The definition of metaverse originated in the science fiction novel "Snow Disaster", first published in 1992 by American novelist Neil Stevenson, in which a cyber world parallel to the real one is described, where each person has his own digital avatar (1). The word is a combination of "meta[1]", meaning "beyond" and "universe". The novel, which intertwines history, linguistics, anthropology, religion, computer science, politics, and philosophy, focuses on the life of Hiro Protagonist - a hacker, and at the same time, a pizza delivery man teleporting into an online fantasy world. It turns out that it was this new reality, called "metaverse", with all its artistic features and events with which it was described in the book by the cyberpunk genre, that would not be substantially different from the exact virtual experiences of us three decades later.
The emergence of the meta-universe provides both new opportunities and challenges for all sectors. Metaverse allows a high level of customization of the customer experience, whereby users define their preferences to customize their avatars, but the underdeveloped technology infrastructure for users, among whom glasses are needed, creates challenges. In the fall of 2021, Facebook's largest social network founder Mark Zuckerberg announced that he is changing the company's name to Meta and focussing on the future interaction of people and brands in virtual reality. He shared plans to build a digital world of our own, featuring virtual reality headset and augmented reality. “We believe that the metaverse will be the successor to the mobile internet,” Zuckerberg said. “We’ll be able to feel present – as if we’re right there with people, no matter where we are, actually” (2). Thinking of ourselves on the components of our reality, we would suggest that we already live in the metaverse: Zoom meetings, cryptocurrencies, online games, and others. The virtual model, built by Zuckerberg, has its prototypes and contemporaries, and it’s not the only platform we can call “metaverse.” Here are some of the most popular:
Roblox | 2006 | An online gaming platform and game creation system that allows users to simultaneously program and play games created by other users. Created by David Bazuki and Eric Kassel in 2004 and released in 2006, the platform hosts user-created games of multiple genres encoded in the Lua programming language. As of August 2020 Roblox has over 164 million monthly active users, including more than half of all American children under 16 (3). |
Fortnite | 2017 | Fortnite is an online video game developed by Epic Games and available to consumers from 2017. It is available in three different versions: Fortnite Battle Royale, a free Battle Royale game, and Fortnite: Save the World. Fortnite Battle Royale has achieved tremendous success and a cultural phenomenon attracting more than 125 million players in less than a year, earning hundreds of millions of dollars a month. Fortnite generally generated $9 billion in gross revenue by December 2019 (4). |
Sanbox | 2018 | Sandbox is a virtual world where players can build, own, and monetize their game experiences in blockchain Ethereum. The game platform is known for its two mobile products The Sandbox (2011) and The Sandbox Evolution (2016), which combined generated 40 million downloads in iOS and Android. In 2018 Pixowl, who created the game, developed the model with user-generated content and a large community of creators from mobile devices to the blockchain ecosystem. (5). |
Decentraland | 2020 | Decentraland is a 3D virtual, browser-based platform. Users can buy virtual plots of land in the platform like NFT[1] through the cryptocurrency MANA, which uses a blockchain Ethereum. It became available to the public in February 2020 and is controlled by the nonprofit Decentraland Foundation (6). [1] Definition in the next part of the text. |
Table 1. Predecessors of the metaverse
Months after the announcement of the rebranded Facebook, in May Mike Proulx, Vice-President of research at the Forrester analyst company, participated in a discussion about meta and its importance for brand communications organized by the digital agency MediaMonks in a virtual studio (7) with hosts Henry Kauling – Chief Innovation Officer and Katherine D. Henry - Senior Vice-President Web3, Metaverse and Innovation Strategy of the company. Proulx shares some of the key results of the recently released report "Ready Player Brand: Marketing In The Metaverse" (8), according to which 76% of B2C marketing executives in the U.S. plan to invest a portion of their budget into this new world. By comparison, only 34 percent of U.S. online users who are in adulthood, and an even lower percentage in the UK, said they were excited about the development of this new reality. “Now the goal is more to convince consumers how this so-called augmented reality will complement their lives,” the analyst shares in the interview. From the perspective of different generations, the research company’s data shows that “the younger you are, the greater your appetite is toward compelling media experience”.
It is expected that the metaverse audience will likely be composed primarily of millennials[3] and generation Z[4] and those users who are computer and video game enthusiasts, dependent on age. While communication and marketing professionals should be familiar with the channels and tools through which to reach different audiences, and the metaverse is still defined, the potential to unleash the next wave of digital disruption (9) seems increasingly clear, with real benefits already emerging for early consumers and companies.
New layers of 3D internet experiences - technological and economic characteristics of the meta
In the metaverse, the conscious boundary between physical and virtual fading, and has been reinforced by growing technological capabilities. One of the functions of this new environment, in which people are practically connected to their family, friends, pets, favorite subjects, and experiences, is to transfer users to the next generation of social interactions, which increases the number of questions and interest among communication and marketing professionals (10).
