ETFs Go Into the Metaverse

of the metaverse. I mean, this is not a term I was unfamiliar with, and when I saw the announcement, I kind of thought, well, Facebook has really been that name has kind of been through the mud, and maybe they were just trying to like make an easy like news start. But when they did that, what happened that really caught my attention as an E t F analyst is the e t F with the ticker meta, which I assume Facebook probably wanted but couldn't get because it

was taken the round hill ball metaverse. Et f UM started to see flows very quickly like and I thought, well, maybe people are like accidentally buying it, But over the past sixteen seventeen days, it just takes in more and more money. It's very reminiscent of Hack after the Sony Pictures Hack, where this news event becomes a catalyst moment for a theme. It's the perfect situation and Meadow was

right there waiting. And I'll give you some numbers. It's now grown by sixfold since you know the Zuck moment, and it's also seen volume grow by fifty times. The options activity has grown by forty five times. The ETF is becoming. It's just it's basically done what you want to see in two years in about three weeks, which

is impressive. So joining us on this episode of Joinings, We've got Matthew Ball, the guy behind the et F meta Also joining us Matt Canterman, an e t F analyst with Bloomberg Intelligence, where he's also the co host of a podcast called Into the Metaverse, along with another Bloomberg Intelligence guest, Rebecca Sin, this time on Trilliance Exploring the Metaverse. Mr Cantorman, Mr Ball, Rebecca Sin, Welcome to Trilliance, nice to be here, Thanks for having us. Okay, So,

Matthew Ball, I want to start with you. Last time you and I connected a couple of years ago, you wrote like an article for Bloomberg Business week and then all of a sudden, like you're back with an E T F. What's been going on? Man? Quite a bit? I mean, funnily enough, the article that I wrote for Bloomberg was on the ongoing and soon to be precipitous decline of Hollywood in the box office. This is like before times, it was like nineteen pre pandemic was certainly

pretty pandemic. But it's a good way to look at the metaverse, which is through my career I've jumped a few different times. At one point I was a wild firefighter in initial at act, if you can believe it. But I've spent most of the past fifteen years jumping from what I saw to be the new thing. At one point, that was the digital apps economy. Shortly thereafter

it was digital communities. I then moved into s VAUD a few years before the streaming wars began, and then over the past five years, I shifted over to video gaming, and that very cleanly brought me to the metaverse, albeit at a time in which I still thought it was fifteen years away from fruition and at least five years from the public consciousness. And so what came first this e t F or or the idea of of just you know, putting a finger into what what this space

could look like. So I've been writing about the metaverse since mid but it was mid twenty in which this is a macro super theme started to become an idea that investors would start to look at this. And then in the intwoing months in the back half of the year, we had roadblocks. File there s one. It was the first time in which we had the metaverse really driving a story to the street. We also had the I p O of unity. Those two combined were some of

the biggest ideas the gaming industry had ever seen. They very quickly became some of the biggest companies in the gaming industry, and that gave us a lot more confirmation that now was actually the right time for an e t F. And so we began in late the second quarter of devising the methodology behind the index. In the third quarter, we began doing initial conversations with various et F providers. Secured that in the first quarter of one. But to be honest, even midway in the second quarter,

we were concerned that we were too early. We didn't think we couldn't have a viable e t F. But we thought that it was largely going to spend a year or two proving itself from a returns perspective, but struggling to actually penetrate the average investor, certainly institu Oceans, but even many retail investors. Um And just before we go to meta here, for those of us who are the uninitiated, how do you even attempt to explain what the metaverse is when you know we're very early innings

in what may transpire. It's a good question, and obviously I'm asked quite frequently. The honest answer is I tailor it to the audience, and that's based on the varying degrees in which they're familiar with the Internet. It's antecedents and so forth. But I think the most fun way I have to describe it is a riff on Daniel X, the founder and CEO of Spotify. He talks about the first fifty eight or twenty years of the consumer Internet as being this relentless quest to break down anything made

of atoms and converted into bits. Think of your alarm clock. We all used to go to bed with an alarm clock on our nightstand made of atoms. And then today we actually go to bed with an alarm clock on our iPhone on our nightstand. We converted an alarm clock from something made of atoms into something made of bits software. This next stage, the metaverse, you can think of as reconstituting that alarm clock using bits, but into virtual atoms. There's a broad belief that that is a more intuitive

model of interaction. You can take a look at forty years of the Internet's history and see is constantly shifting towards more tactile, more immersive, more visual experiences in much the same way we started on the Internet, representing ourselves with the user name and email address, sharing via text messages, message boards, slowly shifting too limited web pages, then profiles

full of photos, video streams, Instagram stories. This next step is shifting online existence commerce into virtual three D objects. And I just follow up on that because there's a really important point that Matt has made um and you can check out We've talked about this extensively on our podcast. Into the metaverse. But the metaverse is not a device.

