A metaverse of opportunity awaits in China | Article – HSBC VisionGo

Tencent and Bytedance are racing to plant their flags on the ‘metaverse’. Who will emerge as the winners in this cutting edge area of global tech?
Technology  ·    ·  5 mins read

For a long time Guy thinks that he is just an ordinary bank teller at a place called Free City. He follows the same routine every day with a blasé attitude, until one day he meets Molotov Girl. Feeling an electric attraction for the edgy lady, he decides to follow her. But in a place ruled by violence, that also means having to commit crimes like stealing, robbing and killing. Refusing to cause mayhem, Guy instead chooses to perform good deeds. His deviation from the norm, however, gets him the wrong kind of attention – to the point where his existence might be threatened. Why? Because Guy is part of an open world video game called Free City, and his unusual subversion has the game’s publisher Antwan wondering if he is controlled by some sort of hacker. Meanwhile, Molotov Girl has slowly developed a rapport with Guy. In fact, it turns out she is the avatar of Millie, a game designer seeking evidence that Antwan has cannibalised her source code to create Free City in the first place.

Such is the plot line of Free Guy, a Hollywood flick that is making a splash in China. Since debuting on August 27 there have only been a couple of days that the action comedy, starring Ryan Reynolds, did not top the box office.


As of this week it had raked in over Rmb500 million ($77.6 million), making it the third highest grossing foreign movie this year. Replete with scenes and images that are reminiscent of the video game sensation Grand Theft Auto, Free Guyundoubtedly appeals to the horde of video gamers in China (Niko Partners, a market researcher, puts the number at 720 million, or half he country’s population). What should not be overlooked, as Sohu suggests, is that the movie’s immense popularity also points towards the explosive interest in what is known as ‘the metaverse’, a concept that saw a fourfold increase in searches on Baidu between August and September, according to a report by the search engine operator.

The word “metaverse” first appeared in Neal Stephenson’s cyberpunk novel Snow Crashpublished in 1992. It refers to a permanent, computer-generated universe that human beings, through terminals and goggles (which work similarly to today’s virtual reality gear), could “jack into” so as to interact with one another in the form of avatars. While offering real-world representations of things like buildings and parks, it also displays things that do not exist in reality such as free-combat zones where people can go to hunt and kill each other much like the fantasy worlds of contemporary video games. In Stephenson’s narrative, which many consider as eerily prescient, every piece of real estate can be bought and sold. But any tinkering also has to go through a fictional entity called the Global Multimedia Protocol Group that develops and maintains the simulated cosmos.

Another prototype for the metaverse can be found in the movie Real Player One directed by Steven Spielberg. In that sci-fi blockbuster the metaverse is technically a massive multiplayer online game (MMOG) that offers immersive experiences. Its essential features include interoperability of data, digital assets and content across each of these experiences. It also entertains an extremely fluid boundary with the physical world, such that a contract signed in the game, for instance, will be recognised as legally binding in the real world.

Futuristic as it seems, some tech companies are already pumping serious money into making the metaverse a business reality.

“We are actively exploring technologies and resources that will allow us to develop metaverse offerings as we are firmly optimistic about metaverse as a growing market,” Jinke Entertainment, owner of the virtual pet app My Talking Tom, said in a statement on September 8, adding that it had established a dedicated ‘metaverse’ team.

In the following trading session the Shenzhen-listed company saw its shares spike over 20%. That also fuelled a lot of hot money going into stocks related to 3D modelling, mixed reality and MMOG — capabilities that are deemed key to the development of the metaverse.

Among all of China’s companies Tencent has the greatest exposure to metaverse plays. Key to its strategy is a 40% stake in Epic Games, the US-based publisher of Fortnite, a wildly popular shooting game that is seen as displaying key traits of the metaverse. Conjuring an alternate universe that is hyper realistic, it has increasingly emerged as a venue where teenagers feel that they can “hang out” and have an “experience” with their friends. The phenomenon drew pop icons such as Ariana Grande, Marshmello and Travis Scott to hold a live concert within the Fortnite world. A clip from the last Star Wars movie was premiered there in December 2019.

