Gaming ETFs Are Having a Breakout Moment During the Pandemic

and he likes his Nintendo Switch. So I think he's probably more of a representative of like what people are doing in the lockdown in terms of gaming. But he's definitely gamed more in the past four months. You know. It's a constant battle to you know, keep him doing other things versus that. But you could feel the poll. Yeah, and my guys almost five. That pole is for real Lego. That's his His go to game on the on the phone is all the Lego games. Those are great, he

also loves, and that's representative of the bigger trend. No, Eric, like the gaming industry has just been its rocket ship. What's it look like in the E T F Lanscape? Yes, so there's four of them, esp O, which is van Eck up this year. Remember this is a year where the S and ps up two percent and emerging markets are down one percent. A lot of these funds have

emerging market exposure as well. So is astonishing. Hero is the Global X that's um, NERD is round Hill that's up, and gamer g A m R is e t F MG that's up. So and collectively they have about five million dollars maybe six hundred million. To me, that is astonishingly low. Given the numbers that I just read off to you. They're having a shiny object moment. The numbers in the video game industry which will go over are massive. They dwore some other areas where them ETFs are, you know,

multiple billions. So I hope we can get into that, not only where the performance coming from, but also why there is some hesitancy from advisors to try to ride this. Uh there's it's a little bit of a mystery and to help us navigate these games. Matt Cantraman, a Bloomberg Intelligent analyst, and Will Hershey, who's behind NERD that roundto et F you mentioned, are going to be joining us this time. I trillions. Welcome to the meta fverse, the

future of the gaming industry. I want to start really just with the nuts and bolts, start with will here. You walk into an advisor's office, right, it's a boomer, you know, it's like a six year old advisor. He's got all these wealthy clients. What do you do to pitch him on this industry? What numbers are you throwing at him? Well, I first I pull out my Atari because that's the only console that he's gonna be able

to relate to. No um. I think at the at the highest level, you look at the overall gaming industries revenue figures and you're talking about, call it for last year, around a hundred and fifty billion dollars in revenues. That's bigger than the global box office and music industries combine. And it's a It's an industry that's also growing while

other forms of entertainment or shrinking. UM So, coming into coronavirus, I think you're probably looking at high single digit growth rates year over year kind of for the next few years. I think what we're seeing now was stay at home. You mentioned it in the intro. We're gonna have growth rates that are above that for the next few years

and then the bigger the bigger question here. And I believe that gaming is a secular trend, right You're playing into the fact that younger people don't want to be passive in terms of the way that they engage with entertainment. They want to be involved, whether that's social media or gaming or watching on Twitch. It's more about being involved. And I think I think what we're seeing going on right now is is a short term uptick, but that's more representative of a long term trend um. And that's

kind of the high level pitch. I'd make the advisor and just real quick, go over the numbers. What's the annual revenue and give us something that's in close to that for a reference point. You're talking about a hundred and fifty billion UM, So there aren't that quite that many reference points. I'm trying to think off the top of my head, and there's nothing that's like right around that size. I think, Erica, you like to point to

some of the other thematics. It's bigger than some of the others that have have garnered way more in terms of assets, right, It's bigger than robotics it's bigger than cybersecurity. Yeah, that those numbers would be bigger, and then you've got the growth rate, and then I guess I would go back and just say, how do how do those companies

produce that revenue? Because are people buying games like they used to or they're moving on to more Because I know, like with my son, if if I asked him last night, if I gave you fifty dollars right now, what would you do with it? It's twenty five of it He used with for roebucks and he'd buy like stuff to make his like avatar look better. He'd do this some private server thing. Um, it's all very there's he has

a whole plan of what he'll do. But that's a platform that's free, but he's about to spend money on it. So is that the new Are you giving him that money? By the way, No, he has to earn it. In fact, roebucks are what we do for allowance. Basically there's no more dollars. So this is like what we thought was

gonna happen with crypto. It's just happening in a digital in a digital world with with Fortnite's b bucks, with roadblocks it's like digital economies are being built within games, and we'll see if that shapes out to be kind of what everyone kind of wants to call the metaverse every where at Neil Stevenson snow Crash. That's kind of this concept of our our younger generation is gonna live

