Tencent could not join the metaverse bandwagon, when Facebook is focusing its future on this buzzword.
Tencent's approach to this stage seems more measured than Facebook’s $10 billion investment in its metaverse division. Investor speculation will be fueled by any hint that Tencent may give from the Chinese gaming and social media giant.
Pony Ma, Tencent's CEO, shared his thoughts on metaverse during Wednesday's earnings call.
The metaverse can include anything that makes the virtual world feel more real, and the real world richer with virtual experiences.
The executives of the firm took turns to elaborate this tagline. Although their definitions sometimes confused me, they agreed on three main "pathways" that would lead to "the metaverse".
Any metaverse currently in development could be affected by the current crackdown on China's internet sector. Tencent believes Beijing is not fundamentally opposed to the development metaverses, as long as it is provided under the regulatory framework.
It's difficult to imagine what regulations might look like in the future, as the metaverses of the country are still very young.
From staircase to metaverse
Video games are the most obvious route to metaverse, as they are the largest revenue driver for the company. According to Ma, it could be interactive games or multiple games under a single IP or infrastructure that allows users to create games.
Tencent's portfolio companies such as Epic Games and Roblox have seen some of these ideas take root. Tencent isn't trying to do everything, but it has supported hundreds of businesses that have strategic value.
"So Fortnite with Rocket League in Epic is one example. Or multiple so-called gaming experiences within Roblox," stated James Mitchell, Tencent’s chief strategy officer.
Ma suggests that the second path could be a social networking system that is "gamified" and allows for more programmable experiences.
This social network requires a set of tools. Mitchell explained that it is necessary to provide both the 3D graphics capabilities (the one that connects with the server-based community) and the UGC and PGC tools needed by game companies.
He said that while Snap and Meta have the largest capital resources, social networks like Snap also have a lot of work ahead.
Ma noted that another iteration of this path could be "real world experience, but augmented with augmented reality or virtual reality."
Mitchell predicted that user-operated communities, such as Discord with a high level of technology bots and textual content, could shift "from a text-and image basis to more immersive video basis."
What is Tencent's ability to execute these three plans? Tencent believes that it has the right talent, and technology.
Martin Lau, Tencent's president, stated that "the driving force of metaverse" will remain software-driven. He also mentioned the technology that helps to deliver the user experience. This could be engine technology or AI technology.
Although the company did not give a timeframe for its metaverse's creation, Lau acknowledged that it would "probably take longer than people anticipated and would likely require a number of iterations."
What about an Oculus counterpart to Tencent? Lau believes that "hardware will likely be an assisting condition, but not the required condition" to enter metaverse.