Philippa Kaur

PITY BEN VAN BEURDEN. The boss of Royal Dutch Shell is an affable man steering a Scylla-and-Charybdis course between oil-loving shareholders on one extreme and carbon-hating ones on the other. His latest task is to convince investors that Shell’s strategy of doubling down on oil and gas production while bulking up on renewables is viable, even as Third Point, a hedge fund, demands it breaks itself up. And for seven years he has run a company with one foot in the Netherlands and the other in Britain—with Brexit in between.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

REED HASTINGS HAS built the culture at Netflix around it. Ray Dalio made it a founding principle at Bridgewater, a successful investment fund. “Radical candour” is the idea that bracing honesty is the best way to run a business: no one dances around the truth, and swifter feedback improves performance.Most firms rely on a messier doctrine. People rarely say what they mean, but hope that their meaning is nonetheless clear. Think Britain, but with paycheques. To navigate this kind of workplace, you need a phrasebook.“I hear you”Ostensible meaning: You’re making a legitimate pointActual meaning: Be quiet“Let’s discuss this offline”Ostensible meaning: We shouldn’t waste other people’s valuable timeActual meaning: Let’s never speak of this again (see also: “Let’s put a pin in it”)“We should all learn to walk in each other’s shoes”Ostensible meaning: Shared understanding results in better outcomesActual meaning: I need you to know that my job is a living hell“I’m just curious…”Ostensible meaning: I’d like to know why you think that…Actual meaning: …because it makes no sense to anyone else“It’s great to have started this conversation”Ostensible meaning: We’ve raised an important issue here Actual meaning: We’ve made absolutely no progress“I wanted to keep you in the loop”Ostensible meaning: I am informing you of something minor Actual meaning: I should have told you this weeks ago“Do you have five minutes?”Ostensible meaning: I have something trivial to say Actual meaning: You are in deep, deep trouble“Let’s handle this asynchronously”Ostensible meaning: We’ll each work on this task in our own timeActual meaning: I have to go to my Pilates class now“It’s on the product roadmap”Ostensible meaning: It’ll be done soonActual meaning: It won’t be done soon“We’re moving to an agile framework”Ostensible meaning: We will work iteratively in response to user feedback Actual meaning: We’re literally planning to go round in circles“It’s a legacy tech stack”Ostensible meaning: It’s a rat’s nest of old and incompatible systemsActual meaning: None of this is our fault“We are a platform business”Ostensible meaning: We provide an ecosystem in which others can interactActual meaning: Let’s pretend we are a tech firm and see what happens to our valuation (see also: “as a service”, “network effects” and “flywheels”)“We are planning for the metaverse”Ostensible meaning: We are ready for a shared, immersive digital worldActual meaning: Ooh, look! A bandwagon! (see also: “Web3”)“Bring your whole selves to work”Ostensible meaning: Be authentic and don’t be afraid to show vulnerabilityActual meaning: But not those bits of your whole self, obviouslyIn a world of radical candour, there would be less need for translating. Most managers and colleagues could indeed be better at giving unvarnished feedback. Some words and phrases are so opaque they absorb all visible meaning.But there is an awful lot to be said for coded communication. Work is where people learn to manage social interactions, not define them out of existence. Transparency doesn’t necessarily travel well across borders. And perpetual bluntness is draining; humans constantly finesse and massage the messages they send in order to avoid open conflict. Radical candour is associated with firms that pay very well. That may be because this approach leads to greater success. It may be because otherwise most people wouldn’t put up with it.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “The business phrasebook” More

PITY BEN VAN BEURDEN. The boss of Royal Dutch Shell is an affable man steering a Scylla-and-Charybdis course between oil-loving shareholders on one extreme and carbon-hating ones on the other. His latest task is to convince investors that Shell’s strategy of doubling down on oil and gas production while bulking up on renewables is viable, even as Third Point, a hedge fund, demands it breaks itself up. And for seven years he has run a company with one foot in the Netherlands and the other in Britain—with Brexit in between.On November 15th Shell offered shareholders some badly needed simplification. It asked them to vote next month for a proposal to ditch a dual Anglo-Dutch share structure, haul the headquarters back to Britain, and scrap the Royal Dutch name. It marks a homecoming of sorts. The original moniker dates back to the 19th century, when the company’s forebear, Marcus Samuel, dealt in sea shells along the Thames. But the reaction in parts of the Netherlands has been apoplectic. Some politicians want to impose an exit tax to dissuade Shell from leaving.Simplification looks like the handiwork of Andrew Mackenzie, Shell’s new