What is the Metaverse: Making Sense of the Metaverse
Whether you’re a cutting-edge technologist or a skeptical Luddite, chances are you’ve probably encountered some mention on the topic of the metaverse. Perhaps it was from metaverse musings from your coworker, or maybe it was a central theme in the most recent movie you watched. Regardless, it seems that someone is discussing or alluding to the metaverse in every direction we turn. Having once been a favored buzzword, the once-frequented phrase has recently turned sour for many, particularly among investors. Meta (the company) recently completed their 3Q22 earnings call, which did not paint a rosy picture for one of the most prominent metaverse pioneers. The company reported a $9.4 billion loss for the year (thus far), resulting from investments that support and underpin the metaverse.
So, given the perceived fall from grace of such technology, it begs the question: What exactly is the metaverse, and how do metaverse platforms fit into the business and technological landscape?
What is the metaverse?
Often described in abstract and mysterious terms, let’s first come to a clear understanding of what the metaverse is. The term – metaverse – doesn’t actually reflect a single piece of technology or digital space but rather is reflective of a variety of technologies that ultimately change how we engage and interact with technology, businesses, and individuals in the physical and digital world.
For simplicity, we can view the metaverse as a technological and immersive ecosystem in which we can interact with others and engage in real-world activities in digital spaces. For example, think of the classic Sims video game, but on a much larger scale and more similar to real life. Upon entering the metaverse, you find yourself in the body of your own digital avatars. In this virtual world, you could walk into a coworker’s office for a meeting or peruse a shopping mall, virtually interacting with and trying on virtual clothing in virtual spaces. Taking this example a step further, if you found a piece of virtual clothing, virtual sneakers, or other virtual items you liked, you could theoretically purchase it in the metaverse, with virtual ownership transferring and equating to real-world ownership of the virtually represented item. While nuances and differences depend on the person, this is essentially the concept referred to when the metaverse is invoked.
Technological characteristics of the metaverse
The metaverse is underpinned by a handful of technologies that allow for immersive virtual experiences and engagements and is anything but just a video game. Below are some of the most common and prominent technologies that are currently serving as the primary drivers behind metaverse technology, application, development, and evolution (a list that is sure to grow with time):
Blockchain is a digital ledger technology that enables secure, transparent, and tamper-proof transactions. Blockchain can be used to track the ownership of assets and to record transactions securely and efficiently. This makes it an ideal technology for use in the metaverse, where it can be used to record the ownership of virtual assets and to track transactions between users. Blockchain is also a distributed system, meaning that transactions are processed by a network of computers rather than a single server. This makes it resistant to attack and ensures that the integrity of the metaverse is maintained.
Extended reality (XR) is an umbrella term that encompasses virtual reality (VR), augmented reality (AR), and mixed reality (MR). These technologies all share the goal of immersing users in digital content and virtual worlds, but they differ in their level of immersion. VR provides the most immersive virtual reality experience, while AR and MR are less immersive but still provide a significant level of engagement.
Non-fungible tokens (NFTs) are unique digital assets that can be traded on decentralized exchanges. They are quickly becoming a popular way to trade and store value, as they offer a high level of security. NFTs are providing new ways for businesses to raise capital and are paving the way for a new era of digital asset ownership. These tokens can represent real-world assets, allowing businesses to offer real-world products to customers in a virtual world.
Alongside these technologies, the metaverse and the future application of the metaverse rest on the key principle of interoperability. As a shared virtual environment comprised of different virtual worlds, interoperability provides for continuity; it allows for seamless transitions and fluid connections between different virtual settings. Interoperability, a key challenge to the deployment of an integrated metaverse, serves as an important system unifier. Imagine you have an avatar that purchased a virtual piece of clothing or an accessory NFT to wear in a specific virtual world. Interoperability reflects the ability to take that same piece of clothing or accessory NFT across different systems and virtual worlds, resulting in a cohesive and integrated metaverse ecosystem.
Why is the metaverse important?
Although still in its theoretical and nascent stage of development, the successful deployment and application of the metaverse carry significant implications for both technology and business. As a new and emerging set of technologies, the metaverse will likely result in new opportunities and challenges for businesses of all shapes and sizes.
As witnessed through the COVID-19 pandemic, business and social interactions have increasingly moved online, away from the physical world. We have seen the reduction and elimination of spatial barriers, the emergence of new markets, and the ability of consumers and businesses to reach previously untapped engagement and business interactions. Given these new opportunities and business avenues from new tech companies, it’s of little surprise that businesses and executives continue to explore the growing set of practical metaverse applications and look into metaverse development.
