The Metaverse: what can we expect
There’s a lot of talk about the Metaverse but what can we really expect? Some are hopeful seeing new social and commercial possibilities, others think it is scary and some think it’s just a hype. Those who are more sceptic refer to earlier metaverse-like projects like Second Life that boomed in the late 2000s but now lead a quiet life. The metaverse is sometimes described as The Internet of the Future – but what future?
Reid Hoffman, founder of LinkedIn and a venture capitalist, recently said in a Yahoo! Finance podcast, “I don’t see the signs yet that tell me that the metaverse is going to happen.
The metaverse-like Second Life peaked in the late 2000s when commerce and governments were spending time and money on it. Swedish foreign minister was very trendy and opened a Swedish embassy in Second Line with an avatar ambassador.
Second Life’s creators, Linden Lab, stresses that Second Life is not a game, unlike other metaverse-like experiences such as Fortnite and Roblox. In Second Life users create a digital avatar to represent them and to explore the world, meet other users, create their own digital content. Buy and sell goods and services. All of it a bit like what many say they expect the Metaverse to be.
Trying to figure our what the expect, consultancy McKinsey made a survey about what people think will happen and Copenhagen Institute for Futures Studies in a white paper offers four future Metaverse alternatives from a free Metaverse (perhaps mainly for nerds) to one more autocratic Metaverse dominated by for instance one big tech company.
DEFINITION
Marketing and Research firm Gartner asked business leaders what they think and found that they are rather sceptic.
McKinsey asked over 1,000 consumers aged 13 to 70 and talked to advocates and early adopters of the metaverse to understand current sentiment about the Metaverse.
“What we found surprised us. A majority of consumers know and engage with some form of the metaverse, and many expect it to become a significant part of their lives.”
McKinsey’s conclusion is that consumers are unable to give a precise definition of what the Metaverse is but they are familiar enough with it to be able to describe it. 55% said they had heard of at least one existing metaverse platform, such as Roblox, Fortnite, or Decentraland. Nearly 30% said they had used or played at least one metaverse game.
47% of early adopters who had used Metaverse platforms described the metaverse using terms such as “immersive,” “interactive,” or a “scaled network.” One of the most articulate descriptions came from a teenager who described the metaverse as “a scaled and interoperable network of real-time, 3-D virtual worlds”, McKinsey reports.
DATING
20% told McKinsey they will spend more time online exercising, working, reading, and shopping in the future. “Furthermore, people’s interest in immersive digital activities and experiences is growing. In fact, roughly 10% of the population (in the study) has already tried augmented reality (AR) or metaverse dating, and a majority enjoyed it more than the real-life alternative.”
“Moreover, consumers told us that they expect the metaverse to be a significant part of their everyday lives, spending four hours a day in the Metaverse within the next five years. Generation Z and millennials expect to spend close to five hours per day, but older generations also expect to spend several hours in the metaverse each day. This expected shift is driven by a desire for greater convenience, connectivity, and entertainment. Along with recent fanfare and strong medium-term interest from consumers, we believe that the Metaverse is the future, not a fad”, the McKinsey report says.
“While gaming remains one of the leading experiences, consumers are increasingly looking for entertainment and shopping in the virtual world. One in five Metaverse users has attended virtual live events such as concerts and film festivals.”
40% said they were interested in playing social games with others in virtual reality (VR) or AR—this ranked ninth on a list of future activities. More popular interests include immersive shopping, booking, learning, traveling, and socializing. McKinsey’s analysis also shows that approximately one in four consumers will be Metaverse “superusers” who leverage virtual worlds for a variety of purposes.
LUXURY
Generation Z is enthusiastic about the metaverse; one example is that two-thirds of Roblox’s 50 million daily users are under the age of 16, McKinsey stressed. “Luxury and mainstream brands like Gucci and Vans are ramping up their Metaverse strategy with a focus on attracting younger consumers. Both brands are experimenting on multiple platforms to determine where and how to recruit lifetime customers.”
When it comes to being online, 46% of McKinsey’s Gen Z survey respondents and 55% of millennials see their virtual identity as an extension of themselves in the physical world. About half of both groups believe friendships formed online can be as strong as friendships formed in real life. 41% of Gen Z and 37% of millennials believe it is easier to be themselves online than in real life.
