Morning!
So, the Metaverse is here. Sort of. And according to Forrester, consumer adoption hinges on context and economics.
But what are the economics of the Metaverse?
The Metaverse economy depends on the creation, authentication and trade of digital assets (NFTs).
And for this economy to flourish, it needs these digital assets to be transferred and traded freely between realms with different laws and rules.
As Matt Ball explained on a podcast with McKinsey, “We have to look at the economy of the Metaverse. That’s not about building the GDP of their individual product. They [tech providers] need developers to choose to reside in their experiences, they need developers to build in those experiences, and they need users to patronise and invest. And so, we do have some expectations that this requires collaboration on a level similar to that of the WTO (World Trade Organization).”
That’s the destination, and we’re nowhere near it.
But the Metaverse is already a $47 billion industry that’s expected to be worth $800 billion by 2024.
Games and gamified retail.
Cathy Hackl told McKinsey that “a big thing I’m seeing in business right now is how commerce is evolving as we head into these new virtual spaces and shared experiences, both in the virtual and physical world.”
And there’s a lot of activity around it too. Just think of the Metaverse Fashion Week that drew 108,000 unique attendees and netted close to $77,000 for the participating fashion labels.
These are early days for fashion labels but apparel retail isn’t new to the Metaverse.
Fortnite has sold more virtual merchandise than some of the most iconic luxury fashion brands in the past four years.
That’s why a shift towards gaming and gamified digital retail is the future of commerce in the Metaverse.
Beyond commerce, the Metaverse already has promising applications for businesses.
Enterprise applications of the Metaverse.
Many examples of virtual offices are in use, e.g. Accenture’s Nth Floor, Microsoft’s Mesh that integrates with Teams, and Facebook’s Horizon Workrooms.
Beyond the office, digital twins like Siemens Energy’s Metaverse are revolutionising the service industry by visualising every detail of energy consumption, down to water usage and the flowing steam through pipes.
But the most immediate application of the Metaverse in business is far less sexy than sharply dressed avatars.
Efficiency, safety & innovation.
Developments and adoption of VR (Virtual Reality), AR (Augmented Reality), and 3D graphics technologies are inseparable from building an economically viable Metaverse.
And AR and VR are already producing business results.
For example, the US military uses VR goggles to train their mechanics. And a process that used to take 18 weeks can now be done in 10.
South China Airlines has woven augmented reality, artificial intelligence, cloud computing, the Internet of Things, and 5G connectivity into a single application to improve the safety and performance of their engineers.
And BMW built the production line for their all-electrics cars in the one-to-one scale Metaverse before building a physical factory. This allowed them to test and improve their capabilities for six months, resulting in the real-world assembly line being 30% more efficient than if they’d built one without any experimentation.
Public initiatives like the EU’s proposal to standardise electrical ports and legislate access to drivers and API in hardware are going to speed up the adaption of virtual technologies.
NFTs beyond a fake Banksy.
A cyberattack on the artist Banksy’s website led to a collector paying more than $330,000 for a counterfeit Banksy NFT.
Fraud protection and reducing the environmental impact of the blockchain that powers NFTs still need to be sorted out, but NFTs are already finding new applications.
In an interview, Richard Ward spoke of how the financial services sector has started treating NFTs as a new asset class. There have been bank loans collateralised against NFTs, and even mortgages have been issues for virtual real estate deals.
He also believes that NFTs will soon replace all other forms of digital records, such as VIN numbers.
What’s next?
Ten or twenty years ago, would you have guessed how much social media would change our political, social, cultural, and economic world?
As Matt Ball puts it “There was actually nothing you could really do to intellectualize an answer. You had to test in it. You had to play in it. You had to build.“
We’re barely past the starting line and the Metaverse is already replacing bits of the social and mobile web as we know it.
Look 10 years ahead: are you ready to compete with a whole new crop of companies betting on different technologies, target audiences and a digital-native perspective than you or any of your competitors today?
Or are you going to be replaced by them?
In case you missed…
Google multisearch – search by image and text at the same time. /SEL
How DAOs could change the way we work. /HBR
Hydroponic vertical farming brings fresh produce to non-arable regions. /MIT
What makes the difference for Europe’s top start-ups. /McKinsey
How Kia is boosting business by focusing on first-party data. /Google
Analysis: Type of B2B content consumed may signal purchase intent timeline. /MarketingCharts
TedTalk of the Week.
Opportunity makers think of innovative ways to solve problems by bringing people together. They think of the world in terms of what can be done together rather than what they can do alone.
In this TedTalk, Kare Anderson shares her insights on how to be more curious, listen, and look for ways to get people with complementing skills to solve thorny problems by working together.
Have a great week!
Aliyar