You know, it's not defined by any individual access point, and there's a lot of misconception that the metaverse is a VR headset or it's an a R goggles, and that's not the case. The metaverse is device agnostic. The metaverse is the Internet. That's what Matt was saying. It's enabling the Internet with real time three D software. Unity likes to put out a stat that today two percent of the Internet is enabled by real time three D. And whether you think the CEO is is full of

it or not, there's a trend in the direction. He thinks that ten years, fifty percent of the Internet will be enabled by real time three D. So you're talking about making the Internet exactly as Matt was saying, much more immersive and much more three D enabled. And and that's really the metaverse again, it's not a device. It's a really important point to make. And so, um, you know, as somebody who has a ten year old kid, he plays Roadblocks, I've seen it. He loves it. He plays

with his friends. That's the metaverse, right, Matt Kenterman. Absolutely Roadblocks is like the only pure play in the metaverse right now. It is a virtual, social, shared persistent experience platform. That that is the definition of a metaverse platform. Now, there are ways that they can make it more immersive. There are ways that they can enhance that experience. There are ways they can do more from the business side on the monetization. But Roadblox is you know, Roadblocks Fortnite

with ten cents done with honor of King's um. You know, these are some of the leading metaverse platforms out there today, even Minecraft within Microsoft, and so absolutely the metaverse exists today. But you know, we just interviewed Craig Donado, the chief business officer, on our podcast, and we're still in the first inning. You know, if you put this in baseball terms, we're not even close to getting out of the bottom of the first yet. And so let's put this into

dollars and cents. Your job is analyst of Bloomberg Intelligence, is to try to find out the opportunity for investors who use bloomber terminals. So in one of my recent notes, I actually you know, associated one of your bits which talked about how the metaverse would be have a revenue of eight four estimated by you, um, how do people

make money in the metaverse? Explain that? So, you know, our our forecast for the metaverse reaching eight billion by twenty twenty four is really driven by the consumer facing client applications. You know, I thought Matt and his team with Roundhill when they were marketing three TF did a good job of explaining that, and from that perspective, it's actually quite a conservative forecast. So we looked at, you know, four key areas. You know, from one hand, the metaverse

is clearly growing out of online games. It's clearly the evolution of games into these shared social experience platforms. And so we looked at the online games market, which includes the software revenue, the services revenue, the advertising revenue. It also includes engine, the game engine, the real time three D software, which is so important. We looked at um, you know, social media advertising. You know, the metaverse platforms

are going to be the next social platforms. They're going to eat into the advertising revenue of these big social platforms, so we took a big chunk of that. We looked at live entertainment, which I think is a really burgeoning opportunity, like such as virtual concerts, which alone is targeting a thirty billion opportunity just within the concerts. So that adds in, and then it's also the hardware that really used to access it. Although it's not any specific piece of hardware.

The hardware clearly plays a piece, and that adds up to eight hundred billion. But there's so much that we haven't scratched the surface on. We didn't touch enterprise, we didn't touch education, because these are more long term opportunities where the monetization potential is still questionable in terms of

direct revenue. And then there's also you know, secondary items such as you know, the cloud services that back all this up, the telecom services that back all this up, all the infrastructure that goes into building the actual networks that power the metaverse. That's all behind the scenes. That doesn't even touch So when when Tim Sweeney comes out and says the metaverse is already a trillion dollar opportunity, it absolutely is when you start including all of those

secondary tertiary markets. And Rebecca, let me bring you into this um as a new member of our team, and I advised you to be bold and say interesting things in your notes. I think your fifth note said that metaverse CTFs could have eighty billion dollars in the next ten years. That is bold. I mean, honestly, I would say maybe eight to ten. But you went for the home run there. I guess with inflation, you definitely could get a little help there, But what's your logic to that.

I'm I'm wondering if you just were hanging out with Matt cantervittle too much. So I remember when that note first came out and you laughed at me, you said, record are you crazy? And in hindsight, this was before Facebook had rebranded to Meta and before Korea launched their e t S, and I really genuinely thought that the market could be this large. And so I had predicted that the e t F meta space would become eighty billion and that could potentially be six hundred million in revenues.

