Lars Doucet: Some Required Reading for ANY Metaverse Company Hoping to Make It Big, and a Voice of Reason in the Current Metaverse Hype Cycle

If you really want your platform to become the seed for “The Metaverse”, then you need to give it away.

—Lars Doucet
If you want to make a mint off the metaverse (and especially if you dream of being the next Roblox), you’d better be listening to what Lars Doucet has to say! (image source: Photo by Jason Leung on Unsplash)
Lars Doucet
(image source)

Lars Doucet is an independent game developer and consultant for various multi-million dollar game projects (through his company, Level Up Labs), as well as a games industry analyst, commentator, and blogger at Fortress of Doors.

On July 1st, 2021, Lars wrote a Fortress of Doors blogpost titled So You Want to Compete with Roblox, which is primarily directed at those companies who desire to become the next billion-dollar-valued metaverse platform (Roblox, as many of you already know, obtained a market valuation of UA$41.9 billion when the company went public this past March). However, much of Lars’ wisdom also applies to any social VR platform or virtual world that wants to break into the big leagues, especially if they are competing against an entrenched front-runner in a particular market segment, so I decided to write up this blogpost as an introduction to Lars’ ideas for my regular readers (if you’re not interested in my thoughts, just click over to read Lars Doucet’s blogpost in full; I have links to other content of his at the tail end of this post).

Lars starts off by dashing any dreams of would-be Roblox competitors, saying that they are too late to try and overtake something which has been building for years:

I used to get so many pitches from startups eager to knock PC gaming powerhouse Steam off its block, that in 2018 I wrote one big standard response called So You Want to Compete with Steam, with a follow-up a year later. The dust has now settled and the result is clear: all of the new contenders failed but Epic, and even they have a long upward climb ahead of them.

Flash forward to today, and my inbox is stuffed with pitches from start-ups wanting to compete with Roblox, that plucky Lego-ish multiplayer game-creation platform currently valued at 41 billion dollars.

So I guess we’re gonna do this again. Here’s how you can build a successful business that competes directly with Roblox: DON’T.

I say this out of love: the vast majority of you are going to fail. I admire you and your hard work and dedication; I’m pessimistic simply because your task is incredibly hard.

First of all, you are late to this party. Roblox first launched in 2006a full fifteen years ago – that’s five years before Minecraft, if you can believe it. They have a massive head start and are playing by an entirely different set of rules. Your only chance is to flip the entire problem on its head.

Lars outlines three components which absolutely must be in any product that tries to make a dent in the ever-evolving metaverse, they are:

  • High quality multiplayer support for user creations out of the box
  • High performance servers with excellent reliability
  • Powerful, user friendly, and joyful creation tools

Note a couple of the words he uses very carefully. “Multiplayer” support for user creations out of the box means the ability to support collaborative creation of user content (an example of this are the user creation toolset in NeosVR, although I would argue that they are not particularly “user friendly”, as they are powerful, but also have a rather steep learning curve). Many social VR platforms still lack collaborative building tools, or any sort of in-world building tools, forcing content creators and world builders to use external tools like Blender and then import 3D models.

Note also Lars’ reference to “joyful” creation tools—in other words, make it FUN to create something. From what I understand, one of Horizon Worlds’ strengths is its content creation tools, which are apparently easy and fun to use. Do this part especially well, and you will empower your userbase to create wonderful worlds, which attracts new users, who then also become content creators—it becomes a virtuous circle.

Then, Lars tackles each of the selling points of products who say they are going to be the next Roblox, “but with…”, harshly but accurately poking holes in the arguments. I’m not going to quote this section in my blopost; it’s better if you go over there and read it in full yourself.

He then talks about how Roblox spends a lot of money on hosting and network infrastructure, and how cloud provider costs (e.g. AWS) can eat up a significant chunk of cash as your platform grows. He then discusses what he sees as the three big problems you’ll face as a metaverse platform creator:

First Problem: Chicken-or-the-Egg Deadlocks

Which comes first, the chicken or the egg? (Photo by Grace O’Driscoll on Unsplash)

Lars states:

One of the key themes of So You Want to Compete With Steam was a nasty paradox best articulated in Joel Spolsky’s Strategy Letter II: Chicken and Egg problems, which also applies to would-be Roblox competitors:

• You need players
• Players won’t show up without content, so you need creators
• Creators won’t show up until you have players

Joel points out that you can’t expect this deadlock to solve itself – instead you need to just go out there and deliver a truckload of chickens or a truckload of eggs. Typically this means spending a lot of money. Anyone able to rely on organic growth alone started ages ago and that door is now closed to you.

