What is the metaverse and why should corporations care?

What is “the metaverse” exactly?

The metaverse is a virtual universe where people can come together to work, play, shop, be entertained and interact with others. Think of it as the internet, but with added layers that make the experience immersive. Seems pretty straightforward, right? Well, it would be if there weren’t so many different versions of it out there. The metaverse isn’t just one place, much like how the internet isn’t just one website.

You see, different creators have put different spins on it, with various goals and technologies to achieve a seamless, immersive experience. For example, while some metaverse worlds were built for gaming (e.g. going on adventures, battling other players, etc.), others were built for virtual events like parties or concerts. Some even enable users to buy virtual plots of land or showcase their artwork in the form of NFTs. 

Here are just a few prime metaverse world examples, currently shaping the space:

Roblox

Roblox is a global platform with almost 50 M daily active users (DAUs), where people can play 3D games, customise their avatars and buy things with Robux, their cryptocurrency. Reportedly, over half the kids in the US are on Roblox, not only gaming but also holding online events on Party Place. The numbers for Roblox are pretty impressive too:

• 9.5 million developers are earning in-game currency for their creations. 
• It has over 40 million games to choose from.
• About 67% of its users are under the age of 16.
• Its community developers have made over $328 M so far.

The Sandbox

The Sandbox is a metaverse where players can build their own virtual worlds and monetise various in-game experiences. You can even buy and sell lands and assets as NFTs. The ecosystem is made up of three integrated parts (all focused on facilitating user-generated content): 

• VoxEdit - which enables users to create NFT game assets.
• A Marketplace - where users can sell and buy those assets.
• Game Maker - where users can craft their game, no coding required.
  

Recent projects include launching a $50 M accelerator program to invest in startups across the wider crypto ecosystem over the next three years. The goal? To build an open metaverse (more on the open metaverse later).

Decentraland 

Decentraland is a virtual world best known for its pricey virtual plots of land. One of its plots, a fashion district hub, recently sold for $2,4 M. Here are just a few of the things you can do in this metaverse:

• Create dynamic 3D applications, games, and content.
• Join communities based on common interests and share curated content.
• Market your brand to other users in high-traffic areas.
• Launch, distribute and collect rare digital assets (e.g. NFTs).
  

Future plans include virtual tourism, education and professional training. 

Spatial

Spatial raised $25 M just last year and shifted its focus from AR and VR collaborations to NFT art exhibitions and live events. Its goal is to become a 3D hub that links NFT creators with the communities that collect them. Their long-term vision? To become the “go-to” open and free metaverse for creators.

Somnium Space

Somnium Space leverages VR to enable its users to experience their virtual environment, interact with others and trade digital items and NFTs (but you need a headset to do it). Here are just some of the things you can do in Somnium Space:

• Buy and sell real estate (investments).
• Build and monetise your virtual architecture.
• Display your creations (e.g. artwork, animations, structures, etc.), at low costs.
• Create virtual office spaces, training sites and games. 

Axie Infinity

Axie Infinity, a blockchain-based game where you can trade or battle cute NFT monsters against each other (like Pokémon). Take a look at the numbers below to get an idea of just how successful the company is:

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These are all examples of worlds within the broader metaverse construct and perhaps early precursors of what future metaverse platforms will be like. Saying, for instance, that Roblox “is the metaverse” would be a bit like saying Google is “the internet”.

What are the building blocks of the metaverse?

Several core technologies characterise metaverse worlds:

Extended Reality (XR)

Extended reality is an umbrella term that encompasses virtual reality (VR), augmented reality (AR) and mixed reality (MR). Here’s a quick breakdown of each:

Virtual reality (VR)

VR immerses users in simulated environments that are different from the real world. For example, Meta’s “Horizon Worlds” will use its own Oculus headset to create an immersive experience for its users.  

Augmented reality (AR)

AR works by adding a layer on top of the reality we exist in. A great example is the Ikea Place app, which enables users to virtually “place” 3D, full-scale models of the furniture they want in their homes and get a realistic view of how it looks.  

Mixed reality (MR) 

MR is a hybrid of AR and VR. Microsoft’s Hololens 2 is a good example of it, using sensors, advanced optics, and holographic processing to fuse real and virtual worlds. In a recent demo, Niantic, the company behind Pokemon Go, showcased a mixed reality in which Pokemon can walk beside users in the real world - using the Hololens 2 of course. 