chairman, who oversaw a restructuring of BHP, the Anglo-Australian miner that he previously ran. But it has a financial logic, too. Under the dual-share structure, Shell’s Dutch A shares were subject to a withholding tax, which meant that only British B shares could be bought back economically. That capped buy-backs at $2.5bn a quarter. Oswald Clint of Bernstein, an investment firm, says the maximum could now rise to $5bn. More buy-backs are a way of increasing cash returns to shareholders while they see how Shell’s energy-transition strategy plays out. They may not guarantee the company wins the argument against Third Point. But they will buy it some time.There are other potential side-effects. The Netherlands has dealt some harsh blows to Shell recently. They include a court judgment in The Hague ordering Shell to reduce its worldwide emissions—part of which the company is appealing against (and which it says the planned move won’t affect). A Dutch pension fund, ABP, stunned Shell last month by saying it would sell its shares in the firm as part of efforts to divest from fossil fuels.The British government cheered the relocation announcement. Kwasi Kwarteng, the business secretary, called it “a clear vote of confidence in the British economy”. But the boon to global Britain could come at a cost to global warming. In the coming months the government is expected to decide whether to allow drilling of an oilfield called Cambo off the coast of Scotland—a litmus test for the future of North Sea oil. Cambo is part-owned by Shell.■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “A simple solution” More

FEW INDUSTRIES are more vulnerable to events that depress revenues and increase expenses than America’s railways. The basic business model is to lug lots of stuff to offset the high fixed costs of owning fleets of locomotives and maintaining thousands of miles of track. That has been hard as America’s supply chain has come unglued, first because of covid-19 and then as it has waned. Ports are gridlocked, warehouses over-stuffed and labour unavailable. It has unquestionably been a tough time to be a rail company and, it turns out, a remarkably good time to be one.Volumes and profits at the listed companies that run America’s tracks and trains used to be tied as closely as a locomotive to its cargo. No longer. Traffic has yet to recover from pre-pandemic peaks, according to the Association of American Railroads, a trade group. But the financial equivalent of a train crash that such a slump would once have presaged has not arrived. On the contrary, America’s major freight carriers are on their way to record annual profits. Their share prices in recent weeks have helped stockmarkets there chug to new highs.Train dispatchers have earned their crust in recent months: vital rails underlying many trans-continental supply chains are not exempt from disruptions of their own. At Union Pacific (UP), one of America’s two largest rail operators, fuel costs have risen by 74% over the past year and locomotive productivity has fallen by 8%. Freight car “velocity”, the number of miles travelled in a day, is 5% below the company’s standard, in part because of “terminal dwell”—rail-speak for being stuck.Wildfires across 13 western states during the summer caused widespread delays, rerouting and damage. The global microchip snafu has reduced shipments of cars, a lucrative cargo. Railways have their own shortages to contend with, from the rolling chassis used for unloading containers to large warehouses. Employees, whom rail bosses once thinned in repeated cost-cutting drives, are now in short supply too. Many who were furloughed during the early days are not keen on coming back to work, says James Foote, the chief executive of CSX, the third-largest rail company.Ordinarily all these factors would be toxic, but these are not ordinary times.The capacity to get goods from A to B has become extraordinarily valuable. Jennifer Hamann, UP’s finance chief, explains that strong demand “supports pricing actions that yield dollars exceeding inflation”. Price rises mean UP’s operating income over the past two years is up by 9% even as volumes have slipped by 4%.Other railways have made precisely the same point (the networks overlap in places, though largely cover their own patch of America). All have limited capacity and similar obstacles. Better yet, for railway shareholders, the shortage of labour has been even more acute in the trucking industry, blunting outside competition.Inevitably, the environment will shift as bottlenecks are resolved and workers return. Pushy business customers will not have forgotten how to negotiate. The railways themselves are not sitting still. UP, for example, is stretching its seemingly endless trains from 9,500 to 10,000 feet. CSX is introducing autonomous locomotives. Norfolk Southern is shifting ever more traffic from jammed west-coast ports to smoother operations on the east coast. This unusual moment, in short, will pass. But for now, the industry remains on something of a roll.■This article appeared in the Business section of the print edition under the headline “Chugging along” More