Note particularly that last sentence, which I am going to repeat in bold for those of you who still don’t get it: ANYBODY ABLE TO RELY ON ORGANIC GROWTH ALONE STARTED AGES AGO AND THAT DOOR IS NOW CLOSED TO YOU. I have repeated versions of this statement on my blog until I was blue in the face, and few of the newer social VR platforms have been paying any attention.

Linden Lab’s fatal mistake with Sansar (one of many) is that they 100% expected that they would be able to build a high-end social VR platform with a in-world currency and an integrated marketplace for user-generated content, just put it out there, and expect it to sell itself! What worked for Second Life in 2003 most assuredly did NOT work for Sansar in 2017. A last-minute, hail-Mary pass. pivoting from social VR to a live events platform, essentially failed, and Linden Lab landed up selling Sansar to Wookey. At present, Wookey has suspended all development and furloughed all its staff. Millions and millions of dollars† were sunk into a platform which is currently on life-support, hanging on by a thread, and could be unplugged at any moment. Say a prayer for Sansar; it could use one.

Lars Doucet advises:

Seed your platform with awesome material by paying your own employees to build beautiful creations. Hire contractors and independent content creators and then pay your staff to train them in your tools. Pay these people to make tutorials and guides and videos and post them all over the internet and don’t stop. Set up an affiliate system with creator and influencer rewards. And that’s just the obvious stuff – you need to be thinking about new and innovative solutions to this problem 24/7. Pay any and every price to get high quality content onto your platform.

Second Problem: Platform Dynamics

Here Lars differentiates between different kinds of platforms, from open to closed:

On one end you have open platforms like the World Wide Web where each of the five aspects is owned by no one but the commons.

Towards the middle you have different kinds of closed platforms like Windows and Steam where certain components of the stack are proprietary, but others are unowned; the owner either refrains from (or is simply unable) to capture most of the value that creators produce on the platform.

On the far end are digital company towns, proprietary platform stacks privately owned from top to bottom. In the physical world company towns are communities where a single corporation is not only the sole or principal employer, but also owns all the housing and stores – the company is your boss, your landlord, and even your grocer. Total ownership grants the company power over not only every aspect of their workers’ lives, but also their families and the entire local economy. Digital company towns likewise squeeze as much value out of creators as possible.

And he makes the point that Roblox is a company town, controlling the creation tools (Roblox Studio), the playback engine (the Roblox app), the discovery methods (the Roblox discovery portal), and the marketplace (items can only be bought and sold using Robux through the Roblox Marketplace, with all financial information managed by Roblox). While it might look tempting to set up wannabe Roblox competitors using the same model, Lars makes it very clear in his article that this is a tactical error:

Look, I know some of you as customers actually like company towns from giant companies like Apple precisely because they’re locked down and you trust the platform holder. Good for you, sincerely! You are more than welcome to continue liking them as a customer. But this article isn’t addressed to you; it’s addressed to startups who think they can deploy this kind of vertically integrated stack without already starting from a position of strength.

Simply put, if you’re trying to build a Roblox competitor in 2021 under the company town model, you’re delusional. You should not build a company town for two very good reasons:

1. Company towns are bad, and you shouldn’t do bad things*
2. It’s way, way, way too late to succeed with this strategy

So, if you can’t rigidly control everything in order to compete against the entrenched front-runner(s), what can you do? Lars suggests giving something away:

Give people a reason to build on your platform. Make them owners, not tenants.

What should you give away? Well, that depends on your specific situation, but I recommend “as much as you possibly can.” Recall the five components of a platform:

• Creation tools
• Playback engine
• Discovery methods
• Marketplace / transaction engine
• Relationship with the customer

Again, I’m going to refer you to Lars’ blogpost for more details.

