Is it finally time to care about the metaverse?

by Sarah Firisen

Google the phrase “is it time to care about the metaverse?” and there are a wealth of articles, mostly claiming that the answer is yes! Are they right?

In the next six months, I’m going to start on a home-building project. While I’ve done home renovations before, building a house from the ground up is a new and scary experience. I’m not a good visualizer; during the home renovation project, I couldn’t look at a bathroom tile and imagine what an entire bathroom would look like using that design. Given this, it was great that our architect used 3D software that enabled us to “walk through” the house plan. But how much more effective would it be if I could really “live” in a virtual copy of the house for a while? If there was a digital twin of the house design in the metaverse, my avatar could inhabit it for a while and get a real feel for whether that kitchen is big enough and whether the tile for the floor is a bit much or just right.

As I’ve written before, my ex-husband and I were very into Second Life about 16 years ago. He was a Senator in the ROMA sim, while I used my software development skills to learn the language for building and scripting to become a fashion designer. Dabbling in virtual architecture and construction, I built my own stores, and I also built my ex-husband a villa on a plot of virtual land he bought in the ROMA sim. Way back then, virtual worlds were mostly escapes from the real world. There was the occasional brand that set up a Second Life store, but they never really seemed to know what to do with the technology. 

Second Life itself, while it still is around, definitely is long past its peak of Inflated Expectations. Indeed, virtual reality (VR) and augmented reality (AR), core technologies at the heart of the metaverse, definitely had their moments of hype around 2016/2017, only to sink into the Trough of Disillusionment. I wrote about some of my hopes for the technology in 2017, talking even then about Facebook’s moves to be a significant player in this space, something that was borne out when the company changed its name to Meta. Despite all the hype this generated, there’s been a lot of virtual eye-rolling at this move, which definitely hasn’t helped the company’s valuation. Even Keanu Reeves weighed in, “Reeves has a very specific take: keep Facebook out of it. ‘Can we just not have metaverse be like invented by Facebook,” he told interviewer Alex Heath.”

In Second Life, you entered a particular platform and used its currency. The items made or purchased there couldn’t be used on any other technology platform. One big difference between the VR/AR of 2017 and now, and this is reflected in the pushback against Meta trying to dominate in the space, is that the metaverse, as envisioned today, is all about interoperability, “The metaverse is a device- and vendor-independent collective virtual space created by the convergence of virtually enhanced physical and digital reality. It has its own independent virtual economy, enabled by digital currencies and nonfungible tokens (NFTs).”

The terms Web 3.0 and metaverse are sometimes used interchangeably. But as this piece makes clear, “The biggest difference between the two technologies is that people use Web3 to access the metaverse, much like how an automobile uses a road. Web3 is about decentralized ownership and control and putting the web in the hands of its users and the community. The metaverse, on the other hand, is a shared digital reality that enables users to connect with each other, build economies and interact in real time — and it doesn’t care who owns it.“

This convergence of technologies, blockchain and crypto, VR, significantly increased computer processing power, IoT, and the decentralized, vendor-independent nature of the metaverse in 2023, could be what finally brings the technology concept firmly onto the Slope of Enlightenment and on the path towards the Plateau of Productivity. 

It’s easy to imagine many productive uses of the metaverse, from educational to virtual meetings to entertainment. And most of these are already underway in some form or another. The consumer opportunities are clear: “Every year, US$54 billion is spent on virtual goods.” At the moment, most of this activity is around virtual goods created by brands that customers already know and have loyalty to and is often centered around avatars in online gaming. But, there is already some sign that this is changing; as well as selling virtual things to be used in the metaverse, companies are starting to look at selling virtual goods that are a digital twin to items in the physical world. The user can purchase the real-world version when they purchase the virtual one for their avatar, “Ralph Lauren announced a clothing capsule for players on the gaming platform Fortnite earlier this month, which is tied to a physical clothing collection with a limited edition version of the brand’s iconic logo.”

Virtual real estate was a booming economy in Second Life back in 2007, with virtual sims changing hands for some very real amounts of USD. Sixteen years or so later, we seem to be back there again, “Pixelated parcels of land are being bought, sold and built upon in a market now worth $1.4 billion, making the metaverse a new frontier for real estate builders and investors. But, unlike in 2007, there does seem to be less of a focus on creating fantasy lands and more on the digital twin of real-world real estate potential. This is my home-building fantasy come to life; a virtual twin of my house design that I can really “live in”, “Brick and mortar home builders are also tapping into the metaverse for opportunities to reach new customers. In January, KB Home, one of the largest homebuilders in the United States, cut the ribbon on a community in Decentraland, where potential buyers can enter, explore and toy with customization options on three of their model homes.”

There are plenty of metaverse/Web 3.0 sceptics out there and some serious questions about whether the underlying technologies have matured enough. Are we really at a sufficient point of computational power and efficiency? VR and AR are key underlying technologies of the metaverse, but the headsets are still clunky, and while the costs have come down, they’re hardly cheap. There have been lots of false starts and unrealized promises along the way; remember Magic Leap? This company was the darling of the AR world in 2011, with a highly secret and anticipated headset that didn’t materialize until 2018 and then was a commercial flop.

On the other hand, as we saw with ChatGPT recently, huge technological leaps can suddenly change everything. Maybe the metaverse is about to have its day. Certainly, the fact that companies as traditionally conservative and risk-averse as PwC are taking it seriously enough to have a metaverse business group indicates that we may be at an inflection point. It indicates opportunities and challenges ahead for businesses and consumers; how are a company’s supply chain operations changed when the initial point of customer contact is when a virtual item is purchased? What are the taxation implications of virtual goods? And the list goes on. 

Some of these questions have already started to be addressed; internet commerce was the proving ground for many of the issues that will just get their next iteration in the metaverse. Some companies are already accepting crypto for real-world purchases. Over the last 20 years or so, e-commerce has been a major disruptor to the consumer market. I remember when the idea of shopping online was pooh-poohed by many as a flash in the pan that no sensible person would take part in. How did that work out for them?