And in November, after Korea launched for new e t F, so on October twelve, Korea launched for new Metaverse et F S and it was one of the fastest growing ETFs to have gained a hundred million. So to give you some context, in Korea, two of their et f Samsung and Miray, reached a hundred million in assets in just under two weeks, so it was round six days.

And so this is a record number of inflows. And in early November, I had published that the metaworse space would reach two billion, and this was achieved Act week earlier this week, and looking at Meta, you know, Meta has seen inflows of seven hundred million. But even in the Korea space alone, between the four et f s, they've already surpassed six hundred and fifty million in assets and they only just launched less than one month ago. And so I really believe that this space has a

lot of potential. In Asia alone, we have other regions like Australia, Taiwan, Hong Kong, Singapore that are all looking to launch metaverse et s, and so the appetite in Asia is huge, and so I can see that this market could really reach eighty billion. Yeah, and I think eric it it's important to talk a little bit about where the long term can go here, and I think that there are a few different perspectives. First is Matt's where he talks about how much of the potential metaverse

economy sits outside of the consumer facing applications. Well, the UN estimates that the global economy eighty seven trillion dollars is roughly eighteen percent digital. Now, of course, the Gaffam or big tech five companies Google, Amazon, Facebook, Apple, and

Microsoft are about one point three trillion of that. The truth is that the vast majority of the digital economy sits outside of those big five companies, And in fact, we know that outside of that eighteen of the global economy that's digital, much of it is still powered by digital technology. Over time, we have seen the percentage of the global economy that is digital go up. My expectation is that that will continue to go up, in part powered by the metaverse, as the metaverse also gains share

of that digital portion. Jensen Wang, the Nvidio CEO, has said that he expects the economy of the metaverse to eventually exceed that of the physical world. In other words, he's talking about a future state in which the global economy is perhaps to a hundred trillion dollars and fifty or more of that is in the metaverse. That seems a little large to me, but it doesn't surprise me

that invests are so excited to invest in this theme. Technologists, business owners, investors have come to terms with the fact that the Internet caught many of us by surprise. The mobile Internet came much faster and proliferated faster than we anticipated, cloud was more disruptive. Just as business leaders have learned about disruption theory investors have learned about the pace of change, the enormity of a platform shift, and they're preparing. I

have three visions in my head. You tell me which one is probably the most where we're going. One is Ready Player. One the oasis where one thing kind of becomes like the where everybody puts on their goggles and they all live in there, and yet society crumbles around them.

That's probably like a dark vision, but that's one. The other one is more like Mark Zuckerberg's commercial on Good Morning America where he's sitting there a meeting talking to people, a how you doing like zoom, but like you're like a robot or like a fake version of yourself, whereas we're in the skeleton outfit. Then the other is something like Roadblocks, which I see my son playing, where he's

too dimensional and he's sort of interacting. I I guess I'll throw this to Matt cantonman, you know, because I saw you shaking your head like um, you know, especially with Matthew Ball saying that that that much of this total revenue could come for total economic activity could come from in there, it seems like the oasis would be the vision that would exist. No no, I don't think so. I think that is a way to access the metaverse,

but it's not the way to access the metaverse. I mean, you know, if you just think about the iterations of the Internet, right, we went from web pages to you know, social to mobile, and now we're entering the metaverse era of the Internet. And really we're just enabling everything that's out there with real time three D software and making it more social and more persistent. So an analogy would be,

for example, you have face Book. You know, you're scrolling your wall or Instagram, and it's all photos and posts. It's all static, it's two D. It's not immersive. You're not interacting with it in lifetime. Imagine if that was a virtual bulletin board and you and your avatar were walking around and pinning things to the board and others were coming up and reading it in lifetime and the

changes they make affect your board. That is a metaverse in theory, right, And then you talk about the business opportunities around that. So it doesn't have to be locking yourself in a headset. It doesn't have to be putting yourself away from the world. It's it's just a new way to interact and immerse yourself with others in a

virtual world. I kind of love this question of anchoring in science fiction because, of course, the metaverse comes from snow Crash, and many, especially critics, tend to highlight the fact that all of the most popular conceptions of the metaverse or a virtual future come from dystopic science fiction novels. I found it funny because, of course, utopias aren't the