Third Problem: Ownership and Trust

Building trust with content creators is key (Photo by Jannis Lucas on Unsplash)

Platforms tend to follow a certain kind of life cycle, and there’s no better primer than Dan Cook’s Game of Platform Power. In it he outlines how platforms transition through “Growth” and “Engage” phases where they are friendly and generous to the creators who produce value on their ecosystems, before maturing into the “Extract” phase where they leverage their size and power to lock-in users and capture as much creator-produced value for themselves as possible.

A classic example of this is Second Life, which is now merrily coasting along, collecting fees for the sale of in-world land and currency, still going strong at the ripe old age of 18 with a locked-in, relatively small but highly passionate userbase who resist leaving their friends and communities behind to join other virtual worlds. For example, it’s hardly a surprise that Linden Lab, now owned by the deep-pocketed Waterfield Network investment group, has recently raised its fees for buying Linden dollars. Second Life is a cash cow, and they are rightfully milking it!

And Lars makes what I think is a somewhat counterintuitive, very nervy, and potentially game-changing suggestion on how to build that trust with content creators: make it easy for them to pack up and leave!

No matter how generous your platform is today, content creators aren’t dumb, they know how this works, and they’re being exploited right now by company towns like Roblox. Words are cheap. What they want is assurance. Trustless assurance. And no, I’m not talking about blockchain.

You really want to shake things up? Give content creators a loaded gun pointed at your platform’s head.

Another word for this is “exit rights.” If you want creators to come over in the first place, give them the power to leave anytime they want.

Mind. BLOWN. I can see how Lars Doucet is a highly-paid and in-demand consultant, just for these few paragraphs of advice alone! However, I would also add that we need to see some metaverse interoperability and standards before we can really put this into action. However, Lars makes a rather compelling case for doing at first what sounds like corporate suicide, using companies such as Substack as an example of how and why such an approach works.

Lars wraps up by dispelling some common myths about what is the “metaverse” (for example, that the metaverse cannot and should not be owned by any one person or company). And he wraps up by saying that anybody who wants to become the next Roblox is embarking on a wild, crazy, risky venture—but that “simply the riskiest thing to do is to play it safe.”

As I said in my blogpost title, this is some harsh advice that many commercial social VR platforms probably don’t want to hear, but should definitely read through at least once.

You can read more of Lars’ wisdom and advice on his blog, called Fortress of Doors (here’s his recommended reading list), and by following him on Twitter.


*As an aside, Lars wraps up his Fortress of Doors blogpost with the following highly-accurate-but-snarky observation:

That’s not to say someone fundamentally can’t craft a “Dark Metaverse” under the company town model. It’s just that their name is Facebook, it will be a dystopian hellhole, and you don’t have a chance of competing on those terms.

🙌 PREACH, LARS! 🙌

†More specifically, 75 million dollars (US) over four years, according to this Sansar Wookey Investor Fact Sheet, which is attached to the publicly-accessible LinkedIn profile of Wookey CEO Mark Gustavson:

Part of the Sansar Wookey Investor Fact Sheet

This is the first time I have shared this figure on my blog. Mark and his V.P. are currently the only two Wookey employees left on the payroll; as I have said above, all the rest of the Wookey staff have been furloughed.

Editorial: Could Fortnite Become the Next Second Life? A First Look at Fortnite Party Royale

Watching the sun rise on Party Royale Island in Fortnite

I am not a gamer. The only possible exception to this ironclad rule are puzzle games, such as Cyan’s Myst, Riven, and Obduction, and the truly wonderful Eastshade).

I’m simply not that interested in most shoot-em-up, combat-and-killing-focused games and MMOs (although I did get as far as level 20 in Lord of the Rings Online, only because I am such a Lord of the Rings fan).

To give you one example, I succumbed to peer pressure when No Man’s Sky released a VR-compatible update, and I bought the game. I think I played No Man’s Sky a grand total of three hours, maximum, and that was in desktop mode! Since then, it has been quietly gathering dust in a corner of my hard drive.

So I came to Fortnite as a clueless newbie with pretty much zero previous computer game experience.

I have written about the phenomenally successful battle royale game of Fortnite several times on my blog already. I blogged about Marshmello’s concert in Fortnite back in February 2019, and in November of that year, I even went so far as to actually download and install Fortnite on my computer, just so I could visit, explore, and report on the groundbreaking decision by the Royal Canadian Legion (Canada’s military veterans’ association) to create a custom-built Remembrance Island within Fortnite to celebrate Remembrance Day on November 11th (which I blogged about here and here). I thought it was such a cool way to reach out to an audience that the Legion probably would have otherwise had difficulty connecting with (namely, children and teenagers).