Artificial intelligence (AI)

AI plays a crucial role in “bridging the gap” between the physical world and the virtual world, particularly with natural language processing (helping computers effectively interpret and understand us). It will also help us:

• Build life-like avatars (e.g. plotting facial expressions, emotions, etc.)
• Create digital humans, or 3D versions of chatbots we can interact with
• Automate the expansion of virtual worlds 
• Enhance human-computer interactions (HCI) like voice recognition

Blockchain

In the metaverse, blockchain is essentially the transactional system under which everything will be pinned. It will be the key to owning digital objects in the form of currencies, securities and artwork - these digital objects are known as crypto assets. Items like music, in-game items and plots of virtual land on blockchain can be owned as nonfungible tokens (NFTs). Some NFT’s like the ones from Bored Ape Yacht Club and CryptoPunks can even be transformed into 3D avatars that owners can take with them to different metaverse worlds.

In recent months, NFTs have gained popularity (and completely disrupted the art industry) as a way for fans of any wealth status to support their favourite artists. We expect they’ll continue to make waves powered by smart contracts and the demand for decentralised finance.   

Is the metaverse already mainstream?

The concept of the metaverse dates back to the 90s when the term was coined by sci-fi writer Neal Stephenson in his novel Snow Crash. The story takes readers through a world where people use virtual avatars to escape a dystopian reality. 

But metaverse worlds have existed online for years as well. Gen Z has been pretty chummy with them for a while now, growing up with games like Webkinz and Club Penguin (both involve avatars, collecting items and exploring virtual worlds). Less kiddy virtual worlds have also existed for years. Some of the most popular ones include:

• Second Life came out in 2003 and allows you to do things like buy in-game items (e.g. fashion, home decor, etc.), go to a music club, join a roleplaying community or even go to a virtual cinema. There are endless different worlds to explore, and despite being around for so many years, the game still boasts 1 million active users. 
  

• The Sims games follow a similar dynamic, enabling you to create an avatar, interact with other players, build a community and explore a virtual universe of possibilities. It’s considered one of the best-selling video game series of all time.    
  

And these virtual worlds are just the tip of the iceberg. In fact, many would argue that metaverse experiences are already mainstream, and they might not be wrong, considering the numbers within the gaming landscape (59% of US adults):

• 65% of people have engaged in a media experience through an online gaming platform (e.g. live concerts, movie premieres, shows, etc.).
• 69% of people have taken part in social activities in a digital environment (e.g. meeting, travelling, gaming, etc.). 
• 72% of people have bought, sold, traded or shopped within a metaverse environment.

If the metaverse isn’t new, why is it blowing up now?

To answer this question with some context, let’s first take a quick look at how the internet is evolving:

Web 1.0 

This was the “read-only web” characterised by static websites with basic shopping carts. Web 1.0 basically enabled people to read about products, as catalogues did before that. It was the mostly one-directional “information superhighway” era we lived through roughly from 1990 to 2000. 

Web 2.0

This is where the real action started. Driven by improved connectivity, mobile internet access and a slew of new social networks (e.g. Facebook, Youtube, Twitter), Web 2.0 made it possible for anyone to be a contributor and a publisher. This enabled countless opportunities for people to build booming online businesses around their following (e.g. Glossier, Warby Parker) and revolutionised industries like retail, entertainment, and advertising (just to name a few). 

Web 3.0

This is our latest iteration (or at least the beginning of it). In Web 3.0, technologies like AI and machine learning are enabling computers to process and interpret information like humans. The result? Processes are getting quicker, experiences are getting more life-like, and human-computer interactions (HCI) are more personalised and intuitive than ever. 

Just the right conditions for the metaverse to thrive, but that’s not the whole story. 

As described by Meagan Loyst, founder of Gen Z VCs, there are three key factors behind the metaverse’s recent rise in popularity:

Market timing

We all spent more time on our computers during the 2020 lockdowns, shopping, learning, interacting, working, banking and attending virtual events. It made more people than ever familiar and comfortable with “digital living” - in many ways priming them for metaverse experiences.     

Tech advances

This goes back to Web 3.0 and the wonderful tech advances that make it possible, including AI, XR, blockchain, IoT, and 3D modelling.    

New generations 

We’ve all heard how millennials and Gen Z have radically different consumer behaviours than previous generations. These are the generations that grew up on a steady diet of The Sims, Webkins and Club Penguin - and they’re gaining spending power. Who better to kick start what might eventually become a booming metaverse economy. 

The future of the metaverse

Right now, the metaverse still exists as a series of virtual worlds that aren’t connected (aka walled gardens). This is limiting because it means the things you buy, the avatar you created, and in many cases, the wealth you accrue can’t come with you to other worlds. This will eventually change, making the metaverse “connected”. 

This means that eventually, metaverse worlds will be linked, enabling users to take their avatars, purchased items and digital assets seamlessly from world to world. That’s when things will really get exciting!

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However, as is the case with most game-changing innovations (e.g. the internet, eCommerce), there will be winners and losers. Companies that fail to adapt run the risk of missing out or, worse - becoming obsolete. The time to explore the possibilities is now. 

Stay tuned for our next article, where we’ll be taking a closer look at corporate opportunities within the metaverse! 

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