Most business have no use for the metaverse – the virtual worlds and augmented realities being rolled out at increasing speed. But that might change sooner rather than later.
The metaverse is science fiction.
If you were a fan of the Battlestar Galactica series Caprica that aired on the SyFy network in the early 2000s, the virtual nightclubs in the series were great examples of the metaverse. For those who have no idea what Caprica is, the simplest way to define the metaverse is this: the metaverse exists in the land of cyberspace make believe. You need Wi-Fi. You may or may not need to wear some virtual reality goggles to “inhabit” that world. You’ll definitely need a computer or a smartphone. The metaverse is being built on blockchains and with cloud computing and a place where cryptocurrencies flourish.
The most immediate way for people to get involved in the metaverse is to open a cryptocurrency account (think Gemini or Coinbase) and buy the coins of the major blockchain game worlds like the $3 billion market cap Axie Infinity (AXS) or the $4.4 billion Sandbox (SAND), which looks like your kids Minecraft game.
Anyone with a “fear of missing out” might as well learn what all the fuss is about by checking the metaverse “primordial swamp” – which is the likes of successful tech companies like the above-mentioned Axie and Sandbox, among others.
The metaverse as it exists today is a mix of playing games like The Sims, which might allow virtual reality headsets to give the user a sense of “being there.” But it also includes augmented reality, something consumer retail is already using.
One of the metaverse’s goals is to create parallel, but decentralized economies and – ideally — platforms where you can live and work in the equivalent of the Sims, using the equivalent of Sims cash, and buy and sell real physical items, as well as virtual ones for use in the digital community. See the movie Ready Player One for an excellent, yet fictionalized, example of what this might look like.
In these versions of the metaverse, traditional real estate agents will also be able to sell virtual real estate. In fact, it is already happening. A piece of virtual land in the Axie Infinity world sold for $2.3 million last November.
Consider that if someone spent over $2 million on a lot in a video game, there are thousands more who will spend a few hundred thousand on virtual office space. Bill Gates even ambitiously predicted that in 2-3 years, metaverse meetings will take the place of video meetings on platforms like Zoom.
This sale, Facebook’s name change, and the predictions of various thought leaders have turned “the metaverse” into a business and investing buzzword, even though the current metaverse doesn’t look much different than the Sims game on the X Box One.
No one dare said this odd blending of the physical and digital world is always easy to understand. But it is already here, which leads us to ask: “What use is the metaverse today and how will it impact business strategies in the future?”
A Metaverse for Every Business
What can you do with the metaverse? For now, the metaverse is catering to gamers (a massive market, by the way), social networks and augmented reality software that allows users to see themselves in a new suit, try on a watch, fit a pair of shoes, and even see what a new sofa might look like in your living room for example.
Bloomberg Intelligence estimates it will be an $800 billion market by 2024 and that it is already worth $500 billion today.
A Goldman Sachs Asset Management report published in February 2021 noted that roughly one-third of our lives, nearly 8 hours a day, are spent in front of a screen. This includes working on a computer, playing video games, time spent on social media, and time spent watching TV.
But watching TV is non-participatory. The metaverse is participatory, engaging, digital worlds where users spend time doing things, not watching them happen.
Some people are already able to earn a living building communities, or as influencers inside these worlds. These could be game worlds, or social media avatars (think the Caprica virtual nightclub) who have their own “show” or are main characters in a game. One could be the equivalent of Jennifer Aniston inside The Sandbox. The ad revenue and marketing dollars will follow, if not create that character.
Companies are looking to the metaverse to:
- Enrich the consumer experience
- Introduce virtual products, only available in the metaverse
- Collect new data on customers, from their favorite color to the games they play, and what they are willing to pay for inside of them.
- Market physical and digital products and services
- Support metaverse payments and finance
- Offer hardware and applications that support metaverse activities
The opportunities are out there, but as PwC says, “a true metaverse doesn’t yet exist…and may never.” PwC highlights decentralized autonomous organizations (or DAOs), which are popular in the blockchain and cryptocurrency space. DAOs have voluntarily agreed-upon rules that are enforced by algorithms, though these are not necessarily metaverse plays. They can be, however, as they can be the backbone infrastructure for virtual worlds and payment systems.