Remembrance Island in Fortnite (November 2019)

I then promptly uninstalled the game and pretty much forgot about it.

Oh, and I also reported on Tim Sweeney’s SIGGRAPH talk in July of 2019, in which the founder and CEO of Epic Games, the maker of Fortnite, mused about the future of the metaverse. At that time, I wrote:

I must confess that…I am rather skeptical that Fortnite, as it is right now, would form a useful model for the future metaverse. Games are designed to be focused more on linear play-through and set objectives, while virtual worlds are meant to be more open-ended and less goal-oriented in nature (although you can certainly have games within virtual worlds). As well, you can have thriving social communities in MMOs like World of Warcraft and Lord of the Rings Online, so there is a somewhat fuzzy boundary between games and virtual worlds.

Well, today I am going to eat those words.

I have decided to start covering Fortnite on this blog. Why? Well, it’s because of something new in Fortnite, called Party Royale: an open-ended, non-combat extension of the game.

Image taken from the Fortnite Party Royale website

Marshall Honorof of the blog Tom’s Guide writes:

Party Royale went live in Fortnite on April 29th, 2020 as part of the game’s most recent update. The mode has no weapons and no crafting — the two hallmarks, one would think, of the Fortnite experience. Instead, an in-game message invites players to “hang out with friends, play games, perfect your skydive and more.” Also noteworthy: Unlike normal Fortnite games, Party Royale mode is not limited to 100 players.

Here’s the slickly-produced official trailer for Fortnite Battle Royale:

On May 8th, 2020, Fortnite held its first big event in Party Royale, dubbed the Fortnite Party Royale Premiere: an epic concert featuring not just one, but three top-tier, internationally-known DJs: Deadmau5, Steve Aoki and Dillon Francis. I’ll be writing more about that in another blogpost later, but if (like me) you missed all the fuss, here’s a replay of the one-hour event:

And you can bet that Epic Games has been busily signing deals with the representatives of various big-name musical performers for future concerts to be held in Fortnite Party Royale. They’re only just getting started.

And their reach (over 250 million Fortnite players as of March 2019) means that they have a huge potential audience for those future concerts, 85% of whom are aged 18 to 34—a highly-desired advertising target market that makes corporations salivate, and which is significantly younger than the userbase of more established virtual worlds like Second Life:

Fortnite user statistics (source)

So, it’s time to firmly put Fortnite on my radar.

I am adding Fortnite Party Royale to my List of Non-Combat, Open-World Exploration/Puzzle/Life Simulation Games, instead of my much longer Comprehensive List of Social VR Platforms and Virtual Worlds, because it seems to fit in bettter among the games on the first list. However, you could argue that Fortnite Battle Royale is the first tentative step for Epic Games to expand Fornite from just a game to a full-blown, open-ended virtual world like Second Life.

I’m not the only one who thinks so. Forbes reporter Paul Tassi is convinced that Fortnite will indeed become the next Second Life. In a recent artcle titled ‘Fortnite’ Party Royale Will Become ‘Second Life’ On Its Way To Being The Metaverse, he writes:

Last night I attended yet another concert in Fortnite’s Party Royale mode, the combat-free zone where everyone just hangs out and doesn’t kill each other. It’s a small island and an early experiment, and yet as I witnessed live sets performed by Dillon Francis, Steve Aoki and deadmau5, all world-famous DJs, I couldn’t shake the feeling that I was yet again witnessing something pretty significant and incredible.

I’ve talked a lot about the Metaverse with Fortnite, the grand virtual world that may end up replacing the internet someday, and in fiction, often appears in immersive VR form, and is full of brands and companies vying for their place among users. And you can definitely feel a significant step in that direction from Fortnite, especially last night as I, controlling X-Men’s Psylocke as my Avatar, danced with John Wick and Harley Quinn and dozens of other player avatars during the hour-long show.

When I posted the clips online, many of my followers remarked that this looked like Second Life, and honestly, while the Metaverse is still ages away in its “true” form, it does feel like Fortnite is gearing up to start with something more akin to Second Life or PlayStation Home instead.

