What is Metaverse and How It Will Affect Businesses?

Spotting Trends and making predictions are always a tricker exercise as you never know how many will go on to making the final list and have real and lasting impact on your business. In my view, predictions are at best reasonable guesses best left at the mercy of data hygiene, robustness of the analytical tools & techniques and the ability of the Individual to extract meaningful insights from the noise. But I also have to admit that we are really getting better at it with some deep work going on in the Artificial Intelligence, Machine Learning, Natural Language Processing, Image recognition, & Deep learning space.

This blog is a humble attempt to Immerse into the world of Metaverse, soak up what it has to offer and analyze the opportunities and threats it poses to business.

What is Metaverse?

"The distinction between the past, present and the future is only a stubbornly persistent Illusion - Albert Einstein

The term metaverse may sound like a sci-fi movie title for the uninitiated but for the majority of digital natives and the early adopters, it is very much a reality perhaps a closer reality.

To make sense of what a metaverse is and how it works, we need to draw some inspiration from the multiverse theory rooted in space science. The multiverse theory at its simplest level postulates that "we are not alone" ( pardon me for oversimplifying this theory in one single line). In other words, our universe may not be the only one and there could be hundreds or perhaps millions of universe that might exist, possibly distinct or similar to each other, each having its own set of physical or temporal laws governing its existence.

Similarly metaverse can be thought of as an evolving parallel universe (a virtual one though), where humans in their digital avatars, interact with other avatars or elements of the virtual universe. Think of it as a 3D virtual world accessed through VR or Virtual Reality headsets and Augmented reality that superimposes digital images on your mobile device. Much of the definitions of metaverse we see today are nothing more than the seamless integration of physical and virtual world connected via devices.

What metaverse does at its very basic level is that; it takes our digital Interactions or experiences one step further and make it truly Immersive. Literally it is like transporting or beaming ourselves into a whole new world where we can engage with avatars or elements that exist in that virtual world. Rather than simply interacting with touchscreens or keyboards, in metaverse, you truly immerse yourself in a virtual environment interacting with various elements in the cyberspace. In some ways, metaverse promises to liberate us from the confines of physical or the real world and immerse ourselves into the grand virtual world (the La-La land ) where we socialize, have fun, work, transact and play.

The world of metaverse - How it looks like?

Sample this. Think of a virtual music concert where the artists performs within a platform ( say Roblox, a virtual gaming platform) and the participants attend the event from the comfort of their home or any location, taking new avatars, buying virtual tickets, shopping or purchasing digital assets like artwork (Non-Fungible Tokens), and immersing themselves in the musical Cybervaganza ( I just made it up), that is a glimpse of what metaverse can offer for you.

Let's go back to 2020 for a while. Lil Nas X amazed the world with a virtual concert experience which was performed completely within the Roblox platform which garnered over 30 million visits to this grand spectacle.

Not only that, the show also featured the release of Lil Nas X-themed avatar Items and emotes. Check this catalog that offers Lil Nas X-themed avatar items and emotes. On the 19th of November 2021, Justin Bieber, a popular Canadian singer held a 30 minute meta-universe concert on the virtual music platform Wave

It might look a bit primitive and many are still testing the waters but remember, these are still early days and given the rapid advancements in technologies, it can only go up from here.

I cherry picked few charts that explains the state of consumer behavior towards Metaverse hoping to leave the audience with some clues that might be useful in predicting the trajectory of Metaverse.

While the above data looks encouraging, I still think metaverse has a long way to go before it achieves the critical mass that other platforms like Facebook, Instagram or TikTok have achieved. Currently the early adopters are driving the wave. The metaverse eco-system is still in its early days and going forward, we could see lot of changes and developments across the entire eco-system each fueling the growth of the other and vice-versa.

What is metaverse eco-system made of?

The below Infographics broadly captures the metaverse eco-system which primarily comprises of hardware devices, software, cryptos, blockchains and its underlying technologies, NFTs, social networking, IT infrastructure and support, centralized or decentralized gateways, advertising technologies for the virtual world, privacy and security, analytics, applications and Interfaces, communications networks & technologies etc.

As opposed to popular belief that metaverse is all about gaming or concerts, I reckon it has the potential to impact or rather disrupt many Industries though the time scale may vary.

Is metaverse all but only hype?

Probably not. Metaverse is real and here to stay for a long time. Take a closer look at these data and you will get a sense of where metaverse is today and where it will be heading. According to a McKinsey report titled " Value creation in the metaverse", it is predicted that metaverse has the potential to generate up to $5 trillion in value by 2030. Here is the preview of some data curated from the McKinsey report.

What factors are contributing or driving the growth of Metaverse?

There are some critical factors driving the growth and transformation of metaverse as we know today.

a) 5G - The roll out of 5G or the 5th generation of cellular networks promises faster connectivity speeds (up to 100 times faster than 4G), lower latency and greater bandwidth that dramatically enhances Individual experience and significantly improves the efficiency of Industries. (Think of IoT, Increased predictive capabilities, automation, digital replicas or twins, remote access etc.)

b) Hardware - According to a data from the IDC or International Data Corporation, the worldwide market for augmented reality and virtual reality headsets grew 92.1% YoY in 2021. Meta (Oculus) leads the market throughout 2021 followed by DPVR and Pico.

Although these devices are not mainstream currently, the demand will rise once it crosses the chasm.

c) Digital Economy - The rise of crypto currencies, block chain technologies and NFTs would further propel the growth of metaverse

d) Edge Computing, AI, Web3. technologies 3D Modelling and Opensource will facilitate the growth of metaverse, drive interoperability, enhance accessibility and Improve the safety of the users.