Tencent’s other major investment in the field is a strategic partnership with California-based Roblox, a gaming platform that allows players to build, publish, and operate 3D experiences. With 36.2 million users from around the world logging into its platform daily, Roblox has become a new medium for retailers to promote their brands. For example, Italian fashion house Gucci opened a Roblox presence in June (its digital showroom resembled its real-world exhibitions being held concurrently in Florence and other global cities). The shop allowed visitors to purchase and wear collectible Gucci virtual items for their avatars.

South Korean automaker Hyundai likewise established its presence on Roblox early this month. Known as Hyundai Mobility Adventure, users can meet with friends, pretend to be engineers, as well as race their cars. The rationale is to familiarise young people with future technologies so that they become open to consuming them as they reach adulthood.

As early as the end of last year Tencent’s boss Pony Ma wrote in the company’s internal magazine that the metaverse, being a successor to today’s mobile internet, provides “an exciting opportunity” and is a new frontier that Tencent can’t afford to lose out on.

But just as in the social media space, Bytedance is emerging as a serious contender to Tencent. The owner of TikTok has purchased a number of mobile game studios this year, including Code View, the publisher of sandbox game ReWorld and Moonton Technology, best known for its multiplayer battle game Mobile Legends. Bytedance announced last month its acquisition of Beijing-based Pico Interactive, the world’s third largest virtual reality (VR) gear maker with a 9% share, from Goertek for Rmb9.6 billion.

The deal is regarded as signalling Bytedance’s metaverse ambitions, especially in the light of Facebook’s acquisition of Oculus, a VR headset maker, back in 2014. Bytedance is developing a product called Pixsoul that aims to work with hardware made by the likes of Pico to support immersive social interaction.

The ‘concept’ of the metaverse has existed for nearly three decades. What is taking it a step closer to becoming an everyday reality is advancements in computing power, networking bandwidth and other technologies. But it is the boom in non-fungible tokens, or NFTs, that has commentators convinced that metaverses could one day exist as more than just a game zone.

NFTs differ from cryptocurrencies in a sense that each of them has a unique digital signature that makes it impossible for them to be equal to, or interchangeable with, one another. An NFT is essentially a certificate, or proof of ownership, over a particular virtual asset that serves to maintain its scarcity or exclusivity, be it a piece of digital art or a house in a simulated world.

Following the $69 million sale of Beeple’s NFT artwork Everydays: The First 5,000 Daysat a Christie’s auction in March, the notion of NFT as an asset class has been gaining rapid momentum in China. In June Alipay launched 8,000 limited-edition NFTs to commemorate ancient artwork found in the Dunhuang Caves. These quickly sold out. Last month Tencent also unveiled an NFT trading platform called Huanhe. Its main gaming rival NetEase has meanwhile partnered with MetaList Lab, an NFT developer, to sell NFT blind boxes created off its popular game Naraka: Bladepoint.

Visual China Group, a supplier of stock photography, joined the bandwagon with a new blockchain platform designed to help photographers and videographers store and trade their works as NFTs. Plus there has been a mushrooming of NFT-focused investment vehicles such as Vulcan DAO, as well as fanatic investors like Justin Sun, CEO of the crypto platform TRON, who in August bought a digital picture of a rock for $611,170 and a digital avatar for $10.5 million (see WiC483).

However, Securities Times, a state-run newspaper, warned last week of a “huge bubble” in the NFT market, echoing an op-ed in June by The People’s Daily saying that “the NFT market, being hyped up, could lead to chaos, while the decentralisation [of assets] brings security concerns”.

Evidently, like all new investment frontiers NFTs will come with very big risks as well as very big virtual opportunities.

Steven Irvine
Steven Irvine
Week in China
Week in China