It’s hard to sort fact from fiction when it comes to the ‘metaverse’. On the one hand, you have Mark Zuckerberg and his parent company, Meta (formerly Facebook), who are pushing all their chips behind the new technology, gambling that decentralised virtual worlds are the next logical phase of the internet’s evolution. On the other hand, you have the skeptics, who say the metaverse might never get off the ground, and point to Meta’s recent earnings reports as proof – for context, Meta’s value tanked $700 billion dollars this year, despite investing billions in Reality Labs, the internal team responsible for developing the ‘metaverse’.
At this stage, it’s hard to say whether the metaverse is the inevitable future, or simply one man’s dream. Consumers aren’t exactly rallying behind the nascent technology. At least not yet. Still, it seems likely that VR will fundamentally change the digital landscape in Australia – whether it’s the metaverse or something else entirely. So what exactly might that look like?
What is the metaverse?
The word ‘meta’ means ‘beyond’ in Greek, and the term ‘metaverse’ itself actually comes from Neal Stephenson’s 1992 novel Snow Crash. But these days most people use ‘metaverse’ to refer to Mark Zuckerberg’s proposed virtual world.
The metaverse is an open-source network, powered by Blockchain technology, where users can interact with an augmented virtual reality via traditional VR headsets. It’s also known as Web 3.0. Imagine, essentially, walking around the internet. Sitting in your virtual living room. Chatting to virtual friends. Shopping in virtual stores. Playing games, exploring far away cities, or even sitting down at your virtual desk and doing real-life work. Zuckerberg’s vision is for us to live in the metaverse in more-or-less the same way we live in the real world. Still, he’s not the only one working on the problem. More than 160 companies are developing the metaverse as we speak, including Microsoft and gaming giants like Epic Games and Niantic (the company behind Pokémon Go).
The metaverse might sound like science fiction and, given the relatively primitive state of modern VR tech, it sort of is. Meta is investing huge sums of money and gambling that this is the future of the internet. The big question now is: are they correct?
How the Metaverse will affect small business?
In today’s digital world, small business owners have a kind of symbiotic relationship with big tech platforms like TikTok, Instagram and Facebook. These platforms need users, and products to sell to those users, and small businesses rely on tech companies for marketing channels and targeted reach.
So how will the metaverse impact small business? It’s hard to say at this point. We’re certainly too early for businesses to be shifting marketing spend from traditional platforms, like Instagram, to the metaverse. The user base just isn’t there yet. While it’s hard to get an accurate user picture for the metaverse at this point, some analysts claim one in every four people will use the network for at least an hour a day by 2026.
If the metaverse does go mainstream, it’ll have to be folded into small business marketing strategies, just like everything else. Eventually we’ll get to the point where businesses can advertise on virtual billboards in the metaverse, or design their own virtual stores, ready to greet customers (or at least the avatars of customers) and display virtual wares. Which brings us to…
NFTs and digital real estate
The metaverse will likely continue current trends towards digitisation of traditional asset classes. And by that we mean there’ll probably be a dual economy inside the metaverse. You’ll be able to browse and purchase real-life goods, like a new pair of shoes, which will be physically shipped to your front door. But you’ll also be able to buy digital goods, like NFTs and even virtual real estate. It stands to reason: if the metaverse is a living, breathing world, individuals and companies are going to want to stake their claim on certain parts of it.
We’re already seeing the beginnings of this trend. Nike, for example, recently bought out RTFKT, a company that makes NFT (non-fungible token) sneakers. That is, one-of-a-kind digital sneakers that you could wear on your avatar, and even trade inside the metaverse for currency. Several companies are dropping millions of dollars on virtual ‘land’ inside the metaverse already – presumably as a hedge, like staking your claim in the Wild West, or buying up early dot com domains. In fact, prices for virtual real estate shot up by 500 per cent in early 2022.
Businesses will eventually have to consider whether these sort of purchases are worth it. NFTs, for example, are notoriously volatile (at the end of the day they’re crypto-backed assets, and also imaginary). If you’re after examples, look no further than crypto entrepreneur Sina Estavi: he paid $2.9 million for the NFT of Twitter-founder Jack Dorsey’s first tweet last year, then tried to re-sell it in 2022 for $48 million. The highest bid was $6,800.
This goes to the fundamental nature of what the metaverse is, and what it represents for consumers. It needs two things in order to thrive: trust and value. Without trust, consumers won’t buy in. And without value, businesses won’t see the point. Macquarie Capital’s Associate Director of Institutional Sales, Alex Williams put it this way, “The ability for a brand – or anyone for that matter – to create value in the virtual world comes firstly from having verifiable scarcity. But the potential of the metaverse for brands goes beyond transactions – it’s about the indirect benefits that come from building a network and culture around a brand or product.”
So will we see that culture bloom over the next few years? No-one really knows at this point. Certainly there are many big companies investing on the basis that the metaverse will succeed, but still, it’s undeniably a work in progress.