Fishing rod in hand, scanning the seashore

Paul continues:

Second Life operates as a virtual world where players are not killing each other, but rather building homes, trading goods and services with each other, and attending events (Second Life was doing concerts a decade before Fortnite).

Now, it seems like Fortnite is on that path, but in a more attractive package. These days screenshots of Second Life unintentionally make it look like some sort of porn sim (though plenty of naughty stuff can and does happen in Second Life), while Fortnite’s Pixar-like animation and brand deals with Marvel, DC, Star Wars and more are combining different intellectual properties in one place in a way that no other game has before in a better-looking world.

Fortnite has pretty much all the pieces it needs for its own version of Second Life. With Party Royale, it has a combat-free hub where you can’t destroy anything and you just hang out playing minigames and attending events. With Fortnite Creative, you have an infinite hub of user-generated content that could be used to populate expansions to that initial world.

Combine those two together, and what do you have? Really, all the building blocks you need for a virtual world in the Unreal engine. How long until Epic starts letting players build their own houses in an expanding Party Royale zone? How long until creators can sell their custom works to other players, creating an in-game economy? My guess for both, not long.

Fortnite already has its own in-world currency, V-bucks
Shopping (and a fashion market!) are already an established part of Fortnite

Second Life had better be looking over their shoulder. A new competitor has appeared in the race. And they have deep pockets: Epic Games made a profit of $3 billion over 2018 (source). Fortnite has the potential to steamroller over Second Life, particularly as SL’s significantly older user base begins to decline. And you can bet the youngsters are flocking to Fortnite and other games in droves. While Second Life still has its relatively small but intensely passionate fan base, it is widely seen as outdated, faintly quaint technology among the general public (remember this recent article in The Atlantic magazine?). That’s why Linden Lab embarked on the ultimately disastrous Sansar project in the first place; they knew that Second Life could only be extended so far, and they could see that the writing was on the wall.

Marshall Honorof of Tom’s Guide (link up top) summarizes the potential impact of Fortnite Battle Royale quite nicely:

What’s interesting about Party Royale mode is not necessarily the feature itself, but that Fortnite is beginning to establish itself as a digital alternative to the “third place”: a location where people feel at home that isn’t their house, or their office. For a lot of people, this is often a bar, or a gym, or a coffee shop — places where it’s basically impossible to go right now. Party Royale could encourage people to mingle digitally in the long run, or it could just be a stopgap until things get back to normal in the physical world. We’ll know for sure in (hopefully) a few months.

Hang gliding over Party Royale Island in Fortnite

The line between what is a virtual world and what is a game has always been a somewhat blurry one. For example, virtual worlds such as Second Life have always been home to games, for example, But the launch of Party Royale in Fortnite is the clearest signal yet that the game companies want to move into the open-ended virtual worlds market, too. The game companies might not actually refer to them as “virtual worlds”, but that is essentially what they are.

So, last night, I went and reinstalled Fortnite on my personal computer. Things are about to get very, very interesting, and I want to be there when it happens! And expect expanded coverage of Fortnite Party Royale on this blog in the future.

Setting foot in a brand new, open-ended virtual world

A VR Gamer/YouTuber Delivers a Gut-Punch Reality Check to Virtual Reality Gaming: It’s Not Just Social VR That’s Struggling to Take Off, It’s the Entire VR Industry

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Someone posted the following YouTube video to the official Sansar Discord channel today. It’s a mixed-reality video recorded on a green-screen set constructed by Drift0r, a VR enthusiast and avid gamer, within his own home (which should tell you quite a bit about what level a fan he is of virtual reality).

But he certainly does not pull any punches when it comes down to dissecting exactly what’s wrong with the current state of virtual reality in general, and VR gaming in particular:

Now, this is not some VR dilettante; this is what I would consider a hardcore VR gamer who has made a sizeable investment in both the computer hardware and software, not only to play VR games but to record videos of himself doing so. He’s also a popular YouTube personality with over 1.3 million subscribers. And he says in the description of this particular video:

Virtual Reality has been struggling to catch on and go mainstream for almost four years now. I personally am a huge fan of VR and own the Rift, Vive, & PSVR; but I have to face the fact that VR gaming is dying. This video goes over the current major issues with VR gaming and offers some suggestions on how to fix them. I show off Beat Saber, Sprint Vector, Doom VFR, Sairento, Gorn, Creed, Raw Data, and several other games in mixed reality too.