inside these digital worlds. But in terms of what you're what you're alluding to, eric Um, it's a shift that we've seen in the business model. Right when I was when I was growing up, you'd go to the game stop, you buy the physical version of the game. You'd go home and you play it with friend or brother or or your sister or whomever, and that was kind of

the extent of the engaging with the content. Now what we've seen is, via technology and kind of online gaming, we're broadly the ability for games companies to deliver new and engaging content over the Internet. So, you know what that's meant is a shift in the business models one to kind of this more games as a service model, where games are free to play and are monetized via

in game monetization. Uh, kind of what we call micro transactions, right, buying a new outfit for your character, buying a new dance move whatever it might mean, um and and that's ultimately meant over the past several years, it's meant multiple expansion for a lot of the game publishers, because if you're able to deliver content digitally, that can be a whole lot more profitable from a margin standpoint than having

to shift out physical games every time. You know, you're trying to put out new content and and taking that taking that one step further. What it's also meant is intellectual property has never been more valuable than it is right now in gaming. People are playing the same games now for five ten years, and that's kind of we're seeing the development of franchises the same way we've seen

it in Hollywood and blockbuster movies. Is is i P is super super valuable right now because you can continue to monetize it again and again, Matt, let's bring you in here that i P conversation. The producers of this Who are the players that you as an analyst, you're you're most interested in watching. One of the big names that everyone looks at is Take two because they owned rock Star and everyone knows Grand Theft Auto. And to further Will's point about comparing to the box office. Basically,

everybody saw Avengers a game. Most successful movie in the box office ever, so grand Theft Auto five cost about half to make versus m Avengers end game, and it's made more than double lifetime. So to kind of put it in perspective, the biggest video games out there are much more profitable over time than than any movie that's ever been made. And that's and that's mostly because of what Will is alluding to the fact that of this

life services model. So take two, I mean ten Cent, the HK listed China company, is the global leader in the industry. But if you dig into ten cents weeds they have investments in ownership of multiple gaming companies globally. Um, they own Riot Games, who makes League of Legends, They own Stakes and Activision and ub Saw. So they're they're

they're they're global electronic arts. Everyone knows for the sports games, they don't own that intellectual property, but they've built up these these licenses that are almost impenetrable by by competition. So they have the factor monopolies in the sports arena where they where they where they compete the best, uh, you know, And then you also look at companies I

mentioned us off. They have some great I P but all of the biggest companies that are in the easy t F indusees you know, like Wills, like like the like the nerd to et F. These are the industry leaders and the value does come from the intellectual property for sure. I also want to bring up these two companies that have been you know, hitted in like a decades long rivalry and there this rivalry is about to

continue again with a kind of a new chapter. And that's Sony and Microsoft, right, who are known for consoles, right, And you know, I think that's one of the things that's really been interesting with gaming is obviously everybody's got smartphones, you've got games on all those, but the consoles remains sort of the heartbeat of the gaming industry. And both of them are about to bring out new consoles by the end of the year. What what's that going to

do to the business. It's an exciting time to be a gamer. Is just an amazing year. You have the new consoles, as you mentioned, cloud gaming is starting to emerge, um, and then you factor in the COVID boost. But for sure, um, you know I I I personally have been an Xbox owner my whole life. UM, I plan on buying both. Um, I will be I will be that that weird nerd that that buys both this time around. Look at it at the end of the day. UM, you know, if

we wanted the clock back a little bit. When we had the seventh generation cycles that consoles that was the Xbox three sixty and the p S three, Microsoft and Sony basically were fifty fifty. They basically sold the same number of consoles. But then in the most recent generation that was started in with the PS four and the Xbox One, Sony has outsold Microsoft more than two to one, and the main driver of that has been their exclusive content.

They're they're self developed games that they make as well as third party games they get exclusive distribution for. Sony realized that was going to be their competitive advantage over Microsoft. Microsoft tried to be a home entertainment platform and it didn't didn't resonate, and they didn't have the games to back up the platform, and that's what led to Sony dominating. So Microsoft has made a lot of moves in the last couple of years. They've they've doubled their studio account

to over ten now. Um. But with acquisitions of smaller studios to bolster their content. They're also really pushing subscriptions. They have their Xbox game Pass subscription service which has tons of has over two hundred games in there. I literally haven't been using it NonStop, um you know, during the during the lockdowns. Don't tell my boss, but um, you know, uh you know, we've been uh, you know,

playing lots of games there. They've over ten million subscribers in there now and now with cloud gaming, they're gonna bundle their cloud gaming right into those subscriptions, so it won't be any additional costs to the users. So, um, Microsoft is taking a different route to differentiate itself. You know, the Xbox, the new console, is going to be the most powerful box, but they're also giving you other ways to to to interact with their services and their games.

