Funnel Vision #26
Metaverse: A 5 Trillion Dollar Opportunity
Metaverse is in the headlines every day. Companies and VCs are pouring tons of money into building virtual worlds. Facebook changed its name to Meta to emphasize its focus on building a Metaverse for its customers. But what is metaverse?
Is it something like Steven Spielberg’s “Ready Player One” movie, where users escape into a virtual world (OASIS)? Are we going to move away from reality into the virtual? What exactly can be included as part of metaverse?
Metaverse includes any digital experience on the internet that is persistent, immersive, three-dimensional (3D), and virtual, as in, not happening in the physical world. Metaverse experiences offer us the opportunity to play, work, connect or buy (and just to make things extra fun, the things we buy can be real or virtual).
The definition of the Metaverse is continually evolving with new use cases and technologies being launched. Metaverse can be roughly defined as a new version of the internet that seamlessly combines our digital and physical lives. Majorly it has three features, a sense of immersion, real-time interaction, and user agency. It is being envisioned as a place that can be accessed from multiple platforms and devices. It should allow concurrent interactions of thousands of people for use cases spanning various activities.
Covid-19 has changed how consumers use many of the services. They are comfortable with adopting digital methods of doing things. Video conferencing, gaming, and remote collaboration technologies have experienced huge growth in recent years. Businesses are trying to leverage and build their capabilities for the next stage of innovation, which the Metaverse is seen as providing.
This has led to investments by businesses and venture capital firms. In 2022 alone, $120 Billion is invested in Metaverse, and it is expected to grow multifold in the next five years. We can also see this in the digital real estate boom happening where companies and individuals are flocking to buy digital space that they plan to develop and use for events, advertising, etc.
The current Metaverse, which is called a proto version, is built by gaming and social media companies. Different technologies such as AR/VR, Artificial Intelligence, Blockchain, etc. come together to provide a virtual experience. Customers buy virtual goods in games such as Fortnite and Roblox, NFTs are the new buzz in the asset markets, and personalization AI is used to identify customer preferences to customize their experience. Virtual meeting and collaboration spaces are also increasing their reach as companies are starting to shift their events into digital spaces where digital avatars can interact with each other and be part of a shared experience.
Along with the technical aspects, it is very essential for businesses to figure out how to derive business value from their investments. Below are some of the ways in which businesses can use metaverse to create value.
E-commerce: Convenience and User experience are being continuously enhanced with the help of digital technologies. Companies are trying to provide a wholesome and interactive experience where customers can see their products and try them out virtually.
Gucci launched its Gucci Garden on Roblox, a set of brand-themed rooms that aligned with the launch of a similar physical space
AnamXR uses game-engine technology to create cloud-based, virtual e-commerce platforms for 3-D immersive shopping experiences
Marketing: Consumers spend a lot of time playing games and interacting virtually. Brands are increasingly trying to reach where customers are so that they can communicate and market their products
Coca-Cola launched digital assets to support several marketing campaigns, such as auctioning NFT collectibles for International Friendship Day
Adidas’ Bored Ape Yacht Club NFT release provided access to physical streetwear drops, driving loyalty and creating a community around its virtual goods
Socializing: Consumers want to interact with their close ones in an engaging fashion using their own avatars across platforms
Meta is building its own metaverse called Meta Horizons, where users can be part of virtual worlds, organize or participate in events, or work in virtual offices
Remote Collaboration: Users will incrementally move from 2-D screens to 3-D spaces as metaverse can enable virtual spaces for collaboration
The Havas Group launched a village within The Sandbox that hosts recruitment services for an improved candidate and onboarding experiences
Learning: Education is becoming more and more accessible thanks to technologies. The next step is to make these lessons virtual, which would enhance the understanding of students
The University of California at San Diego’s Rady School of Management uses a virtual campus for real-time lectures, breakout spaces, and outdoor areas
Accenture an IT Consulting firm, has used their virtual meeting platform “Nth Floor” to onboard remote employees and provide a platform to enable their interaction
Gaming: With Metaverse, games are becoming more immersive and engaging. This has resulted in an increase in play potential and creates monetization opportunities
Roblox lets anyone create and even monetize their own game worlds, which all exist within an interconnected metaverse and share aspects like avatars and currency.
Fortnite is a shooting game where users play, interact with their friends, and buy virtual goods which alter their appearance. Brands also provide custom-made goods
Digital Assets: These are anything that exists only in digital form and comes with a distinct usage right. Creators are trying to monetize their work using these methods
NFT (Non-fungible Token) is a financial security consisting of digital data stored in a blockchain. Nyan cat NFT was sold for $587,000 in February, 2021
Digital twins: Physical objects are virtualized and represented in digital form. Which are then used for product design, simulations, or diagnosing any issue with the physical object
BMW is experimenting with creating digital twins of entire factories and designing products using Nvidia’s Omniverse technology
How to capture value from Metaverse?
There are multiple ways in which companies can participate in the metaverse, starting from world builders, who own and manage a digital world, or offer products and services for metaverse users or use existing platforms to provide a better experience to internal and external stakeholders.
Businesses should first determine their goals and what they want to achieve from the Metaverse. Brainstorm on potential use cases and prioritize them. Launch these use cases and monitor them so that you can learn from them, build capabilities and identify successful use cases with long-term potential. Scale these use cases and try to embed them into your business strategy and operating model while clearly identifying who will drive the initiatives in your organization.
There is no avoiding the fact that if you want to both understand consumers and opportunities that may be available to your organization, you need to be familiar with the metaverse. Make an effort to explore Roblox, Fortnite, Minecraft, or a similar gaming experience. Explore The Sandbox or Decentraland—and connect a MetaMask wallet. Join a Discord server or spend time on a Twitch channel. Check out the NFT marketplace. Strap on a VR headset and try a new experience. Have a virtual meeting or event on a platform such as Gather Town. You will be better armed for making informed decisions.
Even though metaverse has a lot of value. Companies should also be cautious to not spend on unnecessary or random activities or use cases. Having a clear strategy and long-term vision on metaverse helps companies avoid some of these pitfalls.
By 2030, it is entirely plausible that more than 50 percent of live events could be held in the metaverse. More than 80 percent of commerce could be impacted by something consumers do there, from discovering brands to visiting a virtual store. Any new technology is like a knife that in the hands of a surgeon, can save lives, and in the hands of a murderer, takes life. Similarly, Metaverse should be used to provide access to things like education, healthcare, etc., reducing inequality and help in enabling greater social cohesion. It shouldn’t replace real-world interactions and interpersonal relations but should complement them. Metaverse is increasingly becoming popular among customers, and not participating in can result in a significant competitive disadvantage.