Disclaimer: This piece is some thoughts I’ve been mulling over for a while put into a short investment thesis. By request of the Twitterverse, I’ve decided to publish it, but this is very much still a work in progress that will be updated in the future. If you have any feedback, feel free to DM me @_johnsonator or shoot me an email at nia@polymathcp.com.
The creator economy, the ecosystem of individual content creators, the digital platforms and products that support their business, has been the subject of much discourse since quarantine. However, this burgeoning creator economy is nothing new, the creator economy is the latest consequence of recent innovations in media and publishing. Given the cycle of technological advancement, mass adoption, and the creation of new markets and culture around that technology, one might ask, what’s next for creators?
A possible answer could be found in the augmented and virtual reality (AR/VR) space. Projected to grow to $20.9 billion by 2025, AR/VR technology is the likely successor to the mobile phone and its related software. Tech giants have made or currently making their own versions of AR/VR-enabled smart glasses. Provided that any of these companies creates a device that reaches a critical mass of adoption (Facebook already well on its way), a whole new world of content will open up - the metaverse. The metaverse, as defined by the Washington Post, is “a massive communal cyberspace, linking augmented reality and virtual reality together, enabling avatars to hop seamlessly from one activity to the next”. This experiential digital experience will create new content types across multiple delivery mediums, allowing creators more flexibility than ever before in the content they create, how they monetize their content, how they build relationships with their audiences, and the mediums through which that occurs. We see pieces of this future already - Peloton instructors gaining loyal fanbases, computerized mirrors capable of giving personalized beauty and fitness advice, the (albeit troubling) proliferation of deep fakes, gamified hangout spaces, and the list goes on.
For the metaverse, there are one of two types of companies that investors should look for - AR/VR platforms that facilitate new creative mediums and auxiliary platforms that will underpin the creator ecosystem within the metaverse. The former group encapsulates platforms where users can create, publish, and distribute content in a never-before-seen format, similar to how Instagram proliferated the influencer content format in the past decade. An example of a metaverse platform company is Raxplay, a platform for immersive VR concert experiences. On Raxplay, artists can create what is essentially a massive multiplayer video game that their fans can play. The growth opportunity here is that, unlike in-person concerts, a Raxplay experience can be replayed long after the “live” performance, creating an infinite recurring revenue source for the creator. By creating a platform where people can experience new forms of content, companies like Raxplay will create entirely new industries and models for stardom.
The latter group of companies provides services, such as data, financial services, and attribution, that allow creators to grow their brands and businesses. An example of such a company is Zora, a universal media registry protocol. On Zora, creators can mint their content into NFTs, auction it to buyers, and profit from subsequent sales. The growth opportunity is that Zora addresses some long-standing issues within the creator space - attribution and monetization by creating a record of ownership that is usable across platforms and a monetization model that allows even smaller creators to profit from their work. By fixing a topical issue in the space, companies like Zora will be well-positioned to one of the pillars keeping the metaverse running.
Ultimately, advancements in media and culture always follow advancements in publishing and media technology and entirely new industries crop up around it. Given the adoption stats and R&D investments by Big Tech, VR technology is going to lead the next shift and the metaverse will soon follow. Investors interested in the creator economy within the next decade should focus on companies building within and underpinning this new immersive digital world.