And at the end of the day, as Will mentioned this, games as the service models all about engaged and they don't care where they get that engagement from, whether it's their game or someone else's game, whether you're playing on a phone, a console, or a PC. They just want you in their ecosystem. And and this has been a big culture shift for Microsoft in the last few years, not just in gaming, I mean their entire business has gone from being a closed ecosystem to an open cloud architecture,

and their gaming businesses now it's following that. Now. I will just add that we in the US and in the West love to talk about console gaming because there's a very high console penetration rate. People grew up with

a Super Nintendo. Um, if you look across the globe, I really see the biggest opportunity in mobile because what's going on right now is smartphone technology has gotten so good that you can play the best video games in the world if you want to call them triple A video games on iPhone, fives on Android, potatoes, whatever, whatever you want to call them. Um, what that's really done is two things that's made games even more global than they already were, and in doing so, has really unlocked

emerging markets. And I look at Latin America and Southeast Asia is really kind of the two most exciting growth areas for the gaming industry going forward, and it's all about introducing new gamers who never had had a Supernintendo growing up, that are now getting introduced via smartphones and to the best games in the world. I think that's a really important point that's going on right now. Okay, so now comes the most important question that I'm gonna

asking the whole interview. How much view game on a day to day basis, like twenty four hours in a day. How much do you dedicate to gaming? Um, I haven't been. I haven't been gaming recently, but I would say I don't know, maybe a half hour. Like it's it's great because nowadays you can, you know, you can just jump into a game, play one play one round or match, and then and then kind of sign off and do that, you know, whenever you want. Well, that's just that's that's

just that's disappointing. That's disappointing. I mean, I'm a solid four hours a day or so easily. Um, I wake up early in the morning just so I can play video games during lockdown. You know, I normally am a wake up early, go to the gym, go to work person. But there's no going to work, so and it's very easy just to sit in front of the TV when you're home and play. So my wife and I we beat Overcooked two. That's a great game to play as

a couple. Really works in your communication skills. And if you survive that game without ripping other's throats out, that that's a huge accomplishment. I've beaten fours of Horizon four, which is this huge open world racing game. That's what I've been playing recently. But I played through the entire Halo collection because the new Halo is coming out at the end of the year, so I was like, I gotta play all the games again and get ready for the new game. So I've been playing everything that I

can get my hands on. But it's all in the subscription service that I told you about, so it's like, you know, it's already paid for, it's just there. I's gotta play it, so it's it's fantastic. But now I've definitely been playing more since the lockdowns, and you know our our estimates that we've published on the terminal on b I Go, I always have to throw the plug. Um. You know, we've looked at the user base expanding about thirty globally for gamers since since the startup lockdowns in

mid March. UM revenue is up, you know, the growth rate. Will was talking about a high single digit paces like the long term trend, but we're about ten to twenty points higher than that during this period. Um, and looking at the US, you know, looking at the U S mobile market for example, grew in the second quarter. So so the numbers are pretty huge right now, just go to the numbers how many people game out of in the world, if is there some kind of way to

estimate that or what percentage of people. I mean, the numbers you here thrown around are somewhere around two and a half billion. Now that includes uh, definitely includes mobile, right, and it definitely includes also kind of what I would call casual or hyper casual mobile, right, which is candy crush mores with friends, those countless games in that calculation. But I mean over two billions the big number, no

matter how you want to slice it. If you're talking hardcore gamers like the guys like me that are that play multiple hours a day, it's still in the hundreds of millions globally for sure. Um, when you add up console PC and the hardcore mobile players. I mean in China, there's lots of hardcore mobile players because you know, that's where all the game development is. Most of these video game ETFs have a good amount of exposure in Asia.

