all of us here. The metaverse is powerful, we’re going to spend a lot of time in it. So we don’t want it to be controlled by one company. For the open metaverse to exist, there need to be cross-game services, interoperability, each be able to transfer items between games. And that really builds the ground for open metaverse to exist. And just practically, would you want to have a thousand different avatars for a thousand different games? You just want to have one identity, it’s consistent across worlds? And also, as a developer, when you sell skins and outdoor accessories, for example, do users want to buy something that is stuck in one game or travels across the metaverse?

Jon: It’s more valuable.

Timmu: Exactly. And stays where you can use it throughout your metaverse lifecycle.

Jon: David, what’s your reaction to that?

David: I will step aside from my engineering roots and wonder about all the technical hurdles between here and there. My question is really: standards. You’ve talked about shared services and things like that. You need the protocols, you need standards, and how do those get established and agreed upon? How do you imagine that being a community-driven effort or how does that get solved?

Timmu: We already have three dozen companies we work with who use our avatars. And all of them are using different standards. Like, they use a different platform. They use a different rate. And we just work around it and offer it in whatever spec that the developer needs. So, that’s how we make the interoperability happen as a centralized party essentially, today.

I think for the industry to figure out standards and protocols, it needs to be clear that an interoperable economy or interoperable systems for a better user experience and better business model. And for that to happen, some kind of a proto-metaverse needs to exist and show everyone that it builds a bigger economy and there’s a better way to build games. And then, there’s motivation for people to figure out the standards and protocols and agree on them. Right now it’s just a concept. And you can work around it, but it’s not going to tip the entire industry overnight.

David: If you had a bet, do you think you end up with the sort of closed-world metaverse or sort of an open metaverse?

Timmu: I think there’ll be a little bit of a mix. So there will be definitely platforms that they want to build a closed world and then can build a closed world. And then there will be a big part of open metaverses as well that exist side by side.

Jon: Awesome. And it’s interesting that one of the thesis that we have is that games are next-generation social networks. That kids that are growing up today, they’re largely not on Facebook, they’re not on Snapchat, they’re spending all their time in these virtual worlds that these gentlemen are building. And then if you continue advancing that sort of social network thesis, we’ll also notice that there are several social networks that exist today that are large and very successful. Like, we have Snapchat, we have Instagram, we have Facebook, we have LinkedIn, we have Discord. And so there’s no one-winner-take-all social network. And it’s interesting to think that games might evolve similarly, where you also have kids that are going between Minecraft, and Roblox, and Fortnite, and League of Legends, and they are all very healthy social communities that you might find different social graphs within each one.

Let me change tactics and talk about, there are two technologies that many people associate with the metaverse. I think the first is VR, virtual reality, and then the second is Web3, which we touched on a little bit with interoperability. Maybe let’s start with VR first. An interesting factor that I’m very excited about is that Meta recently announced that the Oculus Quest 2 had shipped 15 million units since launch in Q4 2020. This is actually more than the number of Xboxes, I think the last generation of Xboxes that have been shipped. It’s a notable milestone. What’s your reaction to that, and sort of what’s your stance on the future of VR going forward from there?

David: VR is so difficult for me, because it’s a platform that today I can’t use. I’m one of the few people who get super-nauseous. But I think once the technology allows everyone to participate…

Timmu: Hardware improvements.

David: Yeah, hardware improvements, also cost, as a barrier to entry. I think you can really start to talk about real permeation in the marketplace.

Timmu: Yeah. I mean, VR was the reason we kind of started putting out just nine years ago…  but it took a lot longer to get here. As a company, we’re not making a bet on VR, I think it will be a part of metaverse. The more people will have interesting experiences, the more developed and we’ll figure out. So, just that kind of a tailwind for the metaverse generally, but it’s not like the core part, it’s not gonna be a core part of the metaverse for a bit of time.