The new virtual reality combines 5G5], AI[6], blockchain[7], content creation, and many other elements. Deloitte analysts think that in the future this environment will evolve from real to virtual to realizing the digitization of the real experience, as well as from virtual to real to realize the digital experience update. The mutual generation of virtual and real is a key feature of the meta-universe, which is built on six main elements:
1. Immersion into virtual environments using technology.
2. Create and use a virtual identity.
3. Own digital assets.
4. Feel the real experience.
5. Virtual-real interconnect.
6. Immersion into a complete social system.
The three meta-universe technologies, according to the analyst company, are:
1. Extended Reality or AR - integrates digital elements with the physical space to provide relevant information and reinforce understanding of an object.
2. Virtual Reality or VR - a fully immersive virtual technology environment that provides a sensory experience. Here, the consumer should use this. VR glasses (see Figure 1).
3. Spectrum or mixed reality is a mixture of a virtual and physical world. The technology is being developed today with holographic technology and augmented reality.
Looking at the economic factors associated with consumer attitudes in the metaverse, I am sharing my personal experience from May this year, when, in the framework of Europe's largest digital marketing conference, the OMR[8] festival in Hamburg, among the most discussed topics are the business opportunities in web3. In his presentation, Dr. Theo Pam, an international lecturer on topics related to the digitization of communication, presented the audience with rich examples of the new reality with a focus on the transition to web3 and a trend familiar to a limited number of users called “bored monkeys” (11). He then shared that according to OpenSea[9] data, the growth in the NFT[10] market for the period from May 2021 to January 2022 was over 600% and trade volume in January was estimated at $5 billion in January. Just a few months later, in June, the market experienced a drastic decline (12).
One of the highlights of Dr. Pam’s presentation was the showcase by Adidas sports in the metaverse which was very impressive in terms of a customer experience. Another brand with a marked presence in this new virtual environment is competitive sports goods maker Nike with its new model CryptoKicks sports shoes (13). The Lecturer’s recommendation to marketing and comms professionals is to experiment and combine skillfully the mix of diverse channels and tools such as social media, influencers, video content, and events. According to Theo Pam, it is because of the dynamic development of the entire new virtual reality, that the labor market will need new skills, which he defines as “crypto, creative, coding, content, and community. Examples of virtual reality work roles that he defines are:
● Discord Mods
● Virtual Event Organisers
● Virtual Land Brokers
● Consultants
● Analysts
● Community Managers
● Escrow
● Artists
● Blockchain Developers.
If we look at the economic aspects of meta-reality, we should look at the exchange technology. NFT technology combines the idea DeFi [11] and is secured by blockchain (14). DeFi is a method designed to provide convenience to centralized markets without the influence of owners. The technology falls into blockchain type as well as all cryptocurrencies like bitcoin, Ethereum, and more. Blockchain, in turn, is a decentralized method of data collection that uses peer-to-peer networks, meaning data is stored in blocks that are chronologically arranged and marked with corresponding dates. Each block contains data for the previous and next. Values change at the time a transaction takes place. This ensures the validity of the data and a fraud-protected system.
Economically, ‘fungible’ means an indispensable commodity, a unique commodity, such as $10 can be replaced for 10 $1 notes and the value is retained, while a $10 note with an autograph of a known person will be considered unique. Defined as a digital tool based on blockchain technology, NFT can only be purchased with cryptocurrency. They can be in e-picture, video, music, meme, or tweet format 14).
In 2021, in just one quarter in the June-October period, sales increased by 464%. Together with the growth of this market, questions arise about the preparedness of new technologies to meet growing needs and how sustainable this business model is for several NFT e-commerce platforms, such as Nftfy, Splyt, Pandora, and Drops.
NFT is already contributing to the development of various interest groups and communities ranging from fan pages to political movements, from individual to business ess users, and even art buyers. Until now, digital art did not have the same value as painting because it could have been easily copied and shared. The new technology revolutionized the art market: it ensured that digital art could finally be collected just like traditional painting or sculpture. An example in this direction is misa. art[12], a unique online platform that brings together emerging and established artists and offers a range of physical and digital art. Ultra contemporary artists have been featured alongside the art history classic of the past 70 years. The NFT market at misa.art offers art that can not only be bought but also sold in the secondary market. With each sale on the secondary market, the seller receives 90%, the remaining 10% covers the contractor's resale right and service fees (15).
The evolution from virtual to real - a process of exploring new production and consumption scenarios
According to a Gartner forecast, by 2026, 25% of people will spend at least one hour in a meta-universe. From the perspective of business analysts, this makes it an attractive opportunity to create meaningful, personalized user experiences, which means brands need to be active and stay informed, even making their first attempts in the virtual world (16). The analyst firm McKinsey summarizes in a timely survey of over 3,400 employees and managers from various businesses around the world, of whom 60% have access to and use the early version of Meta, say that the areas in which they recognize business opportunities in several directions:
marketing campaigns and initiatives;
training and development of employees;
holding w organizing events and conferences;
product design or digital copies of products (17).