WHEN SOTHEBY’S raised the gavel on the season’s biggest art auction on November 15th the sellers, Harry and Linda Macklowe, did not arrive as one to watch the proceedings from the discreet skybox above the auction floor, as those disposing of a collection often do. The couple can hardly stand to be in the same room together. Their divorce, after nearly six decades of marriage, was so contentious that in 2018 a judge ordered them to sell 65 of their magnificent 20th-century artworks and split the proceeds.Death, debt and divorce are the auction market’s traditional catalysts. Sotheby’s won this particular deal by guaranteeing the Macklowes at least $600m from the sale. At the time it was agreed such a fulsome promise, the biggest ever offered to a client by an auction house, seemed to hark back to a bullish age before covid-19 roiled the art market. But Sotheby’s panache was well judged: the evening brought in $676m including fees, to which the proceeds of a second auction in May will be added. For beyond the Macklowe sale, the art market is changing, in three important ways.It started even before the pandemic. The takeover of Sotheby’s by Patrick Drahi, a French telecoms and cable entrepreneur, for $3.7bn in the summer of 2019 looked with hindsight like an error when covid struck nine months later. Lockdowns shuttered auctioneers and galleries the world over. Art collectors quickly decided that 2020 was a bad time to sell. The best-connected auction houses moved swiftly into trying to broker private deals; the more entrepreneurial bolstered online sales with digital auctions.Mr Drahi’s commercial nous has brought new meaning to the famous art-market quip that Sotheby’s are “auctioneers trying to be gentlemen”, in contrast to Christie’s, a firm of “gentlemen trying to be auctioneers”. The tycoon, who took on well over $1bn of debt to finance the deal, now has access to details of the 300,000 or so richest people in the world. The new Sotheby’s is bent on selling them not just art, but handbags and history too.His timing may prove prescient. Contemporary art, which accounts for the single biggest share of the art market, saw a record-breaking $2.7bn change hands during the year to June, according to Artprice, which tracks sales. Both Sotheby’s and Christie’s say they expect their sales in 2021 to match the $4.8bn and $5.8bn they respectively made in 2019.In part that is because both the main auction houses are expanding beyond their conventional offering of art, watches and wine—the market’s first big shift. In 2020 Christie’s sold a dinosaur fossil named Stan for $31.8m. Earlier this year Sotheby’s auctioned Kanye West’s Yeezy trainers for $1.8m. Both firms have jumped into crypto-art, selling non-fungible tokens (NFTs) to techies. All of these have brought in new buyers, especially from Asia, the fastest-growing market. Of the top 20 lots auctioned by Sotheby’s last year, Asian clients bid on ten and bought nine.A second new development is that the two houses are wooing new customers by making buying at auction more fun. Last month Sotheby’s organised a weekend jamboree in Las Vegas for 40 clients. The main business was the auction of $100m-worth of artworks by Picasso. But in an effort to turn the affair into more of an experience, Sotheby’s also laid on wine-tasting, a session on how to game an auction and a talk by Jay Leno about vintage cars. At the party after the sale, the DJ was Picasso’s great-grandson.Going, going, goneThe most far-reaching shift, though, may be the auction houses’ new cosy relationship with commercial galleries and private dealers. Historically these were their great rivals. Galleries know where the art is and what their clients might be prepared to sell, but lack the access to buyers who flock to auction houses. Now the two work more closely together, to find the right buyer for a piece and vice versa.When a Düsseldorf gallerist recently wanted to sell a Gerhard Richter from the 1970s, an under-appreciated period, he turned to Sotheby’s. The private sale to one of its clients was at a far better price than he would have got at auction or selling to one of his own collectors, he says. In April 2020, a month after the pandemic hit, Rafael Valls, an dealer in Old Masters in London, was able to sell nearly 100 pictures in an online Sotheby’s auction; in a normal year the gallery would sell around 200.In a move that highlights this rapprochement between auction houses and dealers, Sotheby’s recently hired Noah Horowitz, a director of the Art Basel art fair who is known to be particularly close to galleries. “Sotheby’s is tearing up the traditional playbook,” says a rival. The marriage is partly one of financial convenience: galleries lack the pools of capital big auction houses deploy to offer guarantees and thus lure potential sellers. Teaming up with dealers helps auctioneers find works to sell, which is almost as hard for them as identifying the next generation of buyers.Sotheby’s and Christie’s hope their new approach will help both sides of the trade. When Christie’s sold its first piece of crypto-art earlier this year, its boss Guillaume Cerutti points out, almost all of the 33 bidders were new to the firm. A few days later one of those who had been outbid, a 31-year-old Chinese-American tech entrepreneur named Justin Sun, went on to buy a $20m Picasso—and, in the Macklowe sale, a Giacometti sculpture for $78m. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Business section of the print edition under the headline “Monet, Manet, Money” More

