Good morning,

Happy Saturday and welcome back to the Backstory—your weekend capsule of the best work that we are publishing at Puck. On behalf of our amazing and trailblazing team of elite journalists, thanks for spending some of your valuable weekend with us. It’s a pleasure and an honor to stand up this company before your very eyes.

It was another incredible week here at Puck. I implore you to read some of our best work, below, and stick around for the backstory on how it came together.

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MEDIA:

Dylan Byers scoops the real story behind Microsoft’s $69 billion Activision deal.

And…

Julia Alexander anticipates what the Biden administration will say about it.

HOLLYWOOD:

Matt Belloni reveals what the sale of the CW portends for the future of Hollywood.

WASHINGTON:

Julia Ioffe unfurls the G.O.P.’s latest attempt to utilize M.L.K.’s legacy for their political gain.

WALL STREET:

Bill Cohan uncovers the next legal curveball in the Epstein-Maxwell scandal.

SILICON VALLEY:

Teddy Schleifer breaks the news on Ron Conway’s Manchinitis.

THE POWERS THAT BE:

Get the real inside story from Peter Hamby, Matt, and Teddy on the latest episode of The Powers that Be, our world-renowned podcast. 

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Nouveau chic business argot has a funny way of coursing through our culture—ascending from the awkward early-adoption stage to the clunky over-usage period before eventually settling into the maturity of banal ubiquity. 

Earlier in my career, the term “disruptor” made a similar invasion into the popular imagination. At first, the word more accurately described a Marvel superhero than a Stanford Graduate School of Business alumni with seed money from Sand Hill Road. But soon enough, it was everywhere, a veritable cliche essentially used to describe everything created after 2011. In subsequent years, “pivot,” “holistic,” and my favorite, “digital transformation,” have advanced far more aggressively in the cultural lexicon. It’s hard to imagine a world before their existence.

Indeed, we are living through a digital transformation of unprecedented velocity, and one way to measure the change is actually the speed at which certain words now enter our social vocabulary. Back in September, I will candidly admit, I had only passing familiarity with the “metaverse,” which seemed more like something my 8-year-old might explain to me from his Dog-Man books than a future that I’d soon be inhabiting, willingly or not. Of course, that all changed instantly when Facebook changed the name of its parent company and formally declared a new wave of internet innovation. Three months later, the metaverse is all anyone can talk about.

Metaverse innovation isn’t just hollow Clayton Christensen-ish econo-intellectual virtue signaling, either. Anyone who spends any time on the internet recognizes, on some fundamental level, that our digital existences will only grow in importance over time, perhaps one day nearly rivaling our actual lives—what some people are now calling the real-verse (sorry, I’m not sold on that one yet). And many are putting their money where their mouth is, too. 

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The potency of the metaverse is part of the logic that undergirded Microsoft’s $69 billion acquisition of Bobby Kotick’s Activision, the gaming behemoth. Video games, after all, are probably our nearest frontier of this future digital world, and they do foretell its addictive allure. As I read the announcement of the deal on my phone, I was quickly reminded of two conversations that I’d had with investors. Years earlier, one legendary titan of the industry noted that the phenomenon of teens watching each other play Fortnite would lead to the most unheralded media story of our age. More recently, during a pre-Omicron coffee with an executive at an elite investment bank, I casually asked about the themes emerging from her dealflow. It was all metaverse plays, she told me, without exception.

I can’t pretend to predict what the metaverse will look like with specificity, but it is a leitmotif that we see across our power corridors at Puck, and it deeply informs our work. This week, Dylan Byers scooped the news about how Microsoft convinced Kotick to sell Activision. Interestingly, it may have been a metaverse play, but it was a very real-verse conversation. And Julia Alexander offered the inside conversation on what regulators are already saying about the deal. If this gets through the D.O.J., and I think it will, we may enter a stage of metaverse deal heat of epic proportions.

A lot can go right and wrong when investors and executives make bets on the ascent of emerging technologies. Facebook, I mean Meta, may be a decade early with its super-scale investments in virtual reality. Web3, another metaverse-adjacent, venture capitalist obsession, is similarly painful to describe without microdosing L.S.D. in the Presidio. But it’s increasingly clear, as Baratunde Thurston wrote in a prescient column last month, that commerce will be transformed by these applications of more omnipresent computing. Whether it’s selling art on the blockchain, attending a virtual concert in Fortnite, or mortgaging a co-op in the metaverse, new layers of technology, sitting atop the internet, have the potential to remake everything from gaming to finance, and yes, even the media too. 

However these early investments turn out, micro-economic trends tend to generate their own momentum, for better or for worse. Sure, Activision may represent less than five percent of Microsoft’s two-trillion-plus market capitalization, but big deals cascade through the ecosystem, and other acquirers may need to bet the farm, so to speak. A media landscape where companies are quickly dividing into sharks and minnows is about to enter overdrive, especially as executives of one generation place bets on trends of another. The successes will be massive, and some people may be humbled along the way. 

This inside chatter is growing louder and louder, and we will be eagerly sharing what we are learning in the weeks to come. Hopefully this is the sort of intimate conversation that you can only have at Puck and makes us worthy of your membership.

Have a great weekend,

Jon

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