best situation or construct human drama. By definition. There's a reason why we don't find many sci fi novels, nor any novels at all, that are set in a pacific perfect version of the future. It's a good narrative device. But to take a step back, I think one of the most interesting things about asking this question of what does the metaverse look like? A question many people ask, is that innovation is recursive. This is actually why disruption

is so threatening to today's companies. A technology is created, which leads to new behaviors, which leads to new use cases for that technology, which leads to follow on innovations, creations, emergence of new business models, new companies. If you went to or two thousand and five and ask someone what does twenty one look like. The closest you'd get to today was essentially platitudes like more people online, more often from more places with better broadband. You don't get people

describe being TikTok, which now owns the Billboard one. You certainly don't get the expectation that app based trading platforms with zero commission would lead to Yolo options trading on the subway because your board, which simultaneously rescues a company from bankruptcy. You don't get the idea that the most popular real time three D rendered experience globally would be Battle Royal games that didn't even exist until a few

years ago. Innovation is recursive, It inspires, it is responded to, and so I think we can take a look at some of the early conceptions of the metaverse. The truth is it will probably look, feel and change our lives in a way we can't anticipate. No one thought that social media was going to lead to election engineering by foreign states in the way that it did, And that's actually what's going to happen here. It's the threat, it's

the opportunity. Okay, So I want to ask another type of question, which was and and Matthew I'd love your

perspective on this. Facebook embroiled in this massive, massive scandal basically pulls a rabbit out of a hat with like maybe you know a rebrand that will in you know, when we look back on this for years, like it could be like the greatest business case study of all time if they pull this thing off or it's Facebook now formerly Facebook also known as Metal Platforms, and all of the problems and societal issues that we've been grappling with in this Facebook context are now just amplified to

the inth degree because now it's all in the metaverse. So where do you rate the rebrand scale of one to ten, ten being the greatest thing ever? Well? I think Mark has received some criticism as to whether or not this is a sleight of hand, whether his interest in the metaverse is new, and I think that misses a lot of context. Two years after he acquired Instagram for a billion, he acquired Oculus VR for more than twice that sum. In he reportedly tried to purchase Unity now,

a seventy billion dollar game engine company. A few years ago, they acquired a company called Control Labs, the leader in brain to machine computer interfaces. They have been investing in this and other technologies for many, many years. His interest in this concept is certainly not new. I also want to highlight that Mark is actually a survivor of the

pre mobile era. Facebook has become a case study for the speed with which a company can pivot to mobile, But that history often forgets He was late to mobile. Why because they bet on ht amount not apps. In two thousand and eight, Apple launched the app store. In two thousand and nine, they came out with their famous campaign there is an app for that in Sesame Street parodied that campaign, and yet it wasn't until twelve that Facebook actually launched a native app. Before then, it was

a thin client based on HTML. Mark called that in the biggest mistake in the company's history. Within one month of rewriting the app to native code, time in the Facebook feed doubled. Imagine that. Imagine just changing your code and doubling engagement in an engagement based platform. Now they survived, But what did happen in two thousand and nine, when Facebook had three fifty million monthly active users. What's app was founded? It was specifically founded on being app based communication.

They ultimately bought that company for fourteen billion dollars. It's now believed to be the most popular of the Facebook constellation of applications. What I see in this rebrand is a manifestation of many, many years of investment and belief. But most importantly, someone who understands the threat of platform shifts sees an opportunity to grow. They've been stymming by their lack of an operating system. They have a business model predicated upon one very flawed business model, and so

he sees opportunity. But I think there's a genuine belief that this rebrand can be an important signal to investors, to partners, to current employees, to potential employees, and to consumers.

It's very dangerous to have one of the most valuable companies on Earth and tell every shareholder you should now evaluate me on a thing I say is five to ten years away and which I am going to incinerate ten billion dollars per annum in pursuit of whether or not Meta is the right name is not particularly interesting to me. I'm no branding expert. I look at whether or not this is new. I don't think it is.

