Enhanced engagement, active learning and improved retention – this is your brain in the metaverse. Disorientation, impaired balance and emotional disconnection from the real world – this is also your brain in the metaverse.
En garde! Technology seems to have an endless array of double-edged swords for society. We are currently grappling with the disruptive effects of AI apps as they begin to scale after years of artificial intelligence development. The metaverse is not far behind.
Let’s take a look.
What is the Metaverse?
In spite of Facebook’s virtual land-grab rebrand as Meta, no single company invented or owns the metaverse. The term was coined by sci-fi author Neal Stephenson in his 1992 novel Snow Crash.
There is not and will never be just one entrance to the metaverse. Even though Meta (formerly known as Facebook) would love for you to think otherwise, when most people talk about the metaverse, they aren’t referring to a single virtual platform.
Just as the real universe is a vast open space hosting billions of objects, the metaverse is the conceptual environment that hosts millions of discrete 3D experiences built on virtual reality and augmented reality (VR/AR) technology.
Proponents and developers envision it as an interactive 3D digital world where users have fully immersive experiences engaging with each other, digital objects and the environment. For businesses, experience is the key word. The metaverse is becoming increasingly relevant to businesses as they begin to explore the metaverse for commercial purposes.
The market potential is huge. Precedence Research valued the global metaverse market at USD 51.69 B in 2021 and estimates growth to around USD 1.3 T by 2030, with CAGR of 44.5% during the forecast period 2022 to 2030.
With tech and stylistic origins rooted in online gaming, the metaverse has gained traction in recent years due to advancements in virtual reality, blockchain technology, data networks, and other related areas.
How Can Brands Leverage the Metaverse?
From a business perspective, the promise of the metaverse is the opportunity to create new interactive channels and personalized, immersive experiences for their audiences, customers and employees.
The metaverse presents numerous use cases such as virtual conferences, e-commerce, gaming, social media, and education. Let’s look at a few in more detail.
- Virtual collaboration: Businesses can use the metaverse to facilitate collaboration between employees, either locally or in different parts of the world. Virtual meetings, brainstorming sessions, and training sessions can be conducted in a fully immersive environment, allowing team members to feel like they are in the same room.
- Product demonstrations: Sales teams can use a metaverse platform to showcase products and services to potential customers. Virtual showrooms, demonstrations, and product launches can give customers a realistic feel for the products before they make a purchase.
- Virtual marketplaces: The metaverse will eventually offer a significant upgrade to the current online shopping experience. Customers can experience products at a much more interactive level. They can try on clothes, pick up a product to examine it from different angles, even test drive a car.
- Customer engagement: Businesses can use the metaverse to engage with customers in more interactive ways. For example, they can create virtual events, contests, and games to engage customers and build brand awareness.
- Employee training and team collaboration: Virtual training sessions and simulations that replicate real-world scenarios provide a safe controlled and personalized environment for employees to practice, learn, and collaborate, regardless of location.
Potential Business Risk in the Metaverse
While the metaverse offers new opportunities for businesses to engage with customers and employees, there are also potential risks associated with its use. Some of these risks include:
Adoption risk: Even though some companies are investing billions in metaverse development, there is no guarantee of large-scale, mainstream adoption of the metaverse. Metaverse experiences require large amounts of data and fast networks. Adoption will be slow in areas without the latest telecom infrastructure.
Not only that, similar to how the immersive experience of online games does not appeal to everyone, it is possible that large segments of the population will never be interested in spending much time in the metaverse.
- Security risks: As with any online platform, security risks such as breaches and hacking exist in the metaverse. In the metaverse, businesses may be vulnerable to attacks compromising sensitive customer data, financial information, and proprietary technology.
- Legal risks: The metaverse is a new and evolving technology and it is unclear how existing laws and regulations will apply. Companies should seek legal advice from attorneys following the evolving case law to avoid potential legal pitfalls and liability.
- Reputation risks: Unlike Las Vegas, what happens in the metaverse doesn’t stay there, from your customers’ point of view. Any negative interactions or experiences in the virtual world can quickly spread on good ol’ Web2 social media and damage a company’s reputation.
- Technical risks: The metaverse requires complex technology and specialized programming expertise. Businesses unfamiliar with the technology may encounter technical problems or performance issues that could impact their operations.
- Ethical risks: As the metaverse is a virtual world, businesses may encounter ethical issues they may not have considered in the physical world. For example, data privacy, identity verification, or discrimination issues may arise.
Overall, businesses must consider the potential risks associated with using the metaverse and take steps to mitigate them, such as developing robust security protocols, staying up-to-date with evolving regulations, and ensuring that operations in the metaverse align with ethical standards.
Examples of Business Activity in the Metaverse
Gaming and virtual real estate were two of the earliest industries to get traction in the metaverse. They attract many cross-promotions from complementary consumer brands in fashion, sports, food and entertainment. On the B2B side, employee training is a growing sector as well.
Industries are entering the metaverse at different rates. As an overview, the chart below shows the 2021 metaverse market share by industry.
Current examples of metaverse business activity include:
Gaming: Roblox is a gaming platform that allows users to create and play their own games. It has a large user base among younger audiences, and has seen significant growth in recent years. Fortnite is another popular online game expanded into other areas of the metaverse, such as virtual concerts and events. The game has generated significant revenue through in-game purchases and partnerships with other brands.
This chart from Bloomberg is an interesting illustration of the metaverse’s impact on gaming. The software and services category represents metaverse development. Notice how metaverse growth is projected to drive ad revenue increases, too.
Virtual Real estate: Virtual real estate companies are exploring the metaverse as a new way to showcase properties and sell virtual land. For example, in Decentraland, a virtual world built on the blockchain, users can buy virtual land and develop it as they wish. Real estate companies like Republic Realm are investing in virtual land and building projects that can attract users to the platform.
Fashion: Many fashion brands are successfully leveraging the metaverse as a new platform for marketing, sales and cross-promotion. For example, Gucci created a virtual showroom in the Roblox gaming platform where players can try on and purchase digital versions of Gucci’s clothing and accessories. Similarly, Burberry launched a virtual store in the game Bazaar, where players can buy limited-edition items from the brand.
Education: The metaverse has the potential to transform the way we learn and access information. Virtual classrooms provide immersive and interactive learning experiences, and companies like EngageVR are developing VR tools that enable teachers and students to interact in a 3D environment.
Another example is VEDAMO, which offers a virtual classroom platform for remote teaching and learning that includes interactive features such as polls, quizzes, and breakout rooms.
For a deep dive into the latest studies and research about VR and education, check out Stanford’s Virtual Human Interaction Lab’s resources.
Moving Ahead – the Near Future of the Metaverse
An article in Forbes listed the metaverse as one the top trends for 2023, echoing industry analysts’ predictions of continued metaverse growth. Big tech, gaming, and consumer goods companies are investing heavily in metaverse development.
The metaverse will provide new opportunities and challenges to businesses. Entering this new world requires careful planning and investment to realize the full potential of the opportunity.
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This material has been prepared for informational purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax or other advice specific to your particular situation.