A convergence of physical and digital worlds that, like the Internet, will introduce new human experiences and unprecedented social and economic opportunities.
Synthetic Reality®
Explore our vision for investing in gaming and interactive media. Published in March 2020.
EXECUTIVE SUMMARY
Physical and digital worlds converge.
An ever-increasing time of our lives is spent in immersive, virtual worlds. In fact, entire generations are already growing up with and inside them.
Gaming leads the charge.
Empowered by technological advances and a generational tidal wave still in its early innings, today’s visionaries in gaming and interactive media are building an exciting future:
syn·thet·ic re·al·i·ty
We see an outstanding opportunity.
The advent of synthetic reality aligns with our two-fold mission:
- Investing in extraordinary entrepreneurs.
- Delivering outsized returns to our investors.
Those who bet on the right startups and consumer trends will benefit from a tectonic shift in entertainment preferences and economics that could upend today’s media conglomerates, technology giants, and social networks.
Play has always been important for our societal evolution and technological progress. We believe that synthetic reality is a natural extension of this phenomenon.
Scroll down to learn more.
CHAPTER I
The Past
Human Imagination at Play
”The spirit of playful competition is, as a social impulse, older than culture itself. [...] Ritual grew up in sacred play; poetry was born in play and nourished on play; music and dancing were pure play. We have to conclude, therefore, that civilization is, in its earliest phases, played. It does not come from play—it arises in and as play, and never leaves it.
Johan HuizingaAuthor, Homo Ludens
The Past: Human Imagination at Play (1/3)
For thousands of years, humans were illuminated by the infinite openness and creativity of play.
In fact, some historians argue that primitive games—enjoyed for the purpose of exploration, collaboration, and competition—are older than society and culture.
The more we learn about our humble origins as a species, the clearer it becomes that it wasn’t only hard labor—but playful interactions—that shaped our learning and transformed our beliefs, cultural narratives, and social fabric.
The Past: Human Imagination at Play (2/3)
Over the past decades, games became a catalyst for technological innovation.
Since breakthrough advances in microelectronics allowed the creation of the first video games in the 1970s, play and technology entered into a symbiotic relationship.
While better technology enabled increasingly immersive gaming experiences, those games—in return—accelerated an era of exponential technological progress. For example, graphics cards invented for gaming became the foundation for artificial intelligence and the blockchain, and behavior trees designed for video games laid the groundwork for modern robotics.
The Past: Human Imagination at Play (3/3)
Most recently, gaming prepared society for ever-increasing human-machine interaction.
Along the journey of scientific breakthroughs, new and immersive gaming devices—including virtual-reality headsets—brought society and technology closer together than ever before.
The unique structure of games also invited humanity into new digital concepts and experiences: from novel forms of exploration and discovery to interactive storytelling and learning, digital identity and reputation, and electronic tools for self-optimization. In essence, play and society became inseparable.
CHAPTER II
The Present
Immersive Worlds
”When we started, we just wanted to make great games. What we realized is that the games we create are really just a framework for human interaction. You [our players] have given me the inspiration to pour my heart and life into what I do. We created these worlds, but you have given them life, through your passion, and in so many other ways.
Mike MorhaimeCo-Founder and Former CEO, Blizzard Entertainment
The Present: Immersive Worlds (1/3)
Today, games are a massive global industry and expand across demographics.
With the rise of the Internet, games moved out of the arcades and connected and engaged billions—becoming the world’s most valuable media category, most watched sport, and social meeting space of choice for an entire generation.
Gaming ascended from a niche hobby to a global phenomenon beyond narrow, outdated stereotypes—an industry that’s now larger than movies and music combined.
The Present: Immersive Worlds (2/3)
Gaming also occupies a central space in the cultural, social, and commercial fabric.
Consumers are no longer settling for linear entertainment. Instead, they want to be creators and explorers of their own worlds.
Digital playgrounds like Minecraft, Roblox, or Fortnite and streaming platforms like Twitch, YouTube, or Huya unleash this creative potential and desire for virtual self-expression, shared experiences, and inclusivity—and have long received the attention of leading consumer brands.
The Present: Immersive Worlds (3/3)
Fueled by a generational tidal wave in its early innings, games will only gain more significance.
Despite popular belief, gaming is no longer exclusively enjoyed by the young. Over time, an increasingly larger share of the population has grown up as a “digital natives” and intuitively seeks out electronic devices for information, entertainment, or work.
Today’s 2.6 billion gamers will soon become 5 billion and beyond. As every upcoming generation will spend an increasing portion of their time in virtual worlds, the boundaries between the digital and physical continue to dissolve.
CHAPTER III
The Future
Synthetic Reality
”Technology can and must help storytelling—even with the most sophisticated interface between man and computer animation. [...] The most exciting thing for me is crossing that bridge between something we know is real and something that is extraordinary. The thing for me has always been how you cross that bridge.
J. J. AbramsDirector, Star Wars
The Future: Synthetic Reality (1/3)
We witness the emergence of synthetic reality—a unification of physical and digital worlds.
Historically, we delineated two worlds: the physical and the digital. Going forward, the already blurred lines will disintegrate.
