The Metaverse beckons: Is it time to explore?
The Metaverse is the new industrial frontier. Futurists, entrepreneurs, and professionals have defined it in multiple ways, but its meaning continues to mystify the public. Organizations that decide to embrace it are more likely to discover a turning point, similar to the growth of the internet spurring globalization, or the rise of the smartphone that made on-the-go services available. As technologies cause a cultural shift that influence ways of living, they open a plethora of opportunities which businesses may consider for early adoption for their long-term strategy.
DEFINING THE METAVERSE
The word “Meta” in Metaverse is derived from Greek that means “transcending.” Paired with the word “universe,” it implies an area that is beyond the physical. The Metaverse can be defined as a virtual world where a real person can extend themselves and their lives onto digital identities. They can earn, purchase, socialize, learn, and enjoy in this digital space, and the results from these activities can connect and apply to the real world. This is much more immersive than the current ecosystem of social media, online shopping, or gaming communities, because the Metaverse involves key characteristics enabled by key technologies.
When derived from various forums, the key characteristics of the Metaverse include (1) Persistence: where your central digital identity is maintained even as you enter and leave the Metaverse; (2) Ownership: where everything you earn or purchase in the world is certified and attributed to be truly yours; (3) Interoperability: where you can carry what you own and use it in other virtual places, and (4) Decentralization: where there is no central organization that dictates the rules of the space, and is instead defined by the users themselves.
It is these characteristics that make it an overarching realm, as opposed to current platforms or small metaverses (with a lowercase “m”). These metaverses are managed centrally by the company that created them, and users typically are not able to consume or port digital assets across these.
On the other hand, notable technologies that realize the characteristics of the overarching Metaverse are 5G, blockchain, and virtual or augmented reality (VR/AR). Widely rolling out 5G infrastructure provides faster speeds for data consumption of up to potentially 10 GB per second, which is essential for a smooth experience in the virtual world. Blockchain is foundational in what creates the true ownership of certified digital assets or currencies, building a de-centralized autonomous environment enabled by the smart contracting that connects them. Moreover, VR and AR technology, which allows the creation of 3D environments supported by wearables, can make the experience more immersive. There are other layers of technologies involved, such as decentralized applications, but implementing the necessary infrastructure fast tracks the vision.
TAPPING INTO DIGITALLY NATIVE CONSUMERS
Understanding what the Metaverse is helps enable organizations to determine how they can generate new revenue streams or create new business models while positioning themselves early for success in this evolving technology — which can grow exponentially in the future. Leaders must realize that doing so taps into a promising audience: the digital natives. These are the people who grew up in the information age, and who spend a significant amount of their time using laptops, smartphones, and Internet of Things (IoT). Digital natives often prefer to interact online first rather than through traditional face-to-face transactions.
In 2019, CNN Philippines said in an online story that the people of the Philippines are some of the heaviest users of the internet, averaging about 10 hours a day. General information from the Philippine Statistics Authority (PSA) indicates that digital natives likely comprise a third or above of the population. These numbers alone provide ample opportunity for new revenue.
RECOGNIZING THE POTENTIAL OF NFTs
To cite potential application to business, it is also important to understand the concept of non-fungible tokens or NFTs in the Metaverse. NFTs are digital assets that are unique and authenticated through blockchain. This can be anything from digital art, gaming items, or video clips that are owned by people through their digital personas. Their financial value is created through supply and demand within the digital world. Its appeal can be tied to the human psychology that seeks ownership of things, which is why authenticating through blockchain is important to make it “real” and exclusively “mine.” Aside from the advent of cryptocurrency, NFTs have opened possibilities of other forms of virtual ownership, and it drives demand.
In effect, real world brands can use NFTs in various ways, whether for creating brand awareness as people transact through their digital identities to own these NFTs or use the actual ownership itself to unlock a privilege, such as exclusive access or discount to a physical store or location. The applications are almost endless. The experience can be gamified, where online gamers not only play for entertainment, but have their actual efforts translate to acquiring NFTs that have value for trading purposes or even for benefits in the physical world.
According to Navigating the Metaverse, A Guide to Limitless Possibilities in a Web 3.0 World, by Cathy Hackl, Dirk Lueth, and Tommaso Di Bartolo, there are also potential recurring revenue streams from a secondary market for royalties for branded NFTs. This means that aside from earning from the primary purchase, royalties can still be applied as NFTs get traded down the line so that businesses can continue to receive earnings from subsequent trading.
Aside from products with NFTs, services for the Metaverse can also be provided by businesses, according to the EY white paper on the “Metaverse” by Bikram Dasgupta and Aarathi Panikkar. These can range from curating and developing virtual environments, pursuing business integration, running advertising campaigns, implementing smart contracting, and so on. There is a whole ecosystem that needs to support running and maintaining the world itself, which is also an area that can be engaged in for revenue.
THE METAVERSE AS AN INEVITABLE CULTURAL SHIFT
Back in October 2021, the most popular social media platform renamed itself to “Meta.” This clearly demonstrates the explicit commitment of the organization to support the direction of the online environment. Moreover, one of the largest software companies has been acquiring well-known gaming companies, also alluding to how these platforms with their own communities and exchanges will play into the future of the Metaverse. The big players are preparing as early as now to help curate the future experience the Metaverse will be able to offer.
Given the current interest and increasing entry into the Metaverse globally, business leaders should recognize and understand the phenomenon — even if it sounds far-fetched or unreal — and consciously consider this in their periphery or as a direct future strategy for their organization. The Metaverse is looking to inevitably shift the culture, driven by technology, and should be given the requisite attention so that companies are prepared if it becomes a truly global-level disruption.
Similar to how digitization accelerated due to the obvious market of digital natives and even more so with the pandemic requiring seamless virtual work, consumerism, and lifestyles, the time to explore the potential of the Metaverse is now.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Lee Carlo B. Abadia is a technology consulting principal of SGV & Co.