In my previous article about the metaverse, I gave you an insight and showed you the potential for investors. But technological revolutions are always a thing. At the beginning, apart from a few insiders, nobody believes in the success. But once a critical mass of users has been reached, the avalanche can no longer be stopped.
The revolution doesn’t always work. In the 90s, virtual reality was an outsider with bulky giant gloves that remained on the fringes. Gaming studios and retail companies are now using virtual reality and augmented reality, but these technologies have still not really caught on. The entry hurdle is large. Larger than with smartphones or Facebook, and the benefits still don’t outweigh the costs.
The same can be said about the concept of the metaverse. Not only since Mark Zuckerberg announced the metaverse of Meta as the next big thing, the concept has been pushed by more and more companies.
But users often lack the answer to the question of what the metaverse is and what it is good for. It is questionable whether this will change in the near future, whether the critical mass of interested parties will be reached at some point – and there are good reasons for this.
What Is Metaverse?
First and foremost, many people still seem to be ignorant of what we’re talking about when we talk about the metaverse. In Deloitte’s 2022 Media Consumer Survey, nearly two-thirds (59 percent) of respondents say they’ve never heard of the metaverse, or don’t even know if they’re familiar with the term. 64 percent state that they have no understanding of this term. The term itself requires explanation and we haven’t talked about access, possible uses and added value.
It is actually misleading to speak of “the” metaverse, because there is not just one, but already many metaverses from different providers. After Facebook announced his own metaverse and founded the parent company Meta, the idea also got public attention, which led to the fallacy that Meta was now building the metaverse.
A metaverse is a kind of virtual extension of the Internet – a virtual world with its own economy and currency in which people “live” as avatars. Anyone who has seen the Spielberg film Ready Player One*, based on the Ernest Cline novel*, will get a pretty good idea of what a metaverse can look like. Neil Stephenson coined the term in the 1992 science fiction novel Snow Crash*.
Already (virtual) reality today?
But are there already offers available that come close to a “real” metaverse? That’s probably in the eye of the beholder. Some will still remember “Second Life”. It started back in 2003 and is still going strong today. The virtual playground has over 70 million registered accounts. It is unclear, however, how many of these are also actively used. Second Life was the first successful attempt to establish a metaverse, but it never became a real game changer and is always ignored when the concept is discussed today.
A man who has made a name for himself with a critically acclaimed essay on the subject is former Amazon executive Matthew Ball. It’s said that Ball’s essay “The Metaverse: What It Is, Where to Find it, and Who Will Build It” had impressed Mark Zuckerberg enough to make it required reading on the Meta team.
Online games may use the metaverse idea, but what is important is not the gaming aspect, but the shifting of activities and events into the virtual world. In Fortnite, for example, there are concerts where players come together and listen instead of shooting each other down. In these moments, however, the game is misused, so Fortnite is not a metaverse.
No Real Added Value In The Metaverse Yet
According to Ball, the metaverse is an extension of today’s Internet. It’s not about the supercomputer in our pocket or being constantly connected to the internet. It’s about us spending more and more time, free time and work in virtual worlds and simulations. Hence, the virtual world should be an alternative to the real one and for that it has to offer the appropriate content.
However, the prerequisite for success is that the business models offer services with real added value, for which customers are also willing to pay!
But what kind of services are these? What is currently found in the metaverses? The German grocer Kaufland, the Swedish H&M already have their own islands in the Nintendo hit Animal Crossing. Ralph Lauren and Nike run shops in Roblox. And Walmart has had trademarks protected for the start of the metaverse. Adidas has spent millions of dollars on virtual properties in The Sandbox, and Gucci is said to have sold a virtual handbag for over $4,000. But do they offer a real added value in the metaverse?
Metaverse is after Second Life the next and very serious attempt to create a fully digital world. Morgan Stanley even predicts that luxury brands alone will make $50 billion in sales in the Metaverse by 2023.
However, it seems as if experts and companies are doing the calculation without the users. In a study published in December 2022, Capgemini asked almost 7,500 German consumers who are already interested in the metaverse how they would like to use it. 43 percent said they want to interact with friends and 39 percent with work colleagues. “Metaverse commerce” and purchasing was interesting only for 28 percent of those surveyed. Mind you, those who are interested in the concept anyway.
To be successful, a metaverse must offer clear added value compared to real-world applications. Which is does not yet! But what is clear added value?
Clear added value is when something is better, faster or cheaper than previous offerings or when there are problems to be solved for which there was previously no satisfying solution. However, in order to combine the advantages of the Internet with virtual reality in such a way that the broader society can be reached, the metaverse concept must offer more than virtual concerts, virtual clothing and funny avatars.
Metaverse – A Bet On The Future
So far, the metaverse has been an experimental laboratory, a bet on the future. Many companies try to make the market interesting in order to be there when the concept really takes off, or in the hope that it really takes off. In the coming years, the question will be how to engage people, how to provide them with real added value. At this moment, we have a very similar situation like with the internet at its beginning.
In the beginning it wasn’t clear what could be done with the internet and there were only a few fields of use, especially marketing. Hence, also for the metaverse, we first have to discover what potential it offers.
Achieving a “critical mass”, as already mentioned, is important for success. It’s quite slow at the beginning, because different user groups and offers have to be brought together first. Once the critical mass has been reached, good offers could have a pull effect.
In his essay, Matthew Ball takes a similar point of view and compares the development with the breakthrough of the smartphone, for which Apple’s iPhone was responsible. Mobile Internet existed much earlier – for example via WAP – but it needed a breakthrough moment for it to be suitable for the masses.
According to Ball, the metaverse will trigger a similar transformation process. In order for him to be right, the content must become more relevant and the barriers to entry must be lowered in the coming years. Hence, metaverse concepts first have to convince people to dive into the digital world and use it in a relevant way.
Where the smartphone brought the internet out of the computer and into the real world as an constant companion, the metaverse is taking the consequent path to a digital future. At this point, digital natives are the first point of contact for companies and the target group who have to act as influencers for the rest. The smartphone didn’t break through because it catered to technology nerds, but because it made all the people who didn’t have anything to do with digital technology an offer they couldn’t refuse.
But it will probably not be decided in 2023 whether the metaverse will also be able to do this.
Subscribe for free to receive new posts and support my work. The subscription will be proceeded via substack.com. There, you can subscribe for free content but also for premium content. Just check it out by clicking the button below! If you would like to publish content on substack, please click here.
SUBSCRIBE FOR A NEWSLETTER*Affiliate link: when you click on this link, no additional costs would arise for you and the product or the service will not become more expensive. When you decide to buy the product or use the service, I’ll get a little benefit from the provider which I would reinvest to keep this blog alive.