Whether or not it's important, I do think so, And whether or not it has utility, and irrespective of the specific name, I do see that it's a powerful signal. And I just translate Matt into cynical financial analysts PEA because I have the same view, but from a cynical perspective, and it's that you know, when Facebook was in the web era, they were the walled garden or if not

one of the large walled garden platforms. And everyone wants to be the walled garden because you get to clip coupons for free on other people spending and commissions on app stores and whatnot. Right we went to mobile, they lost being in the waled garden. You know, they have great, powerful platforms, but Apple and Google and others really became these these waled garden platforms. And so the cynical view was also they see the metaverse as this opportunity to

reclaim that position in the market. And you know, as Matt was saying, build out ancillary revenue streams beyond advertising from devices and content, but also from creating an app platform that where people come to them and pay them and they take commissions from other people that spending. I mean, look, that's assuredly true because the business model on their new devices requires that here. Whether or not you want to say it starts at one end or the other is

I think a question of determination. But certainly the history of companies that are disrupted or stimed does lead to philosophical change. Brad Smith at Microsoft, the president, has said Microsoft was on the wrong side of open versus closed. One can very fairly wonder if Microsoft had not been largely boxed out of the hardware and operating system of the mobile era, they would have had that change of perspective. I think that's absolutely valid, and that's the nature of

any person. Frankly, if I'm Mark Zuckerberg and I'm gonna make this pivot and it's gonna be a big pivot, there's one There's one ticker that I would really love to have if I'm going from Facebook into the metaverse, and that ticker seems like it would be meta. But that ticket was taken by you. How many times have you heard from Mark Yeah or Facebook to try and get the ticker that you got first? Not once? Come on? Just like just random briefcases of cash show up. Does

that count? Well, We've gotten a number of briefcases in cash in creates, many of them and I think a good deal of any metaverse oriented companies R and D Budget might be might be well positioned to bet there. But no, the response has been from investors, Okay, let me let me pivot there to another Mark Zuckerberg question. I'll throw this to Matt Cantonman, since I know you spend a lot of time in the metaverse. Last time we had you on about video games, you you were up.

He was like gaming while he was on the like you're you're like, you're in it. And so there's an elon must put this tweet out, which had Mark Zuckerberg in his like you know during his explanatory video, except the caption said if you die in the metaverse, you

die in real life. And Okay, fine, it's funny, but it taps into it's true, it taps into this sort of I don't know, um, I think Matthew Ball said earlier dystopian, this idea that we're all gonna like live in there, and what are the consequences to humanity of like putting all of our spirit in this fake world. If you take it from a high level and you look at what's driving consumer demand for these sorts of experiences,

it's all about self expression. In the real world, we wear the clothes we wear, we buy handbags, we buy other things because we want to give off an impression of ourselves to others around us. We want those items that we wear, that we buy, that we interact with to tell a story about ourselves. And in the metaverse, in the virtual world, it's the same thing. What your avatar wears, what they look like, what they do that, the dance moves they do, um, the items they wear.

You know, in roadblocks, somebody paid the equivalent of four thousand U S dollars for a virtual g bag. It's not an n f T. It's not something you can pick out, you can't sell it, you can't do anything with it. But it just is an expression of their virtual self. And they thought that value was enough to

justify that. So, you know, when I think about it that way, although you may not physically die, you know you have an emotional connection to this avatar that you've created of yourself in the metaverse at some point, and at that level, when that character dies, you can feel

something from that. Rebecca, what do you think the resale value for that four thousand dollar Gucci bag looks like so I think coming from a female Asian perspective, you know, Asians do love to shop and females do love their shopping bag. I'm surprised or May's hasn't jumped on this and come up with a virtual Kelly or Broken, because I'm sure that would sell much more than the Gucci bag.

But I definitely think there's a market for this. And what's interesting is looking at the e t F space from an Asian perspective, most of the flows that we've gotten is from retail, and this is a shift from

where you normally see growth. So usually in the et F spaces institutional clients that are supporting this, but in Asia, most of the flowing Korea is all from retail more than and the head of e t F s at Mira Mr. June said that since the simultaneous launch of four meta e t F s in Korea last month, the theme has learned much attention from retail investors and the media, and so companies are actually in Korea are actually spending money to further develop the R and D

and capital investments and so in Asia, retail is a huge market. You know, the Chinese market drive the retail population, and so I think there is huge potential, especially in

Asia for this growth. So actually let's just stick with you for a little bit because I want to talk about sort of what what's inside the e t f s themselves, right, and like you you mentioned the ones that have popped up in Asia, but we've also got Mr Balls here what stands out to you in terms of like what companies the e t f s are actually holding. So in Korea, the market is ultimately trying to support the Korean market, and so for all of these four e t f s, they've picked Korean companies.

