Metaverse, future of the internet or simply a buzz?
Recently, the Data practice introduced the Metaverse through an immersive meeting. The practice created an almost exact replica of the HeadMind Partners office in Brussels. During this meeting, participants learned about the Metaverse and its possibilities while exploring the environment. Within the virtual office, Consultants could walk around and had to find some hidden information about Web 3.0, machine learning, AI & Ethics, … After gathering all the information, there was a quiz to test what they had learned.
And you, do you know what the Metaverse is?
Definition of the Metaverse
The Metaverse is a shared virtual space, created by the combination of physical reality and digital reality, and enhanced by new technologies. In other words, it is an independent space that does not belong to a single provider. It is also an independent virtual economy, made possible by digital currencies, non-fungible tokens (NFT) and other assets stored on a blockchain protocol (See Blockchain article). A Metaverse requires several technologies to function. Some of the contributing technologies include Blockchain, Augmented Reality (AR), Internet of Things (IoT), 5G and Artificial Intelligence (AI).
Understanding the concept around the Metaverse
Think about the next version of the Internet! The connectivity that the Metaverse provides requires a new architecture for the Internet, often referred to as web 3.0. First, there were static web pages (web 1.0). Then came today’s Internet, called web 2.0, with dynamic content, but only on platforms owned and managed by company. The web 3.0, on which innovators and investors of the Internet are currently working, is supposed to be a decentralized structure with countless interoperating platforms.
Tech giants are heavily investing in the Metaverse: this year Meta (Facebook Group, Instagram, Messenger…) has committed to invest $10 billion in this technology on Facebook Reality Labs. This division is responsible for creating hardware, software and content for augmented reality and virtual reality. Celebrities such as Bill Gates even believe that most office meetings will be held there within three years. Technology consulting firms are also becoming more interested in the technology: for example, Julie Sweet, CEO of Accenture, revealed that Accenture has purchased 60,000 Oculus VR virtual reality headsets in 2021, which will be used for employee training.
Key concept of the Metaverse
To understand how the Metaverse works and the opportunities created by the idea of a virtual world, it is important to identify some of the key concepts inherent to this new technology. Remember that although the Metaverse was first coined almost 30 years ago, we are still in its early stage and most of these concepts are not yet fully mature. However, some of these concepts are already concrete enough to expand existing industries and create new ones. Retail, real estate and entertainment companies are already investing and making money in the Metaverse.
The Metaverse is a virtual reality space in which users can interact with a computer-generated environment and the other users. Each user has an “avatar” that allows for creativity and diversity in the virtual space. Similar to what we have seen with games like Second Life, your “avatar” can be an animated character, a video game character, or even a public figure. Thus, in Metaverses, such as The Sandbox for example, it is possible to buy unique avatars (NFTs) resembling actors or artists. In the same Metaverse, there is a multitude of possible actions: playing video games, participating in virtual meetings, attending virtual events (concerts, shows) or even shopping in a virtual supermarket by strolling through shelves generated with 3D models. The artist Snoop Dog recently organized a concert in The Sandbox, where participants had access to exclusive content in the form of NFTs.
Identity and governance
On the Internet today, user identity and privacy are major issues. The decentralized and interconnected Metaverse will need trusted digital identities – for people, goods and organizations – that apply across platforms. Companies active in the digital identity space today can both help to define the standards of the Metaverse and be in a position to provide a needed service. Digital identities can also be at the heart of authorized data collection and data governance in a decentralized environment.
The current governance community is engaged in ensuring that the Metaverse is an open environment by combining interoperable models of real and virtual interaction and transactions. These interoperable models should guide the capture and use of personally identifiable information, digital rights management, safety and security. In addition, these models must guide the adoption of portable identifiers suitable for use across the Metaverse to manage user identity, rights, roles and permissions. Finally, these interoperable models must provide enforcement mechanisms that are imperative to reduce risk and uncertainty for users.
Persistent, Synchronous and Accessible
One of the fundamental principles of a Metaverse is that it must be persistent: it cannot be unplugged, restarted or reset. If I park my car on a street and come back the next day, the car should always be there, unless another user or an event in the universe has moved it. Moreover, the Metaverse is inherently synchronous: everyone has the same experience of the Metaverse, in real time. And this, even if some events can be programmed and occur autonomously. Finally, as a 3D virtual space, it eliminates all types of barriers, physical or otherwise. It is an endless space where there is no limit to the number of synchronous users, the types of activities taking place, the participating industries, etc. It is more accessible than the current Internet platforms.
