Metaverses, in concept, date back to science fiction, such as the 1992 novel “Snow Crash”, wherein the sci-fi writer Neal Stephenson coined the term to describe a three-dimensional virtual space where humans interact with each other as programmable avatars.
However, when Facebook rebranded itself as Meta on October 28, 2021, metaverses started gaining traction and seeming more real. Facebook CEO Mark Zuckerberg explained that the new brand name “represents the company’s move further into the metaverse”. Companies started reshuffling their sales decks to show they were in it and individuals began making investments toward a promised virtual future.
Let’s take a few steps back to understand what metaverses are before we look at the business opportunities they offer, their current state and the early and potential here for startups.
What is a Metaverse?
Experientially, a metaverse is a three-dimensional digital ecosystem where we interact with each other, work, study, play, make financial transactions and more.
Financially and from an opportunity standpoint, the metaverse is the next big technology trend and an $800 billion market opportunity by 2024.
From an economic aspect, a metaverse is a digital economy where users can create, buy and sell goods interoperably. Just like we shop for a scarf in a shopping store and later wear it at our home, a metaverse will allow interoperability between platforms.
Socially, a metaverse creates an immersive virtual experience where people build communities based on shared values and interests and express themselves more authentically.
And technologically, a metaverse combines virtual reality, augmented reality, cryptocurrencies, artificial intelligence, the Internet of Things and blockchain technologies that support various functions avatars (users’ digital identities) can carry out in a metaverse.
However, a metaverse doesn’t require AR or VR equipment to access all parts of it. For instance, those acquainted with Fortnite by Epic Games will know that some aspects of the game can be accessed through game consoles, PCs and mobile phones.
So, is Fortnite the metaverse? Not really. Saying that Fortnite is the metaverse is analogous to saying that Google is the Internet. Spending most of the time surfing Google doesn’t mean there isn’t more to the Internet.
Parts of the future metaverse are being built by Fortnite and other players- Meta (previously Facebook), Roblox, Nvidia, Unity and Snap.
What’s the Status Quo of Metaverses?
Here’s a list of the significant players in the metaverse and what they’re up to now.
Facebook, now Meta, has made significant investments in the metaverse, which started with the company acquiring Oculus VR Inc. for $2 billion in 2014. The rebranding speaks to the CEO’s vision of a virtual world where digital avatars connect over travel, work or entertainment using VR headsets.
Mark Zuckerberg remains bullish on the metaverse, believing it has the potential to change the Internet as we know it today to an “immersive and embodied internet where you’re in the experience, not just looking at it”. In the latest news, Zuckerberg invited companies to collaborate with Meta in building the metaverse together at Mobile World Congress 2022 in Barcelona, Spain.
Microsoft recently announced its planned $68.7 billion acquisition of Activision Blizzard, which directly gives Microsoft access to 390 million monthly users and gaming franchises such as Call of Duty and Warcraft.
According to Microsoft’s Chair and Chief Executive Satya Nadella, gaming “will play a key role in the development of metaverse platforms”. Microsoft also has plans to bring mixed reality with holograms and virtual avatars to Microsoft Teams in 2022. The tech giant already uses holograms and XR applications with its Microsoft Mesh platform.
The creator company of Fortnite is heavily invested in building the metaverse. Fortnite has held virtual concerts by the likes of Travis Scott and Ariana Grande, screened movie trailers and music debuts, and an “immersive” re-imagining of the historic “I have a dream” speech by Martin LutherKing Jr.
In November 2021, Epic Games acquired Harmonix, the development company known best for Rock Band, to collaborate closely with Epic to create musical journeys and gameplay for Fortnite. According to CEO Tim Sweeney, “We need great creative talent who know how to build powerful games, content and experiences” for the metaverse.
Roblox was founded in 2004 and now houses various user-generated games, including Bloxburg and Brookhaven, where digital avatars can work, build a home and play scenarios. Roblox was worth $38 billion when it debuted on the New York stock exchange in 2021.
Since then, the company has collaborated with skateboarding shoe company Vans to create a virtual skateboarding park called Vans World, where players can don Vans gear. Roblox also collaborated with Gucci and opened up a Gucci Garden.
Since we’ve mentioned the most significant players in the metaverse, don’t let this limit your perception of what’s happening in the metaverse today. To broaden your perspective, let’s see the various opportunities available to industries in the metaverse.
