The Metaverse and the Business World: How will these two realities meet?

By Pearce Hopkins

In a world that is still reeling from the consequences of the global pandemic, more and more people are turning to the online world as a safer alternative for social interaction. This vast surge in online activity has hastened the expansion of what is known as the ‘Metaverse,’ a term used to describe the technologies involved in creating a virtual space that is ‘parallel to the physical world’ allowing users to ‘live in the future,’ according to Mark Zuckerberg. As this concept is incredibly ambiguous due to its still-developing nature, its existence raises many questions about how the business world will be affected by the rise of an entirely new platform that extends beyond being considered a ‘social media.’

So, what exactly is the Metaverse? Unfortunately, there do not appear to be any clear-cut answers. First coined in the 1992 dystopian cyberpunk novel Snow Crash, the term initially referred to a world accessible through virtual reality technology, similar to virtual reality gaming equipment like the HTC Vive or Oculus Quest that are available today. This definition does not seem to be too far off what the current concept intends to portray. Venture capitalist Matthew Ball suggests that it will stand as a ‘sort of successor state to the mobile internet,’ advocating that this will be the next big transition in social media, consisting of ’a massively scaled and interoperable network of real-time rendered 3D worlds which can be experienced synchronously and persistently by an effectively unlimited number of users’ that will extend itself further and further with the rollout of new products over the coming years. Mark Zuckerberg, the CEO responsible for the social media giants of Facebook and Instagram, stands at the helm of what he considers will be ‘the next version of the internet,’ even recently renaming his organisation ‘Meta’ to bring the idea closer to the mainstream.

Now that we have a slightly more detailed understanding of what this new platform is (or at least how it should work in theory), what businesses are diving into this new reality? Unsurprisingly, the companies that already have a foothold in virtual worlds benefit the most from the establishment of the Metaverse. The online game Second Life allows users to create a digital character and persona, as well as use their own money to buy virtual land in the game or purchase clothing, pets, or other real world amenities. What appears to separate online gaming and ‘the Metaverse’ is the depth of the degree to which users can connect with a virtual world. Speaking about her experience playing Second Life, Metaverse entrepreneur Carrie Tatsu said, “This wasn’t like joining a video game and competing on something like a first-person shooter. This was a very emotional attachment to something that wasn’t physical.” 

Today, video games [AD1] [PH2] like Fortnite are paving the way for social interactions in the online world, with over 12 million Fortnite gamers’ attending’ a Travis Scott concert virtually in 2020. For a game with the primary focus of being a Battle Royaleesc shooter, a public event of this scale departed from the game’s usual content, demonstrating Fortnite’s venture into the socially interactive aspect of online platforms. [AD3] These kinds of online events that millions of users can attend define the wide-scale use of the Metaverse as it develops. In addition to this, another video game akin to virtual reality is RobloxHaving over 42 million users who generated over 10 billion hours of playtime in the first quarter of 2021Roblox’s chief executive is hopeful for its part to play in the future of the internet, believing that the online game will be one of many ‘essential tools for business communication’ and suggesting that it may act as a new online market sooner rather than later. In May 2021, a digital Gucci bag was traded on Roblox for more than $4,100 – a price greater than the actual product in our world. Various other online platforms have created the space for digital markets. In the game Axie Infinity, players can trade and train creatures similar to that of the Pokémon Franchise, treating the virtual creatures like NFTs. Creatures often start at prices of around $100 and increase drastically from there. Virtual transactions like this are happening every day in online platforms, begging the question of how these digital markets will extend beyond the video game industry.

In their attempts to follow modern technology trends, big corporations are following suit and beginning to invest their resources in the Metaverse. In February of this year, Disney introduced Mike White as the senior vice president for Next Generation Storytelling and Consumer Experiences. His role will focus on integrating Disney’s ‘almost 100-year-old storytelling tradition’ into the developing Metaverse. Chief executive Bob Chapek believes that this role will facilitate Disney in their new direction of exploring “the next great storytelling frontier.” As well as this, Nike have set up their own virtual world within the Roblox platform called ‘Nikeland,’ staking their claim in the digital world of tomorrow. Their virtual world contains different buildings, interactive games, and a showroom where users could find newly released products, helping Nike expand their brand to a new interactive platform. Even ITV and John Lewis have brought themselves into the newly forming Metaverse. ITV helped design an I’m A Celebrity experience within Fortnite, letting players participate in challenges like those shown in the hit TV show. John Lewis created a virtual shop that allowed players to gather supplies for a virtual camp. The fact that more and more companies are jumping on the bandwagon shows the promise of the Metaverse in years to come, as suggested by digital regulation expert Tom Harding’ in 10 years’ time, or whatever, we will have this digital interconnected world’.

So, taking all of this into account, what promise does the Metaverse actually show? Right now, not much. Zuckerberg has been open about the fact that “this is not an investment that is going to be profitable for us anytime in the near future.” Instead, he and Meta are urging businesses to lay the foundations for their future in the digital world. However, it feels like that world is years, maybe even decades, away from being a core part of our reality. The general lack of faith in the Metaverse was reflected in the stability of Meta’s earnings, which lost $230 billion in market value in the most recent quarter. This scepticism seems to be shared by many of Meta’s target demographic, Generation Z. Only 38% of people born between 1997 and 2021 believe that the Metaverse will have a significant impact over their lives in the next decade, suggesting that getting this platform up and running might take more time than expected. It’s likely that the lack of clarity over how the Metaverse would affect people’s lives is acting as a barrier from getting behind it, limiting the support behind the project. In both the UK and US, only about a third of adults feel like they understand the Metaverse, implying that the concept will need more time to be understood, accepted, and utilised as a tool by new consumers.

The Metaverse is confusing, underdeveloped, and, it wouldn’t be amiss to say, an essentially non-existent concept right now, and its future is incredibly uncertain. When asked about its prospects, Strauss Zelnick, chief executive of game publisher Take-Two, said, “If you take metaverse, SPAC and cryptocurrency, in five years, will any of this matter? I’m not sure it will.” 

To ‘live in the future‘ does indeed sound like a promising concept. But it might just be best to wait for the future to come instead of trying to force it today. 

Image: Google Images

The views expressed in this article are the author’s own, and may not reflect the opinions of The St Andrews Economist.

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