Episode #80: The Unreal Engine of Everything: Betting on the Next Shift in Entertainment

In this episode of Stewart Squared, host Stewart Alsop is joined by his longtime co-host and guest Stewart Alsop II to cover a wide range of topics sparked by Stewart's recent fishing trip to Tierra del Fuego, Argentina, including a brief tangent on Starlink satellite coverage in the Southern Hemisphere. The conversation moves into the evolving world of immersive entertainment, touching on Meow Wolf, Netflix's acquisition of Warner Brothers, the Sphere in Las Vegas, and the future of movie theaters as digital distribution has replaced physical film reels. Stewart Alsop II shares insights from TK Media's investment thesis around finding the "Unreal Engine of immersive entertainment," a company that can blend physical and digital experiences in real time, and teases a recent visit to a company in Los Angeles that may fit that vision. The two also get into social media addiction, Stewart's unceremonious removal from Facebook, OpenAI's growing trust problem, the Epstein files, and Trump's political antics, before wrapping up with a broader reflection on whether technology is ultimately uncontrollable.

Timestamps

0:00 - Introduction and Stewart Alsop III's polo experience

0:30 - Discussion about Starlink and its coverage in the southern hemisphere

1:36 - Conversation about immersive experiences and Meow Wolf

5:01 - Discussion on Netflix House and immersive storytelling

8:19 - Reflection on movies from the 1960s and 1970s

12:28 - Technology's impact on media and movie distribution

17:02 - Transition to digital distribution in movie theaters

24:11 - The potential for combining immersive experiences with movies

30:07 - The Sphere in Las Vegas and immersive theater experiences

40:04 - Discussion on VR, social media addiction, and technology's role

50:37 - Conversation about government transparency and technology's influence

Key Insights
1. Immersive entertainment is evolving beyond traditional media. Companies like Meow Wolf have pioneered physically built narrative experiences that cannot be replicated by legacy media companies like Netflix. When Netflix attempts to recreate their TV shows as immersive experiences, such as their "Netflix House" concept featuring Stranger Things and Bridgerton, the experiences fall flat because audiences can directly compare them to the original shows.
2. The Sphere in Las Vegas represents a breakthrough in blending physical and digital experiences. Costing $2.5 billion to build, the Sphere surrounds audiences with massive projectors, speakers, and sensory elements like fans. Its Wizard of Oz presentation has been transformative, generating approximately $250 million in monthly ticket sales and demonstrating the commercial viability of truly immersive entertainment.
3. Meow Wolf faces a fundamental repeatability problem. Having sold 13 million tickets across locations, the company struggles with giving audiences a reason to return, since rebuilding or significantly updating their expensive physical installations costs nearly as much as the original construction.
4. A YouTube creator disrupted Hollywood by making a $2 million film that earned $25 million, by mobilizing his 32 million followers to pressure theaters into carrying it. This signals that the entire Hollywood production and distribution model is structurally vulnerable to technology-driven disruption.
5. Movie theater infrastructure has completely transformed from physical film reels to digital distribution, using proprietary point-to-point networks to securely deliver high-resolution content, forcing theaters to rebuild their entire technical infrastructure in the process.
6. The VR/metaverse vision has largely failed because it is fundamentally antisocial. Meta's bet that people would choose to live inside virtual reality ignored basic human nature. The future of entertainment lies in shared physical experiences enhanced by digital elements, not isolated individual immersion.
7. Stewart Alsop's fund, TK Media, is actively seeking to invest in the "Unreal Engine of immersive entertainment" — a platform company that can power next-generation blended physical-digital experiences the same way Epic's Unreal Engine powers video games — having already identified promising companies while acknowledging that fundraising remains their primary challenge.