In fact, Asia's typically the predominant area US might be typically um, there's one company in there that is at the top of a lot of these and I gotta I see it all the time as an E t F analysts, But again I'm an E t F anists, So don't dig into the companies which just ten Cent UM. You know, they're also in cloud computing ETFs, they're obviously in emerging markets in China. E t F s UM will talk to me about why it's in there, how much of their revenue actually comes from gaming, and like

who's running ten Cent are they? Why are they so good? Like they seem to just keep rising in the ranks of these ETFs UM and they're they're everywhere. Now, yeah, I mean at a higher level, ten Cent is I think just past Ali Baba as the biggest company in China on a market cap basis. So it is a behemoth. It is an Internet giant that just so happens to have kind of really built an empire focused around gaming.

And I think China is it kind of a unique market where they were able to start and gaming as kind of the core of their business and expand from there. In the US, you're kind of seeing large tech get

into gaming a little bit later. UM. But in terms of Tencent, I like to call them like a mini gaming and esports et f on their own because of how many h great investments they've made into the space and how many companies under like subsidiary companies within their portfolio that they have that are doing really compressive things. To give you a few examples, UM, Tencent bought Riot Games, which is League of Legends, probably the biggest e sport

in the world. They bought that, um a few years back. They also owned around Epic Games, which is Fortnite. They own super Cell which is Clash of Clans, a big mobile e sports, so they've really built like the premier. They also owned five percent of Activision Blizzard and a few percent in Ubisa, so they're they've really built just kind of a tremendous portfolio of underlying um underlying companies that are doing things in the games industry on the

on the game development side. They also have stakes in in a few Chinese game streaming platforms that have been great investments for them as well. So they've done a ton in terms of investing capital all and I almost look at them as like a Berkshire Hathaway East if you will, if you look at how many public companies are companies they've had public and their portfolio and how well they've gone. And Matt, let me just follow up with that. You know, we'll just said the sports a

couple of times. Um, just define this and like, what section of this whole revenue pie is e sports? And I will anecdotally tell you. I asked my nine year old last night, what would you rather do? Go to go to an Eagles game right from I'm from Philly, or watch a bunch of guys play roadblocks? And my heartbro, he picked, he picked watched people play roadblocks. I'm like, that just makes no sense to me because when I was in the eighties, Yeah, you'd stand around the pac

Man game if some guy was on fire. But I wasn't gonna go and watch. I was more interested in actual sports. Um, are real sports gonna fade away? And the sports kind of like take over? Is that what we're looking at here? I don't. I don't think it will fade away, just a it's just an additional, you know, differentiated offering. Look, I mean the sports too, there's lots of ways to measure it and once you count as

E sports. But it's it's a couple of billion dollars on top of the numbers that will and I've already been discussing, it's in addition to that, most of that comes from from media rights and selling the rights for like streaming on the internet or even on TV. Uh. You know. Speaking of Philly, you know the Overwatch League that's one of activisions leagues. They had the finals in Philly last year. Um. You know, Comcast has been a

big supporter of that. They own one of the franchises, um, you know, and then they have they're building a stadium in Philly and E sports Arena, so, um, you know, a lot, a lot of investment is going into E sports and you know, at the end of the day, you know, for the large video game publishers, E sports is going to be very incremental in terms of the profit contribution. Like it's basically break even for Activision at

this point. But what it does, it's it's much higher return on your marketing spect because if you're gonna go out there and promote your game as a competitive game, anyone can get this good and rise to these ranks. It's a great more direct way to bring more people into your ECO system. Sell more copies of your game, generate more engagement with more players. So for them, you know, even if they break even on actually running sports league,

they benefit just because more people play their games. Weren't people spend money in their games? Now? I would say, I, I I know what kind of you're you're talking about, Which is this one two billion dollar sports industry? Where I look at it, it's around forty five to fifty five. And and in doing so, I'm really counting the games that are predominant E sports. Let's call it a League

of Legends or a counter strike. The revenues that those games, which are really in my mind been driven by competitive play and people watching other people play, if we count those as E sports revenues totally different. Um. I think what Matt referring to is kind of these these in person events that look and feel like traditional sports, and and and the meteorites off of those which are certain to get sizeable in certain cases, but that's not quite