The Metaverse is characterized by a digital economy. That’s precisely why brands like Adidas, Nike, Gucci and Balenciaga have been selling NFTs in the Metaverse for the past few months. It’s more than just creating new advertising opportunities and sales channels for their own physical products. Entirely new markets for digital native products are already emerging in the Metaverse, which major brands want to occupy. NFTs are only one of the possible new opportunities that the Metaverse offers. In the last section we will go more into detail about the new opportunities the Metaverse will offer.
However, as of today there is a lack of real interest and a lack of connected economies. Digital assets are bought and sold on a speculative market, but there’s not much more you can do with what you have right now. To create functional economies in the Metaverse, you have to be able to do something with your property. Moreover, the promise of distributed ledger-based exchanges and the proliferation of different altcoins that feed them should imply a great deal of interoperability between platforms, which is not yet the case. Today, the trading mechanisms require a certain level of understanding of crypto-currencies and the use of wallet platforms like Metamask or Coinbase, for example. Altcoins need to be converted to Ethereum or another more recognized cryptocurrency, and then back to altcoin from another Metaverse in order to be traded – each time incurring fees.
Nevertheless, this does not stop companies from investing in a plot of land in Metaverse such as The Sandbox or Decentraland, following the example of Carrefour which paid nearly €300,000 (120 Ethereum) to acquire a 36-hectare plot in the French Metaverse “The Sandbox”.
How to prepare for the Metaverse?
Since the Metaverse is still in its early stage, and some of the key concepts explained above have not yet reached maturity, not all opportunities and practical uses have the same chance of success. If a company wants to concretely start building a Metaverse-oriented strategy, it has to follow certain steps and prioritize its usage; from the most practical ones given the current technologies (quick wins), to the longer term strategies that will rely on the evolution and success of the Metaverse.
The first step is to educate the teams on the Metaverse concepts. Indeed, most companies are not familiar with these rapidly evolving concepts. Many may also lack the skills and processes to truly understand and trust the underlying technology of the Blockchain that secures transactions. Organizing workshops dedicated to sharing knowledge on these different emerging technologies seems then necessary to understand key concepts such as crypto-currencies and decentralized autonomous organizations and their relevance for the company.
Next, it may be wise to test the technology by selecting a few opportunities available within the Metaverse trends today, and then start building a strategy around one of these trends. Early business opportunities in the Metaverse include:
The virtual real estate market
Digital land parcels and domains are available for development for a wide range of uses, including conference spaces, shopping centers, art galleries or homes. A virtual real estate company, Metaverse Property, allows businesses or individuals to buy or lease land in Decentraland, a decentralized virtual reality environment powered by the Ethereum Blockchain, or in The Sandbox, a community platform that allows creators to monetize assets and gaming experiences on the Blockchain. Metaverse Property also offers a virtual real estate investment trust (REIT) that allows users to access a virtual real estate portfolio represented by non-fungible tokens. Other companies are using crypto-currency exchange and curation platforms to make land purchases on a Metaverse. For example, Carrefour used the French platform Coinhouse to purchase land on The Sandbox.
Marketing opportunities increase dramatically in the Metaverse – removing the boundaries of the physical world offers companies new opportunities to engage with their customers. For example, brands can create new worlds and environments to deliver experiences such as concerts – and collaborate with complementary partners.
The offline business
Retail companies are offering consumers increasingly rich online experiences, and as the Metaverse matures, the transition from virtual to real-world shopping will become increasingly seamless. Users can already walk through 3D or holographic representations of stores, select products from shelves or showrooms, try them on or view them in a range of colors and end-products, and place orders for physical delivery.
The sale of NFTs
As stated before, some brands are already taking advantage of this new opportunity. As the Metaverse matures and becomes more integrated into people’s daily lives, the opportunities increase for businesses to create unique or rare assets that can be monetized through online auctions. Consumers are increasingly willing to pay for unique or attractive items, so there is an opportunity for businesses to create and market products that meet this need. However, it should be noted that the price of these non-fungible assets remains highly volatile, often subject to controversy.
The Internet of the future or an ephemeral trend?
Although the Metaverse is still in its early stage, and some key concepts such as interoperability between different platforms are not yet mature, it is clear that current trends show a real enthusiasm for the virtual world. While some see this trend as a purely ephemeral interest that will disappear in the next few years, we believe that the Metaverse, driven by innovation and new technologies, is the logical continuation of the Internet as we understand it today. It offers a plethora of possibilities, paving the way for virtual tourism, virtual properties, virtual concerts, digital libraries and exclusive shows and concerts, among others. Therefore, it is necessary for companies to take an interest in it now to avoid being caught off guard in the years to come.