And so for instance, Hub, which is one of them, it's uh, it operates in the entertainment space. And so Matthew and I were actually debating this last week, just saying, you know, do you really consider these companies met first companies or are they just entertainment systems entertainment companies? And so I think it really depends on what your definition is. For instance, in Taiwan, they already have e t f s that they consider our metaverse ETFs. But it ultimately

comes down to what your definition of metaverses. And I think everyone has a different definition, And you know, my son at one point wanted to get paid for chores and roebucks and that was my first indicator that this is like a really big you know, uh something that was to you know, something to watch. And when I think of crypto as being the sort of like Internet, you know, money that that can be seamlessly transferred, is roebuck or whatever might be used in the metaverse a

threat to crypto or just because crypto actually plug into it? Um, Matthew Ball, how do you see that that that's sort of like playing out with crypto and the metaverse. It's interesting. I think it's very frequent to hear this conflation of Web three or crypto with the metaverse. I tend to think that it's a bit like conflating industrialization or electrification with democratic republics. One is a technological process, the other

is about how we organize in society. Where these two themes intersect is about what the metaverse economy needs to thrive. And one way to think about that is the old adage possession is nine tenths of the law. Well, in most central server models, you can never take possession of anything you don't own it. Where it is is on a central server with a central database saying you eric have this thing. It can be deleted, it can be removed, they can disagree, it can be sees you can never

take possession of it. And note that in the real world, the fact that you have something in your possession doesn't mean the government can't take it, but we reflect that the vast majority of the power goes to you holding it. The perspective in the crypto community is that blockchain technology for n f T s and assets is critical to ensuring the requisite property rights and trust in the market

for investment. Are you going to buy a ten dollar parcel of land or two million dollar avatar that you can never truly take possession of that you have no guaranteed rights to and in a dispute the owning party can just take it from you until the court forces it back to you, you individual person who makes twenty

dollars per year. These don't require decentralization as a solution, but decentralization is the increasingly deployed solution with rapid adoption and crucially a considerable amount of revenue behind it, which seems to drive more adoption from developers and in turn users and Ultimately, and this is a key point for all of the failures and struggles and gas fees of crypto standards don't necessarily win because they're the best. We saw that with Beta max and VHS. They win when

they are considered legitimate and adopted on mass. That is what we are starting to see here. You know, applying decentralized blockchain and n f T technology as an economy is really a business decision for whether it's a game or a metaverse platform. It's not an enabling technology at its core. You can do a lot of the things

like providing transferability of items between experiences. You know, if Roadblocks and Fortnite wanted to make it so you can move items between them, they could do that today without a blockchain. They don't need n f T s to do that. It's just another layer of ownership and really having that decentralized, you know, no one owns it, but

you monitor that goes with it. That's the real difference. Yeah, I mean, I love talking about interoperability and Sharry and exchange because there are really severe tech problems in hurdles. One of my favorites is actually just to talk about this. You know, epistemological question or ontological question about what is an avatar? Does an avatar have clothes? Is an avatar with a hat and actually an avatar with a hat? Or is it an avatar that has an object known

as a hat? Does an avatar actually have skin? What color is the skin? Is that a separate object. Does a gelatinous jellyfish and a bodybuilder avatar move in the same way? We assume no, But these are actual technical decisions that have to be made. When you copy an image or I send you a jpeg, it's just bringing visual representation. But three D objects require rigging and motion. It's when we are talking about interoperation and sharing of objects.

We are talking about a hard problem of technology. However, the harder problem is always policy. It is business. Technology can be solved. You can scale up with machine learning, you can compress, you can simplify, you can say your world has rigging, mind doesn't I'm just going to import it and they'll be the same for me. The challenges

always business policy. One of the reasons why we see such network effects in crypto is to some extent, developing means giving up that you can't actually develop something and

then control what people do with it. It's lego. Similarly, when you take a look at the virtual world platforms of Minecraft and Roadblocks, the fact that their interoperability is essentially federated has real technical limitations and that you can't do everything you might want to do as a developer on Roadblocks, but you do benefit from the network of efects of everyone else. And part of the problem here is this path of interoperation with crypto from non crypto,

from closed platforms to other closed platforms. Many including Mark, have said that they want to do this, but there's no roadmap for how you do that. Um okay, Matthew, Bob, I want to bring it back to e t S a little bit here and and actually talk about your your holdings. How do you decide what goes in this? I mean you have I've looked at the index. Uh, you have an expert council. Who's on this expert council? How do you decide who gets in the e t F?