To call this future ‘virtual’ or ‘augmented,’ however, fails to accurately capture the convergence at play. Instead of constructing another false dichotomy, we prefer a moniker that speaks to the unification of the two formerly distinct worlds: synthetic reality.
Super Bowl (Physical) vs. Esports (Synthetic)
Esports provide a glimpse into an exciting future. Synthetic reality doesn’t replace physical or digital worlds—instead, they create new interfaces between them. They erase the notion of real vs. unreal: physical reality and digital reality co-exist.
The Future: Synthetic Reality (2/3)
Today’s visionaries in gaming—once more—are paving the way to these new experiences.
Video game companies like Epic Games, Unity, or Niantic Labs are building the simulation software and concurrency infrastructure that will allow billions to co-experience synthetic reality. For the first time, technological advances and the prevalence of digital natives provide a platform that can bring these bold ambitions to life.
- Processing and networking advances are enabling more sophisticated, immersive, and social environments.
- Innovative devices serve as portals to new worlds and sensations.
- A consumer generation of “digital natives” or “reality agnostics” spends an increasing time in virtual spaces.
Explore the catalysts enabling synthetic reality and creating opportunities for investors and entrepreneurs.
Processing
1. Microelectronics: Advances in CPU / GPU performance, promising research in quantum- and nanocomputing
2. Software efficiency: Algorithmic improvements (e.g., AI / TensorFlow), game engine availability, open-source libraries
3. Accessibility and commoditization: Cloud computing services for affordable, scalable, and asset-lite development and deployment
2. Software efficiency: Algorithmic improvements (e.g., AI / TensorFlow), game engine availability, open-source libraries
3. Accessibility and commoditization: Cloud computing services for affordable, scalable, and asset-lite development and deployment
Networking
1. Lower latency / higher bandwidth: 5G, private network transit, LEO satellites (e.g., Starlink)
2. Synchroneity: Concurrency infrastructure to allow millions in shared live environments
3. Decentralized infrastructure: Edge computing, blockchain, ledger technology
2. Synchroneity: Concurrency infrastructure to allow millions in shared live environments
3. Decentralized infrastructure: Edge computing, blockchain, ledger technology
Devices
1. “Post-mobile” platforms: AR, VR, neural-lace and biochemical innovation for direct human-machine connectivity
2. Cross-platform use: Flexible, native software spanning devices and operating systems
3. Sensory immersion: Haptics and audiovisual innovation
4. Ubiquitous endpoints: Connected and smart devices, IoT
2. Cross-platform use: Flexible, native software spanning devices and operating systems
3. Sensory immersion: Haptics and audiovisual innovation
4. Ubiquitous endpoints: Connected and smart devices, IoT
Consumers
1. Digital-first and reality-agnostic: Exposure to virtual worlds, identities, and assets perceived as natural
2. New generation of “makers”: Sophisticated no-code, user-generated content creation taps into creative energy of billions
3. Receptivity for crossover content: Intellectual property no longer siloed inside media categories but permeating across it
2. New generation of “makers”: Sophisticated no-code, user-generated content creation taps into creative energy of billions
3. Receptivity for crossover content: Intellectual property no longer siloed inside media categories but permeating across it
The Future: Synthetic Reality (3/3)
Like the Internet, the benefits of synthetic reality extend far beyond entertainment.
The upcoming migration into synthetic reality is no mindless escapism. Rather, it presents new opportunities for human fulfillment, ability, and connection. Similar to synthetic fibers, synthetic reality unites the natural and the artificial to enhance form and function—allowing us to not only immerse ourselves in new forms of entertainment, but transcend the frontiers of human experience, collaboration, and performance.
Explore the opportunities and their technological catalysts.
Responsive Worlds
“Living” and ever-changing environments
P, N, C1
Persistency
Always on; never resets, pauses, or ends
P, N, D
Unprecedented Immersion
Deeper experiences, new sensations
P, D, C
Supersports
Esports (cognitive) and sports (physical) merge
P, N, D, C
Readily Available
Play on any endpoint at any time
N, D
"Tripartite" Content
Developer + "maker" (UGC) + AI (procedural)
P, N, C1
New Industries and Jobs
Complete virtual functioning economies
N, C
Increasing Remote Work
Physical proximity decreasingly relevant
N, D, C
Expanded Interoperability
Data and assets permeate silos
N, C
Decentralized Ownership
Non-custodial community economics
P, N, C
Rapid Development
Faster build, scale, and deploy mechanisms
N, D, C
1 Legend: (P) Processing, (N) Networking, (D) Devices, (C) Consumers
NEXT STEPS
Let’s Talk
The advent of synthetic reality provides an exciting investment for early movers.
The shift to synthetic reality will drive a massive market share redistribution from the the $2 trillion media and entertainment economy toward gaming entrepreneurs who offer better, more immersive experiences—unlocking enhanced product economics, increasingly scalable business models, and social and economic opportunities.
Through our global network that spans the industry’s most forward-thinking startups and founders, we invest in the nascent innovations that leave no practical impediment to this future.
”As the scope, impact, and meaning of games have transformed over time, so have we. And so to us, it’s a natural transition that—what began as the original esports venture capital fund—has become an entrepreneurial investment platform to shape the future of gaming, Web3, and immersive technology.
The TeamBITKRAFT Ventures