Jon: And one of the challenges for VR app developers is the requirement, since you’re in a 3D space, that you need to have an avatar. In general, it’s much more difficult to build a 3D avatar than a 2D one and so on and so forth.

Timmu: Exactly. It is. So, we have a lot of VR companies who use our avatars. And in VR, it’s like, when you’re speaking with an avatar, it’s like very much in your face. It really matters. Like, if it’s a bad avatar, it’s a terrible experience. And VR, it doesn’t matter: that’s who you are and that’s who your friends are when you speak with them.

Jon: Yeah. Just maybe zooming up one level to talk about avatars in general, there’s been a trend of VTubing, right, where you have VTubers streaming and creating videos using an avatar instead of their real-life selves. This is happening on Twitch as well. Do you feel that the trend that people representing themselves publicly using the avatars over their real-life selves will continue?

Timmu: Yeah, for sure. I mean, avatars lower the barrier of upgrading content because you don’t have to put your identity out there, you just have this avatar representation. It can look like you, it doesn’t have to look like you, and you can create content with it, you can represent yourself as an avatar. And as the technology improves, as there’s more better tracking solutions and easier tracking solutions, I think that they’ll only continue evolving. And also, when you can use your avatar for streaming, you can actually use it in games, you can use it on social media — it becomes consistent across your entire virtual experience.

Jon: It’s also very powerful. It’s something that we see in games often. Your idealized self can sometimes be represented better digitally than your life, right? You can be anyone that you want in the metaverse, in a video game, and so on.

Timmu: Yeah.

Jon: Yeah. Last topic is Web3, which, I know, has also been controversial. There have been many gamers that have had sort of an allergic reaction to NFTs. Like Minecraft recently announced that they were actually banning NFTs from that platform. Is there something that you think players are misunderstanding here, are you sympathetic to that? What’s your reaction?

David: I don’t think players are missing anything. I think it’s developers who are missing something. I think that players, especially hardcore gamers, have been doing a lot of things that, not all, but a lot of things that NFTs are being marketed as to a player, right? “Hey, we’ve now put our game on top of blockchain. And now you’re able to trade, now you’re able to own, now you’re able to accrue value,” etc. I played some CS:GO. I’ve played some Val. I’ve definitely gone on some shady black-market websites and bought new accounts. Sorry, if anyone’s from Blizzard. And these things have existed, but they’re not safe, and they’re not secure, and they’re not repeatable. And there’s value there for players that they’ve interacted with. But I think that when the UX looks very crypto on the surface, “Here’s my wallet, I gotta sign in. I gotta exchange for currency,” it’s off-putting. And I think that players will go to anywhere where there’s true player value, right?

And I think that the blockchain probably is a brilliant technology that provides a lot of capabilities that players currently value, right? But I think that there’s a lot of folks in the Web3 space who are creating a UX. And you don’t know that’s what you’re doing. I think that’s a brilliant approach, right? I think, as a gamer, if I put my game on the chain, or, you know, I really target Web3 as a core to my product, I want players to discover that as they unwrap the onion, right? You should be able to sign in just like any free-to-play game, you should start to play, you should start to earn. And then you can discover these things, right? I think that’s the key.

Timmu: Yeah. I think people hate the concept of NFTs, not what they provide, the ownership. So, it’s like the speculation and stuff like that gamers receive from the site versus what’s going on in the market. And that’s kind of like what people are hating, not the ownership it provides. And as more applications come out, that just really use the value of NFTs, and also like cross-game, add to those. Because yeah, you can own an asset in one game but then NFTs and blockchain really helps separate the ownership for a particular game and make it usable across many worlds. And it’s just another reality today. When those things happen, then it’s more kind of an obvious, divided agreement.

Jon: It’s very clear that we’re still in the early innings of Web3, and a lot of the promise of it is going to be ultimately carried out by builders like yourselves that are building at the frontier. And with that, I think we’re actually out of time. So, thank you, David and Timmu for discussing the future of games with us.