And how do you figure out what the holdings are? Sure? So, the ball metaverse index, which is behind the round hill ball metaverse e t F is a passive thematic rules based index. We have detailed methodologies under seven categories hardware, networking, compute, virtual platforms, payment rails, content assets and services, as well

as interchanged endors. You can think of that as your unity and unreal We define those seven different categories based on the core stack that you see in the Internet, in which powers virtual worlds and metaverse experiences. Today, we allocated value or waitings to each of those categories, not equivalently, because if you take a look at the history of the Internet, you'll see that the value or the revenue

pools differed quite significantly over time. If you take a look in the nineties, almost all of the revenue from the Internet was in hardware and networking. We weren't buying Netflix subscriptions. There wasn't paid ranked with keywords being assigned to it. You were buying a Dell computer and a o L or Exfinity broadband, and so we had to

wait each of those seven categories. How we come up with the rules for each company that's scored within them as our proprietary i P. But it's assembled by this expert Council. And for context, the expert Council is a council of experts. We have the former lead of in Video's Enterprise Clouds streaming offering. The person who launched launched

Amazon's Instant Applications. Former head of developer relations and content strategy for Oculus, former general manager of Steam, former general partner at Andres and Horowitz in their crypto division, led their Crypto School. Former executive from Spotify, the co executive producer, lead game designer of Grand Theft, Auto Red Dead Redemption.

This expert council only four of the seven of which I've just described came up with this methodology, and the belief was the reason why I hired this expert council was essentially a reflection of why the et F exists in the first place, which is the enormity of this transformation, which spans trillions of dollars in every country, in every industry, is far beyond one person myself or even a handful

to truly understand. Then trying to systematize that in an index is even more difficult, and so we spent about eight months building out this rules based methodology, which we then maintain over time. I'm happy to say that among all US listed e t f s, we have the

second highest ranking of roadblocks. Has been a good look recently the fourth highest waiting for Nvidia and among our top four holdings, all of which I would consider to be the leading metaverse companies today Roadblocks and Video, Unity and Microsoft we have the largest combined holdings. Now. One of the challenges with the e t F right now is it is very differently weighted from Q q Q,

but it still has many of the same tickers. And I think that there are a few different important points there. Number one is two of those top holdings, Unity and Roadblocks were not public last year. That's a good reflection of how this e t F is likely to change in the future. While all of the triple Q companies are pretty up year over year, Unity and Roadblocks were valued at less than five billion a year and a half ago. There now fifty and seventy five billion dollar companies.

So our expectation is that the new companies will grow. But the nature of a multidecade change is why you need a diversified portfolio and why the composition of this index will change as the metaverse changes. Which companies lead clobly and and I would just add that you know, we also expect a lot of these companies that are private that are you know, key metaverse companies like Epic Games will eventually go public at some point or another.

You know it's right now there's unlimited and basically infinite amounts of private capital for them to stay private, but you know at some point that private capital will want to exit, and so you know, it's it's it's almost a certainty that at some point in the next few years a company like Epic will look to I p O and probably will join the index. For you guys as well as for us are Bloomberg Metaverse Index and become a key you know, key holding in those indicries.

But as much as we will see more and more of these companies sort of you go public or ter h Matthew Ball's index, I don't know if there could have ever been a bigger gift than uh a rebrand of a company going from Facebook to meta and just having this massive catalyst moment uh Mr Ball, And I'm just wondering had that not happened, where would you be. It's a good question, I mean, and I think Eric

tied this up. There's certainly been some attention, especially in the first few days, as to whether or not the increased inflows were just erroneous trades. I think the assets have been incredibly sticky. We're now at eighteen consecutive days of inflows. Those inflows have grown from five to fifty

to sixty to eighty eight million in a day. As we get farther and farther from that release date, the critical answers if you actually take a look at crypto and this is the most important, metaverse oriented tokens have grown far, far more than meta and almost universe. What this tells me is that the spotlight placed on this theme for which we could not have purchased on this timeframe, is what's driving the inflows. Greater recognition of the size

of this opportunity and its magnitude. But I think it's important to diversify away from meta platforms here. Yes, in July Mark started talking about then at the end of October he rebranded. But what has happened since, Well, in Video has gone from a company two years ago very few people knew to several months ago being the ninth largest company on Earth, it's now the sixth largest company on Earth. Jensen talks about the metaverse more frequently and