According to a 2022 PwC survey, roughly two-thirds of surveyed business executives indicated that they are past metaverse experimentation and are actively engaged in building proof of concepts and testing use cases of the virtual space. Taking it a step further, these respondents also signaled that their business’ metaverse efforts would be fully integrated across the enterprise within a few years. Notably, more than 80% of those surveyed responded that they expect the metaverse economy and related new technology to be a part of the business functions and activities within three years.
Business leaders are taking note and are primarily viewing the metaverse as an emerging opportunity for further enhancing efficiency, engagement, and daily life, as well as an opportunity to explore new monetization opportunities with virtual currency. As supportive technology companies continue to evolve and as the practical use cases and applications of such technologies continue to proliferate, it’s reasonable to expect the interest and support from business executives to grow over time.
However, this doesn’t mean that metaverse applications don’t face their own set of challenges and hurdles. As mentioned, interoperability remains a critical barrier to fully realizing metaverse technologies and digital experiences. With different companies using different systems, tools, and approaches to the metaverse and virtual world creation, these differences make achieving interoperability a persistent challenge. There are also challenges related to accessibility and hardware. In its initial infancy, the hardware necessary for facilitating metaverse immersion – such as XR headsets or augmented reality glasses – has yet to reach a level of scalability and accessibility essential for widespread adoption, both at the consumer and the enterprise level. Until these two hurdles are addressed, metaverse technologies will continue to face challenges relating to standardization and accessibility.
Metaverse business impacts and use-cases
Despite being largely in its infancy, in terms of maturity and development, a wide-ranging set of existing and emerging metaverse use cases and trends have served to capture the interest of both business leaders and consumers, some of which have been outlined below:
Virtual Meetings and Events: increasing the reach, efficiency, and engagement of digital communications
One of the most immediate use cases of the metaverse is the ability to host immersive and engaging virtual meetings and events, bringing more life to your typical Zoom calls. Like the now ubiquitous digital forms of communication – i.e., Microsoft Teams, Slack, Zoom, etc. – the metaverse represents a new means of more immersive communication through a shared virtual space. Whether a team brainstorming session or a board meeting, the metaverse allows remote workers to come together in a shared space for discussion and interaction. The extended reality technologies associated with the metaverse also create an opportunity for hosting highly immersive events that may have otherwise not been available, such as tradeshows, shareholder meetings, annual conferences, and much more. Furthermore, such technology can also provide for other virtualization use cases, such as allowing for business and operational inspection of business sites worldwide.
Community Building: fostering a shared virtual world for enhanced customer engagement and stickiness, as well as business ecosystem expansion
With the ability to craft and host virtual worlds, metaverse technologies facilitate the ability to build digital communities around a specific business, product, and/or idea. Such communities enhance engagement and stickiness, providing a new means for customer aggregation, interaction, and engagement. Having an immersive virtual reality comprised of customers also allows businesses to expand their business ecosystem and footprint, while also providing a new means for gathering customer feedback and input.
Virtual Transactions: emergence of new monetization opportunities, expanded market reach, and extended product functionality
The integration of blockchain technology and digital wallets have facilitated a wide range of new monetization opportunities for businesses. Such technologies enable businesses to expand their offerings to the digital and virtual world while simultaneously opening new product and service potential – such as through NFTs on a virtual platform. Whether a virtual article of clothing or a pass to a virtual or real-world event, NFTs and blockchain technology are revolutionizing the transactional possibilities for customers and businesses. As a result, businesses are exploring emerging product development opportunities and enhanced product functionality – such as being able to test and sample various products and incorporate new virtual features – while customers are being presented with new means of interacting and transacting with businesses.
Virtual Reality Business Functions: enhancing the ability to conduct important business functions in a more efficient and engaging manner
The metaverse and related virtualization are creating new methods of conducting various business functions. For example, metaverse technologies equip employers with the ability to build stimulated virtual environments for training employees and developing new functional skills, as well as for recruiters to interview potential employees more engagingly. The continued evolution and refinement of metaverse technologies will likely contribute to a growing set of business functions that can be efficiently completed through leveraging such technology, whether it be product testing or customer service. As these opportunities grow, business leaders will likely continue to seek and turn to new applications and use cases to enhance operational efficiency and effectiveness.
What is the future of the metaverse?
From all of this, it becomes clear that the metaverse and its related technologies represent a substantial and revolutionary opportunity for businesses to expand their ecosystems in the digital world, enhance customer engagement, and improve operational efficiency. However, we’re still in the very early innings of the metaverse application. There have been concrete developments, and advancements in multiple technologies – the strategic partnership between tech giants Meta and Microsoft focused on developing Metaverse business applications is one of the more notable and recent developments. However, there’s still a long road ahead, peppered with roadblocks and obstacles from legal and commercial challenges, before arriving at the tangibility of what has, to this point, been largely theoretical. Nonetheless, as business leaders have indicated, the metaverse possesses profound new opportunities for businesses and enterprises to tap into.
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