As we mentioned above in the blog, brands like Adidas and Nike are already active in the metaverse, along with carmaker Hyundai, fashion conglomerate Gucci[13], Balenciaga, and Louis Vuitton, Prada[14], and more. Modern hardware and software technologies provide options for unique experiences, including capturing customer lifestyles and color personalizing the user avatar. A truly immersive experience to date is dominated by Facebook’s Oculus headset (rebranding to Meta Quest is on the way). This helps brands develop a customer-centric approach and improve customer knowledge as well as their communication approach.
In July 2022, virtual platform Sandbox announced a new partnership with South Korea-based commercial bank KEB Hana Bank (18), which has one of the largest foreign currency ranges. With this deal, the company aims to expand the meta industry’s global business into the banking industry. The Sandbox and KEB Hana Bank will collaborate to establish a new style of event marketing. Although KEB Hana Bank was recently built as the highest-rated guest-rated bank in the country, having the largest assets in 2015, has 199 branches in 24 states. This includes developing a collaborative business strategy, such as managing a virtual branch at The Sandbox metaverse to provide basic financial services and promoting investment or coloring opportunities with The Sandbox's other partners. “Metavesal is how people will experience Web3, and we want to be part of this new trend. This partnership can open the door to a brand new kind of service, especially for the young generations,” stated KEB Hana Bank Deputy President So Jung Kim.
Figure 2. The Sandbox announced a new partnership with KEB Hana Bank, source: The Sandbox, 2022.
The Deloitte report (19), which we refer to several times in the text of this publication, concludes that the metaverse will form a two-core model - the industrial metaverse will be promoting the productive efficiency of the physical world, and the consumer metaverse will be enriching the personal spiritual world. The two paths of development, integrating the virtual and real world, will gradually combine to eventually form a closed ecosystem of the physical and spiritual worlds. For the industrial meta-universe, developing from virtual to real means that emerging industries in the virtual world can circulate, be displayed, and used in the virtual world, while also having practical applications in the physical world to influence the physical world. world and create real economic value.
Figure 3. The ecosystem of consumer and industrial metaverse. Source. Deloitte Research and Analysis, 2022.
B2B brands once bound by the parameters of expensive business travel and trade shows can now connect with business decision makers virtually through the meta platform. This minimizes costs while maximizing access to product experts on a more consistent basis, allowing marketers to be even more creative when it comes to campaign timing and business goals (20). At the same time as early positives, which recognize companies in the technology and business sectors, there are some obstacles:
1. Brand safety - Unlike traditional digital channels that can enforce brand standards through tactics such as blacklists and careful monitoring of the brand currently the metaverse heavily depends on consumer compliance and careful brand performance.
2. Talent market – even more a trace of expanding recruitment efforts to include candidates with experience and enthusiasm about the new virtual reality.
3. Data analytics – companies should consider incorporating checkpoints into their digital processes to test pressures on how digital experiences and optimizations can (or can’t) integrate into a virtual experience, such as a real-time offer being translated into a virtual experience.
Although “pioneers” from different industries have proved that the metaverse provides opportunities that repeat or even improve those in the real world (21), their potential remains unclear – and most companies act carefully.
The key stakeholders – consumers and companies – have the unique opportunity to be part of forming the metaverse. By 2030, it is entirely plausible that more than 50% of live events will take place in it (21). Enterprises with strong financial performance such as manufacturers and telecommunications companies, can have almost all the assets and processes represented in the meta-digital mirror, and the same applies to the simulation of physical products and spaces to support their design. For all this technological progress to make sense for humanity, the process must be successfully controlled and contribute to connecting the society, widening access to education, and acting as a catalyst for social mobility. Brands should combine virtual and physical merchandise marketing with the virtual world. Before to connect into the metaverse, companies need to wonder how they can make their products interactive and involve the customer.
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[1] Μετς is the original name of metaverse from Greek. [2] Definition in the next part of the text. [3] Those born from 1981-1996 [4] Those born in 1997-2012 [5] 5G wireless technology provides higher multi-Gbps peak data speeds, ultra-low latency, greater reliability, huge network capacity, increased availability, and a more uniform user experience for more users. [6] "Artificial intelligence". [7] Blockchain - a shared, immutable database that facilitates the process of recording transactions and tracking assets in a business network. [8] Official page of the CMR conference - https://omr.com/de/events/omr22/. [9] OpenSea is an American platform for online trading irreplaceable tokens based in New York City. [10] See the definition further in the text. [11] Decentralized Finance. [12] More info at https://misa.art/pages/nft-overview. [13] More info at https://vault.gucci.com/en-US/story/metaverse. [14] More at https://www.vogue.com/article/balenciaga-fortnite-partnership.