McKinsey’s research shows that commercial value is already scattered across different digital products and services for companies to capture. “Consumers, on average, spend USD 219 annually on digital assets, of which more than 30% is on metaverse-related assets such as in-game purchases, virtual enhancements and real estate, and nonfungible tokens (NFTs). Consumers expect their spend on metaverse-related digital assets to increase in the next five years, with 11% looking to spend more on in-game purchases.
SPENDING
“We also expect spending habits in the Metaverse to shift over time, as Gen Z gets older and gains more earning power. Currently, millennials are the highest spenders on metaverse-related digital assets, with USD 151 on average spent in the past year. Gen Z respondents’ spending shows a split: overall, they spend USD 47 per year, but older, employed Gen Z consumers spend USD 107 on average on metaverse-related assets.”
At Decentraland’s Metaverse Fashion Week in March, many people complained of glitches, crashes, and clunky graphics. “Close to one-third of metaverse users see technology as severely limiting their dream experience”, according to the McKinsey study.
“Our analysis of existing platforms indicates that there is a high correlation between users expecting a realistic experience and frequency of use. That pushes companies to build more immersive experiences. Finally, consumer expectations regarding data will challenge companies to develop creative solutions. 62% of consumers expect full control over their data, but nearly half will give that up for a personalized internet experience and device interconnectivity (for example, PC, mobile, console).”
“Our research shows that consumers are excited about brands entering the metaverse. Two-thirds of respondents indicate they would be excited to engage in a digital experience with their favourite brands. Over half of people who attend virtual lifestyle and luxury events report a positive shift in brand perception”, writes the McKinsey consultants Cara Aiello, Boston; Jiamei Bai, Vancouver; Yurii Vilchynskyi, Vancover; and Jennifer Schmidt, Minneapolis.
Copenhagen Institute of Futures Studies stresses that there are many uncertainties related to the development and shape of the Metaverse: What technologies will be included? Who will implement it? How will it be accessed? Will it be centralised or decentralised?
The institute presents four alternatives for what the Metaverse can be. The scenarios are created by Klaus Æ. Mogensen, Sofie Hvitved, Philipp Heideker, Simon Fuglsang Østergaard, Lasse Jonasson and Bugge Holm Hansen
THE FREE METAVERSE
In this scenario, groups of interested people – some voluntary, some commercial – come together to create a Metaverse that they see as the replacement of the World Wide Web (or ‘Web2’), a new decentralized, interoperable go-to interface to the internet; one that blends the physical world with a shared virtual universe using various XR technologies.
This scenario incorporates blockchain technologies that enable decentralised proof of ownership of both digital and physical assets.
“In this scenario, we see a new range of business models where decentralised autonomous organisations (DAOs) own many of the big brands, and where new ‘Web3-native brands’ have grown to become the biggest and most powerful in the world. “
The institute says this ’the Free Metaverse’ is built around non-proprietary open protocols for how virtual 3D objects, spaces, and digital assets are represented and interacted with, making it easy to use the same digital assets across multiple instances, much like a JPEG image can be imported into all sorts of content.
“When users create avatars, they automatically gain the rights to the looks and close variations thereof, with an NFT proving ownership across the Free Metaverse.”
“Because of the decentralised nature of the Metaverse, there are few rules beyond those hardwired into the protocols, but many metaspaces have codes of conduct – such as no virtual nudity and abuse of other users – and have integrated “personal boundaries” tools such as setting limitations of personal interactions.”
THE NERDVERSE
“Much like in Scenario A, groups of interested people are working on creating the Metaverse as a successor to the World Wide Web, but sustained interest turns out to be limited once the initial curiosity has passed”, the institute says.
“Much like earlier ‘betaverses’ like Second Life, the Metaverse does not offer anything that most users feel they really need, the technologies around the Metaverse haven’t really proven their worth, and the big ‘legacy’ brands who invested heavily in entering the Metaverse didn’t manage to integrate the new Web3 logics into their solutions, hence failing to understand the new consumer needs of co-creation and co-ownership.”
The white paper says the Metaverse in this scenario is a world where the ideology of Web3 failed because of politics and power struggles of the new virtual economy.
“The Metaverse only brings few improvements to the existing World Wide Web with the addition of some blockchain technologies and limited options for using VR and AR (like how the option of using smartphone touchscreen interfaces was introduced in the 2010s), and people, in general, are satisfied with what they have.
BETAVERSES DISUNITED
“In a rush to cash in on the (somewhat nebulous) hype of the Metaverse, a dozen major Big Tech companies each come forward with their own product they say is the Metaverse. Superpowers like China and Russia make their own public, censored versions. About all they have in common is the use of virtual 3D metaspaces that can be accessed by XR technology as well as by more conventional interfaces.”