IN THEORY THIS should be a good time to be Walmart, the doyen of American retailers that came of age in the stagflationary era of the 1970s. Inflation is back, yet no one knows better than the Beast of Bentonville how to use the power of the growl to convince suppliers to lower prices. Supply chains are buckling, yet such is Walmart’s heft that it has chartered ships and bypassed rail services to deliver Halloween and Christmas goods early this year. Workers are in short supply, but it managed to add 200,000 jobs to its 2.3m global payroll in the three months to September. “There’s a level of excitement in the air, you can feel it,” enthused Doug McMillon, its chief executive, as Walmart raised its year-end sales and profit targets after solid third-quarter earnings on November 16th.There’s a puzzle, though. Investors are not buying it. In the past year Walmart’s share price has lagged behind not just Amazon, the e-commerce giant, but other big-box American retailers, such as Target and Home Depot. On November 16th its shares fell a further 3%, as investors fretted over what Simeon Gutman of Morgan Stanley described as slightly “squishy” profit margins. Is the stockmarket, so enamoured of all things new, missing the turnaround story of the decade? Or is there something else to worry about, namely the hot breath of Amazon on Walmart’s neck?There are few more engaging advocates of the turnaround story than Felix Oberholzer-Gee of Harvard Business School, who co-hosts a weekly podcast with two of his fellow professors called “After Hours”—a “Seinfeld”-like dose of bonhomie for business enthusiasts. The trio, who interchange high-brow discussions on companies with topics ranging from Scandinavian crime drama to cocktail-making, might not be regulars in the aisles of Walmart. But they are cheerleaders. “Walmart is on fire,” Mr Oberholzer-Gee exclaimed in a recent episode. He acknowledges that investors have not yet caught on. But that might just be because their mindsets are hardened against legacy retailers, he argues.The turnaround story has two parts. First is the customer. Since lockdowns ended, shoppers have returned to Walmart’s stores, though not yet in sufficient numbers to prove that its almost-800m square feet of American retail space—more than the size of Manhattan—is worth cherishing. The company claims it is. It says having stores within ten miles of 90% of Americans is vital for an “omnichannel” strategy that encourages shoppers to buy in-store, online or a combination of the two.But with footfall still subpar, its challenge is to attract online shoppers without cannibalising the ones who visit the stores. It is having some success. Surveys suggest its new Walmart+ subscription service—a lower-cost rival to Amazon Prime—is attracting young, urban and affluent online shoppers who might not be seen dead in a Walmart store (a partnership with American Express’s platinum card reinforces the impression of upward mobility). According to Mr Oberholzer-Gee, Walmart.com has also started to display “edgy” brands such as Ray-Ban that typically shunned Walmart’s physical stores, which further appeals to this cohort. Moreover, Walmart is rolling out Uber Eats-style home delivery to 900 cities through its Spark network of gig-economy drivers. It makes for an intriguing gambit. Walmart, the emblem of suburbia, is moving tentatively into Amazon’s metropolitan heartland.The second part of the story is profit. Unlike Amazon, whose e-commerce business is not a big contributor to earnings, Walmart needs to justify returns on everything it does. That encourages it to think laterally, since online profit margins are meagre. As a result, it is seeking to defray the cost of its e-commerce distribution network by attracting third-party merchants, rather than just selling Walmart stuff. It is building a fast-growing advertising business, called Connect, which Mr Gutman reckons could generate $2bn of operating profit—8% of last year’s total—by 2025. And it is delving into fintech, specifically placing bets on customer-supporting financial services ranging from bill-paying to cryptocurrencies. All of these could bolster the bottom line without detracting from physical-store sales.The twist in the tale, though, says Marc Wulfraat of MWPVL, a logistics consultancy, is Amazon. While Walmart may be encroaching on its urban territory, Amazon is on the counterattack across the suburban hinterland. Its weapons are distribution centres, the vast warehouses from which retailers ship goods around the country. In 2018, Mr Wulfraat says, the size of Amazon’s distribution network in America overtook Walmart’s. Since then, Amazon has sought to double it again, building what Mr Wulfraat reckons will be another 140m square feet of distribution centres—as much as Walmart has built in America in its entire 59-year history.It is a daunting operation. Mr Wulfraat says that each week Amazon builds what some retailers construct in a decade. “It’s almost like