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The recent rebranding of Facebook not only made the concept of a metaverse fashionable, but also set high expectations for significant new and old business potential in a new internet age.
The metaverse (meta = transcends and verse = universe) is defined as a replica of the real world in a virtual universe to interact with people, things, and objects. It was coined in the novel “Snow Cash” (1992) to refer to three-dimensional and virtual workspaces created to replicate off-line reality. Before Facebook launched it to fame, there were already several metaverses that made their creators millionaires and that are still used, such as Second Life or Habbo. It is also important not to confuse it with programs like AltSpaceVR, Engage VR or Virbela, because, among other things, they do not have persistence (things do not happen when you are not there). They are more a kind of evolution of the current Zoom.
What, then, is the difference and why is it reappearing now with such force?
As always, the answer is found in the combination of several simultaneous factors but in this case, we can mainly cite a greater maturity of virtual reality technologies, combined with augmented reality, the adolescence of Web 3.0 (the internet of value, based in decentralized blockchain networks), machine learning and a determining social factor: the new generations are digital natives, where reality and virtuality mix.
With a giant in moral decline like Facebook relaunching its brand, its products and its services under a vision of a virtual world, the question is whether the concept of "metaverse" will move further away from the world of science fiction to become the next technological frontier with a high economic potential.
The metaverse is a computer-generated three-dimensional world, with your own digital twin, in which we can reproduce almost all the social dynamics of our real life. At a given moment, you will have your physical reality, in which you interact, buy, sell and relate. In the metaverse, you go from flat, written and audiovisual communication from your cellphone or from your computer, to "being" inside another virtual, three-dimensional world that has persistence. In it, with your digital twin or with your avatar, you also interact with other people's digital twins/avatars, you can buy/sell digital assets as well as pay for new digital experiences. In other words, a new scenario with plenty of possibilities for new businesses, new forms of learning and new labor models.
Blockchain Detonates Economic Possibilities of the Metaverse<
The different applications of blockchain technology, such as NFTs or DAOs (Decentralized Autonomous Organization), are responsible for taking metaverses to another dimension, because this technology allows them to develop a fully digital economy parallel to their real counterpart. In these blockchain metaverses, users can monetize their talent, buy land, art, any real-world asset, but tokenized (i.e. 100 percent digital). That means that you can create, accumulate (or lose) digital wealth.
In the case of the technology industry, it is a new world that is quite intensive in various areas, such as edge computing, engines for 3D ecosystems, online advertising, video games, haptic interfaces, cloud computing, crypto asset management and wearable technology, to name just a few. Therefore, according to estimates by Emergen Research, the metaverse market revenue is expected to grow at an average compound annual rate of 43.3 percent between 2020 and 2027. Considering that last year this industry generated revenue of US$47.69 billion, this would mean that, in 2028, there could be income valued around US$829 billion.
In the business world, some companies are already betting on the potential of a digitized life and on the famous and little understood metaverse taking off. In the advertising industry, Budweiser was presented as Budverse, at a price between MX$10,000 and MX$20,000 (US$477-US$955).
Another prominent example is the virtual real estate industry. Tokens.com Corp, a Canadian investment firm focused on crypto assets, announced that it had closed the "largest metaverse land acquisition in history" through its subsidiary Metaverse Group. It chose its parcel of land very intentionally and knows exactly what use it will be used for. Located in Decentraland's Fashion Street district, the space will be used to facilitate fashion shows in partnership with existing big brands. It sees fashion as the next massive growth area in the metaverse. Zara, for example, has just launched AZ, a collection in collaboration with the South Korean brand Ader Rerror, for the sale of virtual clothing for the avatars of Generation Z.
Not All That Glitters Is Gold
For all of the above to become reality, it needs its users to have virtual reality devices, augmented reality glasses, wearables with sensors and internet connectivity as close as possible to 5G, without latency. Therefore, as long as these gadgets are not affordable to the general public, the metaverses will be the preserve of an elite group of early adopters. However, like all new technology, they will follow Moore's law, where the more users consume them, the more accessible their price will be. So exponential growth is not seen in the immediate future.
It is also important to note that the enthusiasm of consumers for the metaverse does not compare with the excitement and expectations that brands have. A survey by The Drum and the YouGov organization estimated that only 36 percent of the US population is interested in participating in the metaverse. Although the rate is higher among young people, between 18 and 29 years old, in this segment it is only possible to reach the interest of 51 percent of those surveyed.
Other risks associated with this new digital life is the threat to the health, both physical and mental, of its users, derived from the possible addiction to the metaverse, causing a possible disconnection from physical reality.
Regarding the security of the metaverse, it requires transparent governance, with laws approved in the real world, and extreme cybersecurity to prevent theft of both identity and digital assets.
Metaverses: Trend or Bubble?
Summarizing, we are facing a new phenomenon of a dimension that is unknown and with a huge social-economic impact, in which there is an expectation that the benefits could outweigh its threats. And for this to become a reality, efforts are required in various areas, with close collaboration among the public, private and social sectors. Regulators have a big job ahead to assure citizens that the metaverse is a safe and plural place, with a positive impact for the future of society.
There is no doubt, however, that we are living an exciting era with profound labor, social and economic transformations.