How metaverse impacts business?

Metaverse provide massive opportunities for businesses in the areas of remote working, team meetings, project collaborations, branding, marketing, business transactions, learning and development, events and conferences etc. The impact of metaverse on the business will largely depend on the business objectives, potential applications or use cases of metaverse in a given Industry, capabilities of the company, level of trust, and the perceived risks and business returns.

As one can see from the below chart, the impact potential is not the same across Industries. Retail, E-commerce, Banking, Telecommunications, Media, Professional services, Discrete and Process manufacturing has high impact potential by 2030 followed by Gaming, Education, Transportation, Live entertainment and Ads having medium Impact potential.

Metaverse in action. How companies are experimenting or using metaverse?

Here are some examples or use cases of how companies are using or experimenting with metaverse.

Fashion

Ralph Lauren Corporation, a global leader in the design, marketing and distribution of premium lifestyle products made its debut in Roblox by launching its first digital fashion line in Roblox Corp.’s virtual world, becoming the latest apparel maker to try building brand awareness in the metaverse. The company, known best for its polo shirts, offered a “Winter Escape” experience in the Roblox online universe where players can enjoy activities such as ice skating while shopping for retro sportswear from the designer’s 1990s collection. The items are expected to cost 125 to 300 Robux, or about $1.25 to $3.

Beverage

Globally renowned beverage maker Coco-Cola launched a limited edition Coca-Cola Zero Sugar Byte, a soft drink Inspired by gaming. In order to promote the game, Coco-Cola has created Pixel Point, an Island created in Fortnite where players upon entry, discover Coca-Cola Zero Byte in the metaverse and Interact with fellow gamers through a series of games each with its unique challenge that can be solved by working in tandem with fellow players to progress up the tower.

The brand also launched its first ever NFT collectibles that was up for auction on the International Friendship Day, July 30th 2021.

Communications Agency

Havas group, one of the world's largest communications agency now owns a plot of land in the sandbox video game where it plans to organize conferences, events, concerts, client presentations, product launches and more. The new virtual Village will also include a recruitment service to enrich the employee and the onboarding process.

Customer Service

Helpshift, the established leader in in-app customer service and user support for mobile-first brands, announced the launch of Metashift, its patented user support and customer service solution for the Metaverse. With the help of Metashift, brands can provide immersive support within AR, VR and mobile experiences, with advanced features unique to the needs of the Metaverse.

Automotive - Virtual Factory Planning

The BMW Group and NVIDIA are generating a completely new approach to planning highly complex manufacturing systems – with the Omniverse platform. The virtual factory planning tool integrates a range of planning data and applications and allows real-time collaboration with unrestricted compatibility. People and robots work together, engineers from all aspects of factory design collaborate in a shared virtual space, and the entire factory is simulated with photorealistic detail.

Education

The virtual campus of the Rady School of Management at the University of California, San Diego (UCSD) allows students to participate in real-time virtual lectures and meet in breakout spaces and outdoor areas.

The Conclusion

It might be true that not all Industries, Individuals or society would embrace metaverse in its entirety the way others do. The rate of adoption and usage may vary. The changes might not happen overnight. For some generation, the idea of metaverse and what it offers may sound too vague, ridiculous and unfathomable. Besides one cannot overlook or Ignore the possible threats it entails be it cyber bullying, harassments, sexual abuse, Identity theft, addiction issues etc. We need strong policies, legal and regulatory frameworks to support and protect Individuals, groups and businesses from the inherent risks metaverse poses. Some of the risks or threats might not be even conceivable today but we should be prepared to deal with them on the go as we learn and understand more about them.

Currently the visionaries, developers and early adopters are driving the change. The interest holders are driving the agenda and the narrative. If metaverse has to attain scale or reach critical mass ( early majority & late majority), it has to solve the problem of

Affordability - All the hardware devices and accessories that powers the experience should be affordable to the mass. Look at mobile devices. What has contributed to the growth of mobile device is the network effect. The value of the product or service increases exponentially as more and more people start using it. In the context of mobile, think of value in terms of games, entertainment, shopping, communication, social networking, financial transactions, education, travel etc. From a basic communication device, the mobile now has evolved or metamorphosized into something far bigger and useful than one can possibly Imagine. As more and more people start using it, the more value it creates and the more value it creates, it attracts even more users, creators, developers and newer players into the eco-system. It is like each feeding into the growth of other thereby causing the network effect.

Accessibility - Metaverse should be easily accessible to all meaning it should promote inclusivity and allow interopability between two or more metaverses. How far this is achievable is beyond anybody's guess as it is easier said than done.

Adaptability - To attain scale across geographies, the visionaries, developers and other stakeholders in the eco-system should think local and act global. Geographical, technological, economical, political and socio-cultural factors should be taken into consideration while designing or developing metaverse. Think of something like a metaverse lite version in geographies or markets where Internet bandwidth is low to moderate ( though 5G will alter this equation), vernacular content, content appealing to cultural sensibilities and diverse audiences. Compatibility of hardware devices is another key aspect that should be factored.

With what we have seen and what lies above and beyond, metaverse definitely has the potential to transform business and our personal lives too along the way. Way before the invention of mobile phone, no one would have even imagined the immense possibilities and changes a simple hand-held device would bring into our personal and professional lives. Same goes with the Internet. We are witness to the changes these inventions has brought in our lives.

Similarly, metaverse might be a game changer that has the capability to alter the future of all our Interactions and experiences in the digital world. At this point of time, we cannot fully comprehend or conceive what it may potentially become, the opportunities and challenges it may bring, but one thing is for sure. it is going to be one hell or heaven of a ride.