a war effort,” says Ken Murphy, of abrdn, an asset manager that invests in Amazon. He reckons the logistics blitzkrieg is part of Amazon’s effort to shrink delivery times so sharply that people will have little incentive to go to stores. That makes Walmart, with its vast store network in America, vulnerable.Banana armiesDefeat is not inevitable. More than half of Walmart’s domestic sales are groceries, which people are still hesitant to buy online. That gives it some protection from the Amazonslaught. So far Amazon’s ownership of Whole Foods, an upmarket grocery chain it bought in 2017, and its Fresh supermarket formats, have been half-hearted attempts to take on its Bentonville rival.But if Amazon masters the art of cashierless shopping, as it is trying to do, it could change the buying of groceries as it has everything else, from bookselling to cloud-computing. So far Walmart can pride itself on keeping Amazon at bay while reinventing itself for an omnichannel world. And yet the grocery wars have barely begun. And the size of Amazon’s arsenal is growing. ■This article appeared in the Business section of the print edition under the headline “Walmart gets its bite back” More

The Economist is hiring a senior business writer to provide thematic features across geographies and sectors. Applicants need not be journalists but should be stylish writers and financially literate. Please send a cover letter and CV to [email protected] by December 20th.This article appeared in the Business section of the print edition under the headline “Wanted: a new senior business writer” More

THE PLANET is black, perfectly spherical, does not really exist, and is exactly 65,536km round (being the sixteenth power of two, a number any hacker worth their salt would recognise). A single 100-metre-wide road runs round it. All the real estate on the virtual planet is owned by the Association for Computing Machinery (ACM), an academic body.The ACM sells parcels of land to enterprising programmers wishing to develop them. Many do: their efforts are responsible for the houses, bars and skyscrapers that line the great road. At any given hour the road bustles with people, or at least, with their 3D avatars. Some are going to work; some are going on dates; many are just milling around in the way that people have done since the invention of streets. A few take their cars—like everything else in that world, really just bundles of computer code—out off the highway and “race [them] in the black desert of the electronic night”.That is how Neal Stephenson, a science-fiction author, described what he called the “metaverse”, in a tongue-in-cheek cyberpunk novel called “Snow Crash” (1992). Three decades later, the metaverse—a sort of immersive sequel to today’s text-and-picture-based internet—has been anointed as Silicon Valley’s latest Next Big Thing. Microsoft is integrating virtual-reality offices and 3D avatars into its “Teams” remote-collaboration software. Mark Zuckerberg, the founder of Facebook, is so enamoured of the concept that on October 28th he renamed the firm “Meta” to signal its focus on this new “north star”.It sounds like west-coast techno-utopianism. But some glimpse of the potential could be seen on November 8th, when Roblox, an online game with 200m monthly users, reported its quarterly results. The number of daily players rose 31% year-on-year, to 47.3m, propelling revenue to $509m. David Baszucki, Roblox’s co-founder and boss, said that the firm had predicted the rise of what is now called the metaverse when its first business plan was written 17 years ago. In 2020, when it was still privately held, Roblox was valued at $4bn. Today it is listed and worth $68bn, not least thanks to a near-50% bump in its shares in the past month.For metaverse enthusiasts like Matthew Ball, a venture capitalist, online games such as Roblox—and “Minecraft”, “Fortnite,” “Animal Crossing” and “World of Warcraft”—serve as proof that immersive virtual worlds can be popular and profitable. According to Newzoo, a market-research firm, consumers spent $178bn on video games in 2020. Besides blasting each other, many gamers use them to keep in touch with distant friends. And they are already happy to spend cash on virtual property. Newzoo thinks around 75% of the industry’s revenue comes from games that allow the sale of virtual goods, such as powerups or clothes for players’ avatars.The video-game industry has been experimenting with virtual worlds for decades, says Raph Koster, a veteran designer, exploring how players use them to socialise, create and run entire economies based on virtual goods. Interest waxes and wanes as each generation’s ambitions bump up against technical limitations, he says. But now that the subject is in the air again, some metaverse enthusiasts reckon that the benefit of all that experience might let video-game firms like Roblox, Epic Games and Unity beat the tech titans to the punch.Roblox is both a game and a platform. In the same way firms such as Squarespace provide tools that allow tech neophytes to create their own websites, Roblox comes with a set of easy-to-use programs that let punters build and monetise their own 3D games and experiences. “Piggy”, for instance, is a user-created horror game inspired by “Peppa Pig”, a cartoon. In “Adopt Me”, users rear, collect and trade exotic virtual animals. (The latest craze is games based on “Squid Game”, a Netflix series.)