For someone like this to be saying that VR is dying, and to suggest that full mainstream acceptance of VR may lie 20 to 30 years in the future, instead of the 5 to 10 years most VR market forecasters are predicting, should give a lot of companies working in VR serious pause (including those firms building social VR platforms). This guy is the consummate insider, somebody who should be leading the cheering section, telling us that things are not okay with the current state of VR gaming, at least.

The dirty secret of VR gaming overall, let alone social VR, is that very few people still own a VR headset. The vast majority of people playing VR-capable games and visiting VR-capable virtual worlds are not using a VR headset; they are in desktop mode. And it’s not just social VR that is struggling to attract paying customers, it’s the entire VR industry that is facing the reality that most people aren’t adopting the technology. As Drift0r explains, the hard, cold truth of VR gaming is that the games are selling in numbers that are pitiful by desktop game standards.


So, what does this mean for Sansar, High Fidelity, and the other social VR companies? It means that they should be wary of over-focusing on virtual reality to the exclusion of desktop users. Linden Lab smartly made the move to integrate text chat in Sansar for both desktop and VR users, something that Philip Rosedale has been notably loathe to do in High Fidelity (although I understand that text chat is included in the HiFi client, but disabled by default).

Virtual reality may not be dying, as this YouTuber asserts, but it isn’t looking overly healthy, either. I’ve already blogged about a couple of social VR projects that have fallen on hard times waiting for virtual reality to become more popular (Anyland and, more recently, Virtual Universe). The advent of the attractively-priced, standalone Oculus Quest headset might ignite the VR marketplace, but the forecasters have been wrong before.

So, what do you think? Feel free to leave a comment here with your thoughts and opinions. Or, even better, join us on the RyanSchultz.com Discord server! Over 150 people who are passionate about social VR and virtual worlds are talking about this and other topics every day. And you’re invited to join our discussions!

Decentraland Sets Up $5 Million Fund for Blockchain Gaming Initiatives

Decentraland Funding 13 Aug 2018.png

A report from CCN (a cryptocurrency news website) says that Decentraland is setting up a five-million-dollar fund to support blockchain-based gaming projects:

Decentraland, a decentralized user-owned virtual world on the Ethereum blockchain, plans to invest $5 million to fund blockchain gaming projects built on the Decentraland platform. To this end, it created the Genesis Content Program, through which gaming developers can submit proposals for “blockchain games” and “interactive experiences” that can be built on Decentraland.

More information is available from this Medium post by Decentraland:

We’ve been thinking hard about blockchain games in Decentraland, and have identified several key characteristics that we think will have a big impact on how these games are built:

  • Small parcel footprints — Given the fact that LAND is scarce and that developers can only host their games on the LAND they control, the “play space” that each game may take up is limited. This means that as a developer, you will have to design your game to fit within the parcel boundaries of your LAND. Decentraland does provide the opportunity to build decentralized item or collectible based games, like trading card games, that can be accessed “remotely” from anywhere in Genesis City. However, even these games still require at least one LAND parcel to host and run the game.
  • Distributed ownership — Unlike traditional MMO games or VR platforms that are created and controlled by a single company, Decentraland is a shared, open source hub for user generated content. Because we want to encourage diversity in the games that are built for Decentraland, LAND developers (as in real life) must respect the property boundaries of others. However, Decentraland makes it possible to build distributed games that are hosted across multiple parcels.
  • Limited graphics — We are building Decentraland with a “web-first” approach, following Google’s lead in incentivizing a low-poly aesthetic. This will optimize the quality of the experience for as many users as possible without favoring any single device or binding Decentraland to any particular app store.

All funded projects must be built on Decentraland’s parcels of virtual land (called LAND), which can be purchased using the platform’s cryptocurrency MANA. This could, in theory, get quite expensive, as the minimum price for each 10m-by-10m parcel of LAND is currently 6,000 MANA each (which works out to US$443.48). I still think that Decentraland’s LAND is outrageously expensive, and that cost is going to severely constrain any game-building that takes place on that platform.

However, I am glad to see Decentraland putting its money where its mouth is, and finding ways to attract developers to its platform. I wish them every success.