with greater enthusiasm than anyone else. So you've now got the seventh and sixth largest company on Earth, Microsoft, the largest company on Earth Satya. Nadela went on a tour released videos talking about his vision for the metaverse, how his company is going to transform. A few days ago, Google announced that it was reconfiguring its organization for the xr VR, Google Play Team, Google Labs, and Area one twenty their special Projects group. We're going to be reorganized

into a due reporting unit. We don't know exactly what that looks like. It sounds like the metaverse to me. In addition, Amazon started rewriting their job postings in m L in hardware in their Wearable's division to talk about the metaverse. Reports have come out from Morgan Stanley and others trying to estimate if Facebook Reality Labs is spending twelve billion per anum on the metaverse, what is Amazon doing. Their estimate is six to eight billion dollars per year.

Apple has filed more patents in the last year relating to display technology than in their history. That is metaverse related investment. I absolutely believe that Facebook has catalyzed interest in this scene, but that interest has been constantly reaffirmed by the most significant powerful and stand to lose comp's on Earth. And if you look at some of this, like the share price moves on like Roadbox and Unity recently, they didn't budge when Facebook rebranded the metaverse necessarily they

moved on earnings. And I think what was really impressive aside from shortcovering, because I think there was a lot of shortcovering that you know, catalyzed modes, but you know, I think if you look at Roadblocks, there was a lot of concern. I had this concern that not only would every all the metrics tail off as we emerged from the pandemic, but the engagement, the hours of engagement per daily active user on the platform would fall down.

People would go back to spending less time on the platform. And that's not the case. It's actually going up still. People are now spending more time than they did during lockdowns in the second quarter of Roadblocks. That's one of the most encouraging data points that you can see for this company, because that really proves the viability and sustainability of these platforms is not only gains but as social experiences. Okay, Rebecca, I want to ask you a question right before we

wrap here. You wrote a note that Eric uh found a little bold. Now that we've had this conversation, how do you feel about that number which was what was it? Yeah? My e t F number was eighty billion by twenty four and I think that we might actually reach this. And the reason why is that, especially in Asia, how

people define metaverse is a lot more broad. So, for instance, if we look at Korea before, Korean ETFs that launch track the f N Guide k Meta Index and the I Select Metaverse Index, and so these are really companies in the tech space, anything from social entertainment to live entertainment to technology companies. And in Asia we can expect more metaverse e t s to come just because they take a much more broad definition of what the metaverse is.

And if we look at this from a performance perspective, for instance, in the past month, the Korean ETFs have a one month return of thirty six percent, and so the retail investors are loving this. The returns are phenomenal. And if we compare this to meta in the US in the past month, meta has performed sevent and so for ets for investors, a lot of people just jump on the bandwagon. You know, metaverse is the thing right now,

I'm going to invest into it. But what I love about E t s is that it's really about the details. And so for each et F, even though they are branded as a metaverse et F, the underlying is actually drastically different. And so for in Asia, the Korean ETFs are solely focused on the Korean market, while for the Taiwan ets is solely focused on the Taiwan market. And so as investors look to the metaverse, you know, they

really need to be selective in what they want. And unfortunately, not all ETF issuers can have the luxury that Matthew Ball has by having a very exclusive set of metaverse experts on their committee to select the index. And I think that's what's going to be the differentiating factor, and you're really going to see a difference of that in the return and performance of the index. So I think

this market is going to continue to grow. Facebook has definitely helped my prediction and pushed it to get retail interest, and I think we might actually hit us. Okay, Matthew Ball, I'm gonna wrap with you. We asked this question of of many guests on the on the on the program on the podcast, favorite E t F ticker that is not your own, well, I think the the Easy Camp

would have to be hacked. Eric served that one up to you on a platter, so we talked about it a lot, just out of curiosity here where where else can you go with Meta? How many other ticket tickers do you have in your back pocket that are Meta related? I don't have any. But the crew at round Hill are experts in ticker selection. They have filed for meme for weed. We'll see if they can get that one through on ecy. But those guys are absolute pros at what they do, but ticker selection has to be top

among them. Matthew, Matthew, Rebecca, thank you so much for joining us in Trillians. Thank you, thank you so much. Thank you. Thanks for listening to Trillions. Until next time. You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, and Wordbells. You'd like to listen, we'd love to hear from you. We're on Twitter. I'm at Joel Weber Show, He's at Eric faul Jinas. This episode

of Trillions was produced by Magnus Hendrickson. Francesca Levi is the head of Bloomberg Podcast Bye,