there yet. Or to answer your question, are sports going away? Um? We recently launched a product that's kind of more focused

on the traditional sports side. So my personal belief is no, But I do think you could see certain sports I'm looking at you, like the MLB in particular, that deals with, you know, a very high average age of its fan base that just as kind of phase out and goes the way of boxing or horse racing, just from a demographic standpoint, and that I could see kind of baseball being replaced if it doesn't figure out a way to kind of speed up the game and make it more

engaging and exciting. Totally agree, But I've stopped baseball for the most part. I was just gonna say, if you look at the NBA, the n B A is a is a joint venture partner in the NBA two K League, which is the sports league based on Take two his video game two K NBA two K. So the NBA is all in on the sports they get it. Um. I agree with Will you know, especially during lockdowns, you saw MLB players streaming MLB the Show on Twitch all the time. Tommy Kinley, who's a picture for the Yankees,

who's a absolute psycho. He was amazing to watch on I would wake up early in the morning just to watch him. Um, and I'm super pumped for baseball way back. I'm a huge baseball fan, and the Yankees are gonna you know, just the evil umpires back. Let's go Yankees.

But the more that professional league see value in supporting an e sports league to complement what they're doing, it brings in the younger generation who is kind of disenfranchised with sitting around and watching a football game for four hours a day. What we're seeing going on right now with no traditional sports now hopefully that all changes Thursday and we continue on with the schedule, is a unique amount of attention being paid to sports simulation e sports.

So Matt Matt talks about the NBA two K League or or Matt and or MLB the show. These these games that are meant to simulate traditional sports in normal environment. Those aren't that Those aren't the games that people are you know, tons of people are watching. I think a lot of people think that they hear the sports. They think it's like, you know, it's people playing virtual football.

Really not. And I think the the fantasy games, if you will, or or shooting games, things that you can't replicate in real life, um are the ones that really attract people's attention. It's kind of this more of more of even more of an escape then I think you

get from the kind of sports sem title. Okay, well, I want to bring it back to the the e t F right, because as we mentioned at the top, there's sort of four gaming e t F s. You're behind NERD, but you've got gamer Hero esp O. What distinguishes the products from one another and and specifically NERD from the competitive set? Yeah, I mean, I think if you look across the board, they've all performed rather well, So there's kind of a correlation there which you would

expect um for us. Really, we try and take a kind of a pure play approach to all the products that we're gonna put out in terms of thematic equity. So you can imagine a scenario where you know, you have a Microsoft or a Sony that we talked about included in ETF like this, Well, they don't really generate a whole lot of revenues from their gaming segment relative

to the overall business. We do two things. One, we try and identify companies that are really really kind of tied to this theme of e sports and game streaming and to assign a higher weight to those companies, And we kind of have a tiered methodology that helps get us to kind of what we believe is a really unique place, not waiting based on market cap, but rather kind of this pure play exposure concept and what it's meant for us kind of UM, year today is is

some of our biggest holdings, Um, maybe our underweights are not even including some of the other e T s like the Chinese game streaming platforms for example. So on other follow up I have for this is, you know, if we talk about the numbers, like we've talked about the ETF has barely been a year now, what took so long? Um? You know, I I'm quite I'm surprised as well. And I think that you know, we launched it for a reason, right, We thought there was there

was a huge, huge opportunity here. Um. But I think it still comes back to this concept of now we're doing things differently. I think we're marketing to a younger audience. We're we're kind of taking a different approach and et

F distribution. But UM, when you talk about coming back to Eric's earlier conversation around advisors really being comfortable and understanding, UM, it felt like there was so much in the news over the past couple of years with with Fortnite and and Ninja and Drake playing and having hundreds of thousand people watched them on Twitch, that it kind of felt like it was e sports and gaming in the U S. We're just getting to the point where they were mainstream,

and even those those advisors who maybe have never picked up a game themselves were kind of able to they had heard about it, and that I think played into

the timing. And if I could add to that as well, because I think if you think about the fundamentals of the industry and how it's changed in the last decade, also, I think that also plays an important role because a lot of investors, a lot of you know, R A s and whatnot that are older when they think of video game companies, these are hit driven businesses, just like the box office companies where historically, before this game to the service model, you live and die by every game,

