Mark Zukerberg’s decision to rebrand Facebook as Meta already feels landmark, raising excitement levels and a number of questions about what the metaverse is, what it might become, and how brands and consumers will use it. Read on and explore the capabilities of an innovative and profitable online space that many believe is already ‘out of this world’.
Let’s start with the basics. The metaverse is the latest staging-post in the evolution of the internet and has to do with the convergence of physical and digital worlds. Simply put, the metaverse enables people to move beyond browsing the web to inhabiting it virtually.
The possibilities for merging the boundaries between real and digital worlds have been boosted in recent years by rapid innovations with 3D, Virtual Reality (VR) and Augmented Reality (AR), all of which place the user in immersive virtual experiences.
The notion of place is crucial in the metaverse. While people often ‘visit’ websites and apps, they rarely have a sense of going anywhere. In the metaverse, people can virtually visit a place that has its own architectural logic and spatial qualities, offering a more immersive and interactive environmental experience.
Before it burst onto the scene recently, the metaverse was a niche concept beloved by tech enthusiasts and gamers. For several years it’s existed as a virtual space where people can:
All this sounds a lot like the online community so many people already know and love. So what’s the big deal? Like most big deals, the most recent metaverse developments have to do with one thing – money.
The possibilities for profiting on the metaverse are practically infinite. Facebook leaders are so confident in the metaverse’s money making potential that the company plans to invest at least $10 billion this year in Facebook Reality Labs, its metaverse division tasked with producing VR hardware, software, and content. Facebook’s intention is to pioneer an online community that can “socialise, learn, collaborate and play in ways that go beyond what we can imagine”.
The metaverse not only offers endless virtual spaces for people to explore, but also limitless opportunities for brands to market and sell products and services. To understand how businesses and individual users will profit from the metaverse, it’s useful to examine how it’s already being monetised in the context of online gaming.
A number of gaming businesses have already profited on the metaverse:
As the gaming paradigm suggests, the metaverse isn’t only intended to be a neutral social space for users to simply ‘hang out’ in. It’s also a fully fledged economy where digital assets – such as land, buildings, products and virtual experiences – can be created, bought and sold.
A plot of virtual real estate in the online world Decentraland was purchased for a record $2.4 million worth of cryptocurrency by crypto investor Tokens.com in November, 2021.
This estate is equivalent to 6,090 square feet and the largest metaverse land acquisition to date. Coming from a well-established crypto investor, the purchase is a vote of confidence that the value of the metaverse is destined to climb.
A pioneering company in the metaverse, Decentraland runs on Ethereum blockchain and incentivises a global network of users to operate a shared virtual world.
Decentraland users can buy and sell digital real estate, explore, interact and play games. Over time, the platform has evolved to incorporate interactive apps, in-world payment and a range of user-to-user communication channels.
Two different types of tokens determine real estate ownership in Decentraland:
If you were thinking about avoiding political tensions by retreating into the metaverse, think again. As well as being a fully functioning economy, the metaverse is steadily internalising all the social, political and cultural structures that govern life in the outside world. As an example, how the land in Decentraland works and who it works for is determined by a voting system whereby:
The metaverse provides an alternate reality that more and more people are choosing to escape into. Accenture estimates the value of the global gaming industry now exceeds $300 Billion, far more than movies and music combined, driven by a surge in mobile games and remote social interaction throughout the pandemic.
Accenture also notes Roblox hosted a staggering 43.2 million users each day throughout 2021, meaning if Roblox was a place in the physical world, it would have a population roughly the size of Spain’s.
With consumer demand, market forces and tech innovations giving the metaverse a strong gravitational pull, all the early signs indicate the metaverse can grow far beyond its gaming roots. As a cultural space, the metaverse is starting to diversify beyond gaming (although still dominantly targeting the entertainment tastes of Gen’ Z) with Fortnite Presents recently hosting live concerts by Travis Scott and Ariana Grande.
Nike is quietly preparing for the metaverse by filing for patents on virtual clothing lines and virtual Niketowns to sell them in.
The metaverse kids will soon be able to get their ‘kicks’ virtually, with Nike acquiring a company called RTFKT, who create custom virtual sneakers and other high-end collectibles for the showy ‘materialists’ of the metaverse.
It’s also believed Apple could be a dark horse in the race towards the metaverse, with the company currently working on advanced VR equipment that promises not only to increase the immersiveness of the metaverse, but also make it a widely available experience with groundbreaking tech set to come at a relatively low price-point.
Morgan Stanley claims that mass-market adoption of the metaverse might hinge on a contribution by Apple, much like smartphone and tablet markets in previous years.
It’s important to note that the metaverse isn’t just an opportunity for consumer-facing brands. From training future medical professionals to rolling out product demos to retail staff, there are countless plausible business applications with the metaverse.
As an example, the leadership at tech firm Nvidia believes investing in metaverse simulations of manufacturing and logistics processes will reduce waste and expedite long-term business solutions. Using the metaverse model, which it calls the ‘Omniverse’, Nvidia hosts simulations for other companies in a consultancy capacity.
Microsoft has already begun redesigning its cloud services to become the fabric of the metaverse. Its Mesh platform will weave avatars and immersive spaces together to form collaborative environments, with major long-term adjustments proposed for the Microsoft Teams platform. Just as many are excitedly discussing the possibilities of the Facebook metaverse, hype is rising around the prospect of the Microsoft metaverse, which promises to bring immersive virtual experiences to everyday office work.
In a post-pandemic context of hybrid and remote working environments, many of the more experimental virtual business solutions are likely to gain traction with companies determined to forge stronger online connections with staff and customers.
Many businesses will inevitably bide their time when it comes to entering the markets of the metaverse. It’s important for each brand to find its place (if it has one at all) and balance risk and reward. Here’s the truth of it – nobody knows exactly what the metaverse will be and a blind investment should always be approached with serious caution.
Businesses that are leaning in quickly might offer inspiration, but more importantly, will also provide test cases. Expect an even mix of companies showing unrestrained enthusiasm who plunge deep into the metaverse, and others that wait patiently on the sidelines.
It goes without saying that traditional revenue streams will remain in place for more prudent companies. However, for businesses in certain key industries, it might be wise to plan for the hype, even if they don’t believe every word of it.
If the metaverse still seems like a gamer’s fantasy to you, it’s worth considering that tech specialists were predicting the development of the internet in the early 1970s. Their projected concepts, though widely dismissed at the time, have proved to be accurate.
If big tech tells you it’s going somewhere, it’s best to buckle-up and get ready for the ride, even if that ride is in a virtual theme park.
It’s also wise to remember that many of the people who insist the metaverse is either already here, or just around the corner, have all the finances and influence to bring it more fully into being.
With so many large companies investing in a ‘new frontier’ and countless users keen to explore it and make purchases along the way, the planets of the metaverse seem to be neatly aligning. For businesses with young or tech-savvy customer bases, it might be time to plan for the future, and possibly a cultural revolution.
When all is said and done, it doesn’t matter if the metaverse is fantasy or reality. It’s a virtual space where millions are ready and willing to spend a fortune of money, and as far as ecommerce is concerned, that’s about as real as it gets.
All this represents a major shake-up in corporate thinking, as businesses will need to monitor the public’s behaviour and understand in the medium and long-term whether or not their customers will exist in this new world.