The metaverse: will the virtual soon be real?

This article was published in the Ergon Magazine SMART insights 2022. Order your free copy now.

Everyone’s talking about the metaverse. But what is it exactly? What happens to us and the way we experience the world when the virtual melds with the physical? We examine the business opportunities that the metaverse opens up, and ask if there’s any real substance behind the hype.

It's New Year's Eve in the middle of the pandemic. French musician Jean-Michael Jarre is entertaining an audience of 75 million from Notre Dame in Paris, still off limits after the fire. But the real show-stopper is the fact that Jarre appears as an avatar against a virtual backdrop. The audience is at home, enjoying the music from the familiar comfort of their own sofas, all around the globe. Welcome to the metaverse. Welcome to the future?

Digital interaction – the new way.

The metaverse consists of 3D digital worlds in which people interact and share experiences as avatars. The term was coined in the 1990s, and it will soon be 20 years since it was initially hyped as the future. The first major multiverse, created in 2003, was called Second Life. It proved highly successful as a platform for VR games, chats and other applications. Even after 15 years, some 350,000 new users were still signing up to be able to enjoy the virtual environment in avatar form. But the current vision of the metaverse goes beyond the concept of a virtual platform. The idea is that in the future, virtual platforms will be interlinked. Users and their avatars will be able to switch between platforms or, more precisely, communities. The metaverse is designed to inspire co-creation and shift social interactions from the real to the virtual 3D world. This interaction is natural and immersive and should resemble "real world" contact as closely as possible. The concert in the virtual Notre Dame becomes a shared experience that generates real memories, just as physically attending a concert does.

The metaverse will open up new markets

Living as an avatar allows owners to reinvent themselves. That brings a lot of opportunities, but risks as well. Privacy takes on a new meaning in the metaverse. Verifiable digital identities will become even more important as the physical and virtual worlds increasingly merge. When you’re moving around a shared space as a virtual body, the concept of closeness also takes on greater significance. Meta, formerly Facebook, for example, had to define minimum distances between avatars on its Horizon Worlds VR platform. If users break these or other rules, they’re barred from the platform temporarily or permanently.

If the rules of a community are clear, the metaverse can be a hotbed of creativity which is also very interesting for companies. The gaming platform Roblox, for example, lets users create their own games. Within a short space of time countless games and worlds of experience have sprung up; you can even buy virtual objects and upgrades. The monetisation of the metaverse is complex and rich in potential, with digital products traded for hard cash, particularly if they’re rare or represent something special. At the moment non-fungible tokens (NFTs), which can even guarantee the uniqueness of digital works, are triggering gold fever. The metaverse will open up new markets. No wonder that well-known companies are looking for ways to be a part of it.

Prestigious first movers

Market research company Gartner predicts that by 2026 each of us will be spending at least one hour a day in the metaverse. Companies with an eye on the future would therefore do well to adapt their offerings accordingly. And they’re realising this. Nike has filed for patents and property rights for the virtual world, has bought a start-up for virtual fashion, and has inaugurated Nikeland, a virtual world of sports and experience, on Roblox. J.P. Morgan is the first big US bank to announce involvement in the metaverse in the form of a virtual lounge on the Decentraland platform. Sometime this year, Seoul intends to start setting up a virtual communications ecosystem covering all areas of the city administration. US companies such as Epic Games and Meta are building their own metaverses. Microsoft has announced a preview of the Teams platform for this year: users attending meetings will interact in the form of avatars.

Big business for retailers

The fashion industry is also sensing real business opportunities in the virtual space, with users fitting out their avatar with virtual clothing and accessories – already willing to pay money for it. A Roblox avatar might be carrying a Gucci handbag worth 4,100 dollars. Other retail sectors are also profiting. People shopping in the metaverse can move around a simulated supermarket and get instant information on how to cook with a product. Holding the new iPhone in your hand will give you a better idea of its size. Buying outdoor clothes becomes an experience on the Matterhorn with Reinhold Messner advising you. The digital world also has its own real estate market: In the Entropia Universe the digital planet Calypso sold for USD 6 million and has since been generating considerable revenues from the sale of in-game assets. In an auction on Upland, an online game for selling virtual land, the New York Stock Exchange sold for the equivalent of USD 23,000. A virtual real estate market is conceivable where it will be possible to buy virtual streets and buildings, upgrade and resell them for more money.

Many industries set to benefit

The metaverse is also creating new opportunities for organisers of training and workshops: learning in 3D becomes immersive and efficient. Organisations no longer have to fork out for travel or renting premises; the digital experience is more easily scalable. At little expense and effort they can offer courses all over the world and extend their own market reach considerably.

The virtual universe is also interesting for industries that rely on discretion and integrity, such as banks and insurance companies. Virtual consultations will open up new opportunities and be more interesting for customers. Banks will be able to offer loans for virtual real estate trading, and insurers will create new products to cover novel digital goods. The metaverse also raises new legal issues: at present trademark and property rights only apply to real assets. From a legal point of view the virtual world is a fairly open universe.

Real and virtual become one

The metaverse would seem to have a golden future ahead of it. But how realistic is it really? While the platforms currently used already have a big reach, they still lag far behind conventional social media and gaming platforms. The potential is huge. Now it’s time to acquire users. One particularly interesting development is augmented reality, which integrates virtual worlds into the real world. Examples include map services such as Google Maps, Apple Maps, Microsoft and Niantic, which anchor certain points of interest and make them usable. To see what that actually involves, consider Pokémon Go: the app and games are free of charge for users. Companies pay for their location to be a game venue. It’s a new, very effective form of advertising.

The metaverse is still hype. But the technology is ready and relatively affordable. More and more companies and users want to be a part of it. Even though the term "metaverse" might disappear, the technologies will remain. The virtual and the real will become one. This is something companies should already be taking a good look at. Maybe they’ll find their virtual home on an existing metaverse. Or maybe they’ll even create one of their own. The opportunities are rich and varied, and the potential is huge. Now’s the time to try out, explore, learn and profit. See you soon – in the metaverse.

This article was written by Daniel Neubig, Senior Software Engineer and Head of AR, and Daniel Zeiter, Head of Technology.