and so you was, you know, you had beta risk on the upside and you have massive negative downside skew in these companies that were you know, living buying by single by single games at the time. But now we're in a world where you have these large live services games that are highly recurring in their revenue, you know, electronic arts of their revenue and over ninety percent of their cash flow is basically recurring. Now you couldn't say

that ten years ago. And so because of that dynamic, you look at a business a business model that is that is much more sasllite than it was box office like ten years ago, and that that is starting to change investors perceptions. And you saw this start to really take hold in seen that's when multiples of the sector really started to detach away from other media stocks and trade more like tech stocks. And since then it's kind

of been in that range. And so you know, it took a couple of years for investors to buy into that thesis. But since then, um that that that really that new mindset has taken hold. And I think you've also seen that in the flows into funds like wills as well. Yeah, I do think this is a you know,

an issue that is gonna just persist. I pulled people on Twitter a year ago, and perception to frivolous was the number one answer for why the video game ETFs haven't attracted the kind of assets that robotics, cybersecurity and even cannabis has despite having numbers that are as good or better in terms of performance and revenue. Uh. And then the second choice was ignorance unaware they're missing a lot of growth right now. It's just it's just weird

to me. I feel like if you did one of those old schools taste tests and you put up the numbers but not the name of the e t F, people would pick the video game et F over those others. But then you showed the name and they're like, oh, I didn't want to pick that. I think. I think another thing that we kind of touched on a bit earlier, but is the exposures in the underlying industry. Just in terms of the nature of which companies are public, there

aren't that many household names that are US listed. You have Activision, Blizzard, Electronic Arts, take Too, and maybe throw Zinga in there, and that's it. And I think without kind of in the investing public having been conditioned to understand these companies follow earnings things of that nature, when you put a whole portfolio of names in front of them that there may be not as familiar with, it

kind of takes a little bit of time. Let me watch a little bit um versus uh, you know, maybe maybe other sectors where you've got fifty sixty plus percent US names that you're all familiar with. And I would also say that to Will's earlier point about Microsoft and Sony, a lot of the companies aren't pure plays in gaming. You know, Microsoft is one of the biggest gaming companies in the world, but gamings only ten percent of Microsoft. Sony is a bank. People forget that Sony also is

a bank. Um See Limited, which is one of the best performing emerging market stocks in the world right now. Um. They're a huge gaming company in Southeast Asia, but they also have this massive e commerce business that's growing at a hundred percent a year, So that that also affects the business model as well in the sense that these large, the largest players are diversified tech conglomerates, you know, basically, and then you have smaller players that are also diversified

as well. You only have a handful of your plays. One thing we're seeing happen right now, um, and it's happening in both the West and the East, is big technology companies. The largest technology companies in the world are all making investments in terms of human capital and millions of dollars into video games streaming platforms. So you have Amazon that famously bought Twitch. Google is investing into YouTube gaming, Facebook has Facebook, and then if you go to kind

of Asia Pacific ten cents invested into Huyian. Do you Sony and Billy Billy, And I think, really what this all has has and this is transpired over the last few years, is it speaks to the fact that one gaming is becoming mainstream, but two, I think there's something bigger at work here where large tech is figuring out

that gaming, whatever form that kind of takes. In this case, streaming platforms really can be a user acquisition tool to kind of and kind of be that top of an all um for kind of building relationships with a younger audience and having them over time convert to potentially higher margin businesses. And there's something like really powerful about the

biggest tech companies in the world investing into games streaming. Um. I think it's a little bit early to say what their endgame is there, but it's just it's so fascinating to watch, and I think really important to note that the biggest tech companies all say, hey, there's something here.

This demographic is really valuable. Let's let's invest. It's also important to note that a lot of those companies are the big cloud companies Microsoft, Amazon, Google, Facebook, and cloud gaming, as I mentioned, is starting to take off, and over time, I think you're gonna see a blending of streaming and cloud gaming. I mean, think about it this way. You

could pay to play Fortnite with Ninja. You hop into his Twitch stream and then all of a sudden, you pay a premium and you can jump right into the game with him. You know, these are the type of things. This is where gaming is going, going to what I was talking about the metaverse being hyper engaged with audiences. This is where gaming is going. And I think that's that's one of the key trends. This is like a decade long trend. But this is where I think we're going.