One way to think of how the parallel universe of meta will work is to consider the world of Fortnite a web 2.0 based game owned by Epic Games, and a huge corporate property. There is nothing virtual or augmented about it (yet). But it has its own economy and its own currency (V-Bucks). It has 200 million users and is practically a nation-state.
“The Web 3.0 crypto Metaverses are emerging market virtual world economies with a continually developing complex mix of digital goods, services, and assets that generates real-world value for users,” Grayscale analysts led by David Grider wrote in a report published in November 2021. “The early Web 3.0 metaverse worlds have been typically built on top of blockchain computing platforms with a host of parties contributing to the development of the games and in-games items that can be freely traded on the blockchain.”
Worth noting, those main blockchains are Ethereum, Solana, Avalanche, Flow, Cosmos, Wax and Binance Smart Chain. This is the world of venture capitalists and developers. Building and investing in Web 3.0 is a key strategy for them.
Real World Use
Wired magazine wrote in November, “mentally replace the phrase ‘the metaverse’ in a sentence with ‘cyberspace.’ Ninety percent of the time, the meaning won’t substantially change.”
Mix in a bit of augmented reality (or throw in a VR headset) and you’re stepping into metaverse territory.
It becomes “The Metaverse” when it is a parallel system where one can live, play, and make a living. Marketing and advertising dollars are going this way as developers devise products like smart glasses consumers can easily use, without the consumer knowing what a blockchain is or having an Ethereum wallet. Forward-thinking businesses will know how it works or will find someone who does. Meanwhile, Google advertising spending will then go towards The Metaverse advertising spend, across dozens of metaverse platforms.
Augmented reality is the immediate bright spot of these virtual worlds because it doesn’t have to be tied to gaming. No one needs a VR headset to use it.
Here are some current examples:
Furniture: Users can point their camera phone in their bedroom, see what a new bed would look like, accounting for size. Wayfair uses augmented reality, for example. So do Ikea, Home Depot, Lowes, and other major retailers.
Glasses: Users can try on eyeglass frames before ordering them online using tools from glasses vendors like Lens Crafters, Warby Parker and Zenni Optical. Zenni partnered with Snap Inc. for its augmented reality project. They started with an AR-powered try-on experience with a handful of Zenni frames in the fall of 2020. They ran a Valentine’s Day themed AR experience in 2021 and garnered over 1.5 million try-ons from customers that day, nationwide.
Makeup: Mac, Maybelline and Sephora all have apps for AR-makeup looks. Companies that do not offer this may find themselves losing out to Instagram obsessed teens and young women looking for fast feedback before deciding on what to buy.
Clothing and shoes: Gucci, Kohls, and Nike have an AR app to help shoppers measure their feet to match the right size for each pair of shoes.
Bernard Arnault, founder of Louis Vuitton, is skeptical. “Let me start by saying that it’s a purely virtual world and until now, we are in the real world and we sell real products,” he said during an investor conference call in January. “It’s interesting; it can even be fun. We must see what are the applications in this metaverse. If it’s well done, it can probably have a positive impact on a brand. I would say…let’s be cautious.”
For now, the metaverse is likely driven by speculation, overvaluation and risky investments in tech that promise to change the consumer experience but could have worked just as well if played on an old school television set or trying on a pair of Ray-Ban Wayfarer shades in real life.
Elon Musk isn’t sold yet.
“I don’t know if I necessarily buy into all of this metaverse stuff although people talk to me a lot about it,” he said. “Web 3.0. Sure, you can put a TV on your nose. I’m not sure that makes you in the metaverse. You wear VR goggles and you get motion sickness. I don’t want to see people strapping VR glasses to their face and not wanting to leave, that seems no way.”
During the Super Bowl LVI, the Foo Fighters performed in the metaverse. Fans could watch the concert on their smartphone and could have opted to use any VR goggles of their choosing. To experience it in a fully meta way, they would need an Oculus “Meta Quest” or similar set of VR Goggles, giving the extra pizzazz that the metaverse promises. Metaverse plays like this one are going to have to bring something special to the end-user – whether it’s a corporate client, or retail.
Still, one can easily imagine event organizers being able to add value to their ticket sales by opening up the unlimited capacity seating in the virtual arena, complete with T-shirt sales, VIP lounges with avatars, and even meet and greets.
The metaverse economy is crawling out of the primordial swamps of the old internet. Eventually, it will have teeth and muscle. Early investors will be rewarded for taking on the risks.
