What is the metaverse? Same world, different reality.
A company hosted a webminar to familiarise people with a new concept: the metaverse (youtube below). It was a full house with 500 people in attendance, and the chat window was buzzing the entire time. Overall, 89% of the participants felt that the metaverse was a great opportunity, while 11% felt it was primarily a risk. That said, a shared definition of the metaverse proved elusive. The webinar revealed the excitement, confusion and fear that this concept conjures. Here’s an article to take a step back and focus on the basics.
What is it?
The metaverse is a (potential network of) 3D virtual world(s) on the internet. These worlds are typically designed to be highly social and require users to have virtual identities, often through avatars with specific attributes. These worlds can provide a sense of ownership over virtual items such as land, building and artwork, as they typically have their own virtual economy with their own currency. Examples of these worlds today include Second Life, Fortnite, Roblox, The Sandbox, Decentraland and Somnium.
Interestingly enough, some of these worlds are built by foundations (Decentraland), whereas others are centrally owned (Second Life, owned by Linden Labs). At the moment, the metaverse is already used for events, education, gambling, cinemas and more.
Why is it important?
According to Bloomberg, the metaverse is on its way to potentially becoming an $800 billion market by 2024. It’s this growth potential that is likely the rationale for the acquisitions and rebranding efforts of Meta, Apple (acquisition of Spaces) and Microsoft (acquisition of Activision).
Who is it for?
The opportunity runs cross-industries, with some early movers in music, fashion, cosmetics, sports, education and art. Major opportunities reside in e-commerce and virtual fashion. The diversity of the opportunity can also be recognized in the actual builders of these worlds. They include big firms like Microsoft and Meta but also companies like Decentraland (a foundation), Epic Games (a gaming company) and Nvidia (traditionally a hardware company). Not surprisingly, land prices in these worlds are soaring, with some pieces of land selling for hundreds of thousands of dollars.
Take a look under the hood, and you’ll see the underlying currents. First of all, there is a new thriving ideology for a Web3. This new version of the Web should be facilitated by a blockchain cloud, allowing decentralized (“many-to-many”) transactions without central authorities. Secondly, virtual wallets have exploded in 2021, along with NFTs (non-fungible tokens). Collections like the Bored Ape Yacht Club have seen over $1 billion in trade, and some individual NFTs like Beeple’s Everydays collage ($69 million) and Pak’s The Merge ($91.8 million) sold for huge amounts.
Finally, the AR/VR space is becoming more attractive. Headset prices have gone down significantly, with the new Oculus Rift selling for just $350 today, compared to earlier VR goggles with often hefty price tags beyond the $1,000 mark (e.g., HTC Vive Focus 3) or even higher (Microsoft Hololens 2). At the same time, companies like Metastage and Quixel are building photo-realistic assets for these new worlds.
That’s where the clarity ends. The metaverse also comes with many unanswered questions that will need to be addressed at some point:
- Crime: How do you “police” the metaverse? Can digital identities be erased or isolated with their network removed? What is appropriate, and who decides?
- Ownership: Are all virtual items you own portable to other worlds? If this is the ideal, then will companies comply with this or frustrate this in practice?
- Work: Is a job in the metaverse technically similar to a normal job? What are a worker’s rights? Who will be overseeing those conditions?
The metaverse, and all its relevant subtrends, will be a highly relevant phenomenon in the coming years. For the older generations, it might feel like a world far way — and one that’s hard to understand. For younger generations, the transition might be more seamless, as familiarity with gaming, AR/VR/XR, in-app purchases and digital identities are already normal today.