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What are the Business Opportunities in a Metaverse?
Virtual real estate is a thriving market. Ethereum-based platforms such as Decentraland already sell virtual real estate that people can buy and develop. The average price of a piece of land in Decentraland jumped from $6,000 in June 2021 to $12,000 in December 2021, and JP Morgan revealed it bought some of it.
This growth partly resulted from the rush created by brands wanting to buy space for virtual stores and showrooms. In June 2021, a land package in Decentraland sold for $913,000, and the developer turned it into an entire shopping district by the name Metajuku (inspired by Japan’s Harajuku shopping area).
The finance industry has the most interesting opportunity of all in the metaverse. As the virtual real estate market booms, so will services such as mortgages, credit and rental agreements. T he arrival of Decentralized Finance (DeFi) will enable composability of blockchain-based assets and collateralized lending primitives.
As retail experiences flourish in the metaverse, the use of cryptocurrencies and smart contracts will too, underscoring the importance of FinTech in the virtual immersive reality.
Investments and Art
For investors and forward-looking tech enthusiasts, cryptocurrencies and NFTs offer a solid investment avenue. Since cryptocurrency is a form of a global token, it’s already a preferred currency for its users.
NFTs, too, have become the cornerstone of the metaverse. Non-fungible tokens are a unique digital signature used as a deed of ownership of digital assets in the metaverse. An NFT is commonly a piece of art, a picture, a song or even real estate.
Notable celebrities and public figures such as Paris Hilton and Justin Bieber have been flaunting their NFT collections, and other enthusiasts are already following and betting on NFTs.
Fashion has moved fast in the metaverse, which is evident in the fact that Morgan Stanley estimates luxury and fashion will be a $50 billion revenue opportunity in the virtual world by 2030.
Fashion saw the opportunity right in front of it when the pandemic forced the industry to think of creative digital ways to survive, leading to virtual showrooms where buyers could try on a garment or accessory and take a 360-degree look at any product.
In 2019, Louis Vuitton collaborated with Riot Games to create original skins for League of Legends and also released a fashion collection from within the game. Balenciaga recently released their Autumn collection as a video game. Gucci recently collaborated with Roblox to create a Gucci Garden, which led to one of their bags selling for over $4k, more than its worth in real life.
Gaming and Entertainment
The Gaming and Entertainment industries will be the wildest if they are not already in the metaverse. Predictions by Statista suggest that the value of in-game purchases may surpass $74.4 billion by 2025. Imagine your Avatar attending a concert by Rihanna in the metaverse with your best friend’s avatar?
Recently, a virtual concert by Fortnite was seen by 45 million people and grossed $20 million, which includes merchandise sales. Metaverse makes it possible for people in diverse geographies to now participate in concerts by their favorite artists.
Other events such as art showcases, sports events and community meetings will also become immersive experiences in the metaverse.
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While we have participated in online events even before the pandemic, the metaverse will take all experiences to the next level. Users are driving the demand for immersive and interactive events in the B2C and the B2B arena.
For B2B, these events mean spaces to easily navigate sessions, network with peers, exchange information, identify business opportunities and nurture human interaction from the safe space of their homes.
Metaverse will render travel budgets as the thing of the past, offer accessibility to those with mobility challenges and introduce better inclusion at events. In the fourth industrial revolution driven by the metaverse, events businesses need to design immersive virtual experiences that deliver engagement and accessibility like never before.
Training and Collaboration
COVID-19 has already made Zoom meetings and online training normal. Remote work and collaboration tools can get more immersive to claim their space in the metaverse. Since metaverse includes the ‘work’ aspect, training and collaboration make sense in it.
For instance, Microsoft writes about collaborating with Accenture to onboard new hires. New employees at Microsoft meet on Teams, where they are guided to create a digital avatar and access One Accenture Park, a shared virtual workspace that enables immersive onboarding.
Similarly, educational opportunities will flourish in the metaverse, with VR being a low-cost and effective way to deliver an immersive and long-lasting learning experience.
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The Potential for Startups in Metaverses?
Some of the products and services we know will continue to exist in the metaverse. For a startup looking to plunge in early, it’s better to do so with a strategy.
Not everything in a metaverse will be relevant for every business. So follow this system to decide what will be applicable to your business.
Startups can create early disruption in the metaverse of today and beyond with a carefully crafted strategy that does not compel compromise with business in the real world.
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