Thread by @packyM

Tencent is building the Metaverse.

Sounds sci-fi, but early pieces are here today in Tencent’s portfolio.

Epic, Snap, Spotify, WeChat + bets in games, ecommerce, & social put Tencent in the driver’s seat of this multi-trillion dollar opportunity.

Part II: Tencent’s Dreams 👇

This thread is the Twitterized version of my 5,000 word piece. If you want to learn more, you should read and subscribe.

Full disclosure: I own shares of $TCEHY and portfolio companies discussed: $SNAP, $SPOT, $API.

notboring.substack.com/p/tencents-dre…

In 2018, Pan Luan wrote a 13k word piece, “Tencent Has No Dreams.”

He argued that a 2011 “Conference of the Gods” decision to focus on capital + traffic caused the co to lose its ability to innovate.

techbuzzchina.com/episodes/ep-5-… h/t @ruima

I disagree. Tencent’s Capital + Traffic Flywheel led to a 15x increase in market cap since 2011, and sets Tencent up to profit from the Metaverse.

1. Running a large company is about capital allocation over innovation.
2. Investment is right approach for decentralized Metaverse.

What is the Metaverse?

The Metaverse is an evolution of the internet that spans VR, AR, online, and physical worlds, creating a new layer of the economy with rich experiences, many of which were not previously possible.

@ballmatthew and @timsweeneyepic explain it best.

Check out @ballmatthew’s essay and interview on Invest Like the Best with @patrick_oshag and @timsweeneyepic’s chat on @deconfun for more detail on the Metaverse.

deconstructoroffun.com/blog/timsweeney
matthewball.vc/all/themetaver…
open.spotify.com/episode/3RKopM…

.@marc_it thinks the Minimum Viable Metaverse is already here in games, ecommerce, premium social media, and remote productivity/collab tools.

Tencent owns stakes in 4 of the companies in this graphic 👀

vividandvague.substack.com/p/the-minimum-…

3 things important to know re: @TencentGlobal & Metaverse:
1. Not science fiction, inevitable even if final form unclear.
2. Games & game engines are important, but just one piece of the puzzle.
3. Owning Content and Platforms underpinning the Metaverse will be highly lucrative

.@ballmatthew thinks it’s a multi-trillion $$ opportunity even in a conservative case.

Impossible to value - like predicting size of the ‘net in the 90s. You couldn’t have predicted multiple trillion $$ companies and many more multi-bn $$ ones.

Tencent is perfectly positioned.

There are two big components of the Metaverse:

1. Platform (where)

2. Content (what)

Tencent owns stakes in more of the components of each than any company in the world.

Platforms

We will interact with the Metaverse in many ways including VR, AR, Audio, and mobile internet. Tencent owns a leading Platform in each.

VR: @epicgames
AR: @snap
Audio: @spotify
Mobile Internet: @WeChatApp

VR: @EpicGames

Fortnite looks like the closest thing to the Metaverse today, but it really just shows off the power of Unreal Engine as the key platform. Games, movies, and buildings all rendered with Unreal.

More worlds built on Unreal, easier it is to stitch them together.

AR: @Snap

Snap is building Mirrorworld, the AR layer on top of the real world, by building for itself then opening up tools: Camera Kit, Bitmoji, Snap Kit, Local Lenses, etc…

I wrote a full piece about it here (I ❤️ $SNAP)

notboring.substack.com/p/oh-snap-

Audio: @spotify

The Metaverse may look more like Her than Ready Player One - audio-based for the in-between moments when we can’t be fully immersed.

Spotify is making all the right moves to own audio, as I wrote about in Earshare:

packym.com/blog/earshare-…

Mobile Internet: @WeChatApp

WeChat is already like a 2D Metaverse - stores, chat, music, games, payments. It will be fascinating to see what kind of influence WeChat has on the Mataverse’s design.

https://twitter.com/packyM/status/1297663950360907776?s=20

For people to actually use the Metaverse, there will need to be things to do: Content.

@marc_it’s diagram with more Tencent investments overlaid shows their strong position in games, ecommerce, and premium social.

Games

- $5.5bn in Q2 revenue
- Owns Riot Games (League of Legends), most Twitch-streamed esport
- Owns 40% of Epic (Fortnite)
- Owns 1.5% of Roblox (50% of under 16yo in US)
- So much more.

Games are the on-ramp to the Metaverse, and Tencent dominates.

Democratization of Ecommerce

Metaverse needs a functioning, participatory economy. Tencent owns the pieces.

- WeChat Minis let cos build stores, WeChat Pay bridges online/offline pymnts
- Paystack, Khatabook, Gojek, SeaMoney - SME payments
- Pinduoduo C2M & Social Comm

Premium Social Media

Metaverse will let us hang out with our friends and strangers who share interests.

Tencent owns Huya, Douyu, Snap, Reddit, Byju’s, Discord, and more.

Where Tencent Might Invest Next

Tencent is missing remote collab & productivity (recently launched VooV to compete w Zoom)

Targets would help build both for and in Metaverse together:
@figmadesign
@agoraio
@zapier
@notionhq
@roamresearch
@webflow
@airtable
h/t @mario_gabriele_

Ultimately, Tencent is in the best position to make a lot of Metaverse $$.

This feels like the opportunity that most of us missed to buy $AAPL, $AMZN, $GOOG, & $MSFT in early 2000s.

Tencent is: undervalued portfolio of top internet assets + free call option on a new world.

I’m trying to remix the content I create in as many ways as possible so people can get it wherever they prefer.

This week, I made a presentation in @projector: projector.com/story/9e144b85…

And recorded Tencent’s Dreams on @spotify:

open.spotify.com/episode/1x71Xe…

And of course, if you want more analyses like this, subscribe to Not Boring on @substackinc to get a new deep dive in your inbox every Monday.

notboring.substack.com/subscribe