None aim to replace the World Wide Web as a general internet interface but are basically virtual social spaces where you can represent yourself with an avatar, interact with others in public or private metaspaces, and buy all sorts of things from virtual marketplaces – with the company behind the individual ‘metaverse’ taking their cut.”
The institute says these ’Metaverses’ are better-termed Betaverses, since their lack of interoperability and limited options prevent them from becoming a ‘true’ Metaverse: the seamless convergence of our physical and digital lives, creating an interoperable virtual space.
“Users in one proprietary Betaverse find it impossible to interact with users in another Betaverse, much like today, where Messenger, Telegram, WeChat, and Signal can’t send messages to each other.”
ONE METAVERSE TO RULE THEM ALL
“As in Scenario C, many Big Tech companies rush to build their own versions of the Metaverse. However, one of them quickly becomes far more popular than the others, either because of better functionality, better conditions for the creators, having the best advertisement campaign on the right channels, or simply being a successful first mover.”
“This popularity becomes self-reinforcing as the greater income deriving from the greater popularity allows continual improvement and expansion of the functionality and aesthetic experience of their Metaverse to a degree that the competitors can’t follow – and, of course, users want to go where other users are. After all, it isn’t much fun bowling alone.”
“As functionalities are added to this Metaverse, it grows to become a unified Metaverse where people can work, play, learn, relax, socialise, communicate, interact, transact, and own digital assets. That this version of the Metaverse is proprietary doesn’t bother most users, who are used to everything being proprietary.”
“The open-source community has fallen on hard times because authorities demand governance and certification that the decentralised open-source organisations find it difficult to live up to, such as checking all content against copyright and trademark violations and policing forums against hate speech and fake news. Most successful open-source systems have been de-facto acquired by commercial interests that can afford to handle the complex and extensive regulations. “
NO PRIORITY
To these attempts to predict what the metaverse really will be, can be add the skepticism expressed by CEO’s in a study by marketing and research firm Gartner. Artificial intelligence is the most impactful technology for CEOs but a majority don’t see the Metaverse as a priority. 63% of CEOs and senior executives say the metaverse is not applicable or very unlikely to be a key technology for their business.
The Gartner survey comprises more than 400 CEOs and other senior business executives in North America, EMEA and APAC across different industries and company sizes.
Consultancy PwC in a forecast stresses the Metaverse’s importance for entertainment and media. The company predicts that in the not-too-distant future the Metaverse could become a stunningly realistic world where individuals access immersive virtual experiences, through a VR headset or other connecting device.
“Because the Metaverse is an evolution that may profoundly change how businesses and consumers interact with products, services and each other, its potential financial and economic value goes far beyond VR. In time, much of the revenues associated with video games, music performances, advertising and even e-commerce could migrate into the metaverse”, PwC said.
McKinsey says that while estimates of the potential economic value of the metaverse vary widely, its bottom-up view of consumer and enterprise use cases suggests it may generate up to USD 5 trillion in impact by 2030.
”The potential impact of the metaverse varies by industry, although we believe it holds implications for all. For instance, we estimate it may have a market impact of between USD 2 trillion and USD 2.6 trillion on e-commerce by 2030, depending on whether a base or upside case is realized. Similarly, we estimate it to have an impact of USD 180 billion to USD 270 billion on the academic virtual learning market, a USD 144 billion to USD 206 billion impact on the advertising market, and a USD 108 billion to USD 125 billion impact on the gaming market.”
And Mark Zuckerberg’s Meta (born Facebook and now named after the Metaverse) has rolled out the Meta Avatars Store to offer more ways to customize the avatar that will be you in the Metaverse. It offers digital outfits to purchase from Balenciaga, Prada and Thom Browne, along with existing free outfit options.
GUESSING
“Commerce helps drive culture throughout the world, and the metaverse is no different. So we’re excited that creators and brands are experimenting with digital clothing and shopping via this new canvas”, Meta said in a blog post.
This means that right now, the Metaverse is more expectations than knowledge about what it will be and how it will be used. Canadian philosopher and communication theorist Marshall McLuhan has contributed many thoughts about technology, communication and media.
Controversially he stated that “The medium is the message”. The importance of media is not what message they have but how the medium itself affects humans and the society.
Would he have said the same about the Metaverse? McLuhan died 1980.
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