“Every experience is built by our community,” says Manuel Bronstein, Roblox’s chief product officer. The firm busies itself handling behind-the-scenes problems, providing server space and infrastructure to support its users’ creations. It has its own currency, called Robux, which is paid for with real cash. Users can spend it in what is, in effect, an app store that sells the powerups or cosmetic items like shirts, hats or pairs of angel wings which avatars need to stand out. The developers of those virtual items get a cut—around 27%—from each sale.The game’s popularity has led to other firms offering experiences within Roblox as a marketing strategy—a simple but effective way to merge the digital and the real. Users can wander round a virtual version of the Starcourt Mall, a place in “Stranger Things”, another Netflix series. In May one user resold a virtual copy of a real Gucci handbag for around $4,100. On November 15th Roblox announced grants worth $10m to develop educational experiences, including a simulated trip to the International Space Station.Mr Baszucki is not the only games-industry boss with metaversey ambitions. Tim Sweeney, chief executive of Epic Games, the privately held firm that develops “Fortnite”, has been a fan of the idea since he wrote “Unreal”, an early multiplayer 3D-shooter, in 1998. Like “Roblox”, “Fortnite”—which is, at least on the surface, a straightforward action game—has been flagged as an early example of what a metaverse might look like. “We don’t see ‘Fortnite’ as the metaverse,” says Marc Petit, a vice-president at Epic, “but as a beautiful corner of the metaverse.”Like Roblox, it has seen crossovers from the real world. In 2019 “Fortnite” hosted a virtual space battle to promote “Rise of Skywalker” (the “Star Wars” film, in turn, referred back to the in-game event—very meta). In July Ferrari uploaded a virtual version of one of its sports cars into the game for players to drive around. It is not quite the same as renegade hackers racing virtual cars in the “black desert of the electronic night”. But it is not a million miles away, either.The best-known uses of “Fortnite’s” virtual world have come from the music industry. In 2020 Travis Scott, a rapper, hosted a virtual concert. The malleable physics of the digital world allowed him to do things no amount of stagecraft could accomplish in reality. His hundred-foot-tall avatar, wreathed in lightning, danced and stomped through the game’s pixelated universe, shaking the ground with every step. Around 12.3m people attended, around 60 times more than can fit onto the fields of Glastonbury, a big music festival.The second prong of Epic’s strategy, besides “Fortnite” itself, is to sell pickaxes in a gold rush. Here it is in competition with Unity, a firm founded in Denmark in 2004 and which went public last year. Both firms sell sophisticated software “engines” that were originally designed to power video-games. Now they are touting them as pieces of general-purpose simulation software that they hope will become a common language in which 3D worlds are built, in the same way HTML underpins websites.They are already partway there. Games engines are finding uses outside the gaming business. Architectural firms, for instance, use them to build virtual versions of buildings to dazzle clients before construction. A collaboration between Epic and Cesium, a startup that maps cities and landscapes, allows virtual copies of real cities such as Melbourne or Detroit to be dropped into Unreal, the engine that powers “Fortnite”.Mr Ball points out that much of “The Mandalorian”, a “Star Wars” TV show, was shot within a virtual world generated by Unreal. Since they are built with the same software, he writes, “audiences could freely investigate much of these sets [in an Unreal-powered world]”—a metaversey twist on charging fans for tours of film sets. Unity recently paid $1.6bn for Weta Digital, a visual-effects studio founded by Peter Jackson, who directed the special-effects-heavy “Lord of the Rings” films. Unity recently unveiled Metacast, a piece of software designed to broadcast sports events into virtual worlds. The firm showed off a mixed martial-arts bout that viewers could watch from any angle—even the point of view of one of the fighters.Whether the games firms can compete with the tech titans remains to be seen. Meta’s annual revenues, at $86bn in 2020, make it half the size of the entire gaming industry by itself. But Mr Ball points out that big changes in technology often lead to the rise of new players despite the efforts of old incumbents. And, besides experience, the games industry has plenty of ready-made early adopters for whom virtual worlds are already an established cultural norm. “You have at least two generations of kids who’ve grown up playing online games,” says Mr Bronstein. “Some of them are in their 40s now! Navigating a 3D environment. Hanging out in a virtual world with friends. This stuff is commonplace for them.”For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More