I can tell you guys are just like nerd ing out. You could I could see you guys intended going like hours at a bar over this stuff and know you're exciting to go to a bar. Just go to a video game. Yeah that's right. Sorry, that doesn't exist anymore, right, social interaction, screw that, Okay, but we'll go to a video that's right. There is there a video game called bar just going to grant theft auto online. You go to a bar that's right speaking Well, this this actually

riffs merges into my question. I just saw Already Player one with my son and it was a good movie, you know, it was, we enjoyed it. But I think it was ramp or. Somebody on Twitter said that's what they see as being the most accurate depiction of what

the future will be like. And I was thinking more about it and the way you guys are talking, I'm like, will there be like this world in which we communicate in and live in digitally that isn't the real world that sort of becomes bigger and bigger and maybe even at the expense of the real world. And does that starting September because we're all in a pandemic. I think I think if you'd speak to most people, it's kind

of it's it's it's not if. But when that kind of really takes hold and becomes kind of a bigger part of culture, I mean you're seeing pockets of it now. Um You're seeing uh graduations held within Minecraft, You're seeing dates inside roadblocks, you're seeing um music concerts. Travis Scott inside a Fortnite right, Like, these games are becoming platforms for things other than what the original intention and the code that was written for people to try and win

the games. They're becoming more like social media, um in that sense, and I think, um, in my mind it's you know, I actually if you if you go on Twitter. About a year ago, I asked him Sweeney, who's the CEO of Epic on Twitter, I said, do you view Fortnite as a game or platform? And he famously said I view it as a game, but asked me, you get in twelve months, and I think all of these game CEOs are really thinking about how to how to make their i P bigger than just a game and

a place where people engage more and more. And then the amount of monetization potential that you have there. I mean you talk about in game advertising, you talk about brand activations inside of games, and and just kind of this entire new world is opened up. But it is a scary concept. Right like now, I think we're uniquely the entire world is kind of sharing in this concept of living virtually right now. So it's maybe more than

ever seems like something that hey, that's not so crazy. Um, but I think it's really it's not if but when Will cavya and say, because I am a big VR virtual reality skeptic, I don't think this is gonna be everyone putting on a virtual reality headset and completely disassociating

themselves from the world around here. You guys have kids, could you imagine like locking yourself out with noise canceling headphones and kids running around and god forbid they hurt themselves and you have no clue because you're in the metaverse.

Like so, so I think there's limits to it, But I agree, But I just I don't think it'll be exactly like what we've seen in the movies where or what's coming in cider Punk later this year from CD Project, who's a great video game developer, where you your character inside the game, puts on a VR headset inside the game to go inside a neural network inside the video game. Um, that's coming later this year in November, and it's gonna be an amazing game. But you know, so I don't

think that kind of thing happens. I think it's going to be continuing more of what we've seen, you know, as as Will said perfectly, video games morphing into social networks. These are the new social networks. This is what's displacing Facebook. Okay, So closing questions, best game of all time and the game that I need to go play when I get off of this interview. Oh man, that's so difficult. I'm gonna show off that I'm not as hardcore of a gamer. But I want to say the best video game of

all time, it's Halo Halo one, the original Halo. And maybe that's that's like very specific to my age and in terms of what you gotta go play now, Um, I mean, if you've never played Fortnite, it's free to play, like you've got to try it, or called Duty war Zone one of those two. But I'm gonna say Doom, the original Doom, because that kind of was the precedent for like all sorts of modern shooter games going forwards. Um, games that I have spent the most time in. My

favorite game of all time was called Duty Modern Warfare two. Um, you know, back in the heyday. Um. And what I've been playing now I mentioned it. I've been playing for is the Horizon for And it's just fun because you get to jump cars off of mountains, all right, Matt Kannerman, Will or she think you guys so much for joining us on Trillions. Thanks guys, thanks for listening to Trillions

until next time. You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, and wherever else you like to listen. We'd love to hear from you. We're on Twitter, I'm at Joel Weber Show, He's at Eric Baltunas, And you can find Matt at the cantor Bot. And you can find Will at Maybe Bullish. This episode of Trillions was produced by Magnus Hendrickson. Francesca Levy is the head of Bloomberg Podcast. Bye.