Gartner predicts that by 2026, 25% of people will spend at least 1 hour a day in the metaverse. The term “Metaverse” took the world by storm in 2021, but its origin dates back nearly three decades.
Originally coined in Neal Stephenson’s 1992 novel, ‘Snow Crash’, the term referred to a convergence of physical, augmented, and virtual reality in a shared online space. In that sense, the seeds of an all-encompassing metaverse have already been planted and the early iterations of metaverse experiences are incorporated into our lives.
When thinking of the metaverse as it exists today, gaming has led growth in this space, making it more accessible to many. The 2002 release of Microsoft’s Xbox console and its iconic game, ‘Halo’, paved the way for a vibrant and interactive gaming economy. Technological advances in everything from microprocessors to mobile connectivity to AR/VR with multi-sensory feedback have supercharged the gaming industry and provided a blueprint for the metaverse, present and future.
COVID-19, with its stay-at-home orders meaning many people have developed new habits with respect to entertainment and socialisation, as well as the rapid rise of wider interest in cryptocurrency investment, has helped catalyse a unique convergence of factors leading to the growth of the metaverse:
- The pandemic cut off the physical connection between people and their loved ones – more time in isolation with fewer options of things to do spurred massive growth in time spent across all digital channels.
- At the same time, further technological disruption (that is, 5G, open AI, creative tools, blockchain accessibility) has empowered humanity to recreate physical experiences in virtual worlds.
- Lastly, malaise in the real economy spurred correlated growth in the virtual economy. People spend their money where they spend their time, hence shifting consumer priorities: more e-commerce and increased value placed on digitally-native goods, services, and experiences.
Globally, there are 519 million eSports participants and 2.1 billion gamers, yet we are only now scratching the surface of virtual experiences beyond gaming.
The seeds of what we call “metaverse” have been planted over decades, but COVID-19 changed the game and gave the metaverse its moment.
Now we look at the path forward…
Metaverse Gateways: Reality Reimagined
The experiences we all know and love today will exist in the metaverse. Sports, music, gaming, and connecting with friends and loved ones will have evolved experiences. The individual parts that make them special will still be there, but they will adapt and take on the next-generation capabilities of an immersive digital experience. These immersive experiences will more naturally emulate human behavior and the feeling of physical connection.
In the metaverse, immersive experiences enable a new way to connect with a heightened feeling of presence, especially if experienced in Virtual Reality (VR) and/or Augmented Reality (AR). Conversations with eye contact, working sessions with whiteboards, and intimate moments in private spaces are all possible in the metaverse. The connections are virtual, but here, they feel real.
Metaverse experiences are still in their infancy, so media and creative activation is ripe for innovation. Nearly any Internet-enabled device can access a metaverse experience and they each have a unique ability to engage consumers. VR & AR consumer devices will ultimately be the gateway of choice for metaverse experiences. But today, Mobile, Desktop, and Game Console devices offer the most scaled access to the broadest number of “metaverses” (there is more than one) and consumers. We expect that to change over the next two years with VR/AR achieving broader scale by 2024 as metaverse experiences grow and mature to attract users that desire full immersion, but that metaverse environments will still have to enable users who can’t access VR/AR to have experiences (even if lower fidelity) through Mobile, Desktop, and/or Game Console.
A Generational Shift from Web 2.0 to Web 3.0
As alluded to above, there are robust ecosystems of many metaverse access points and gateways that support immersive experiences. Building interoperability between these various metaverses, both Web 2.0 and Web 3.0, is a key next key step in the evolution of this space. While there are many players in the space, the key battleground for the foreseeable future is between Centralised vs Decentralised metaverse gateways.
Centralised metaverses are corporate entities, owned by shareholders and operate for the most part as walled gardens. For individuals or brands participating within these virtual worlds, they are renting space and following guidelines established and enforced by the company. Their creations have no utility outside of that metaverse, at least not yet. Today’s most popular and recognisable metaverse gateways are by-and-large centralised and are generally considered Web 2.0 enterprises.
On the flipside, decentralised metaverses live on the blockchain, which holds the promise of interoperability, distributed ownership, and complete transparency through a public ledger. Decentralised metaverse gateways and experiences are populated by assets that are owned and governed by the community of participants within each ecosystem. Decentraland, a virtual world consisting of 90,000 real estate plots in which the owner of each can develop or lease out to others, is the largest decentralised metaverse with a value surpassing $3 billion.
Consumer use and understanding of blockchain is still nascent as crypto wallet technology requires setup that is new for consumers to learn. The massive potential of Web 3.0 lives on the blockchain – that has been the most significant epiphany of 2021 and early 2022 and (in addition to the significant name change for Facebook to Meta, which made headlines around the world in late 2021), the reason why “metaverse” is now a term that everybody knows.
Crypto Wallet: The New Passport, Digital ID, Vault and Source of Truth
In Web 2.0 (non-blockchain), experiences are platform-based, providing Internet users with the ability to rent services in exchange for using their data and user content for monetisation and ads. To authenticate, analyse, measure, and monetise these users, Web 2.0 platforms use emails, phone numbers, usernames, passwords and digital cookies to paint a picture of the audience. Web 2.0 metaverse experiences are also platformed, walled gardened and centralised, hindering the ability to transport the data, experiences and true ownership of the data rented by that user to external platforms.
In the generational shift to Web 3.0 (on-chain/ on the blockchain), these experiences are tokenised and decentralised, which means that users of services can fully own, transport, monetise, control, and customise their data vis-à-vis having a platform, owning and controlling it. For a user to engage with a Web 3.0 metaverse experience, or hold, transfer, and utilise tokens (NFTs, wearables, avatars), they would need a crypto wallet that can interact with the blockchain. NFTs (digital collectibles/ tokens) are immensely attractive to younger digital natives as stores of value, provide utility and can serve as access to metaverse experiences and new forms of brand loyalty. Simply put, a wallet allows you to be you, everywhere in Web 3.0. It is a fully trackable and transparent source of truth, although notably not in the same way as we’d expect first party data and/or cookies to provide traceability in the “real world”.
Importance of Developing Wallet Strategies for Brands
With signal deprecation and consumers severing trackability from advertisers, audiences are taking control of their data and migrating to Web 3.0 experiences, and thus, Web 2.0 ad tech solutions will need to evolve.
For years, advertisers relied on the collection of email addresses/ SMS/ browser and device IDs. In the near future, the wallet may be a new sought after datapoint. To collect this data, agencies and ad tech services will help brands develop wallet strategies. Advertisers will invent methods for brands to offer consumers a way to opt-in to provide and/or connect their wallets to that brand by accessing a metaverse experience, collecting a branded NFT or digital collectible, or use that wallet to link with a Web 2.0 site experience. For example, companies could develop a strategic process to collect Web 3.0 wallet addresses and pair them with Web 2.0 audience data merging those users into a holistic view that marketers can engage with indefinitely.
*Popular Wallets: Metamask, Formatic, Coinbase, Gemini, Novi (Facebook)
Additional Metaverse Implications for Brands
- Web 2.0 metaverse experiences such as mobile, PC, and Console Gaming provide marketers with the ability to integrate brand experiences in a variety of ways. Currently, Web 2.0 metaverse experiences have the most scale as they have had years to integrate with ad tech stacks within Web 2.0 gaming platforms.
- Web 3.0 is a wholly different approach, as it is currently not about serving ads; rather it’s about providing meaningful and valuable experiences. Brands no longer need to be sponsors of games and events (although they can be). Instead, they can be members of the community and replicate brand experiences in fully customisable and connected 3D experiences. Since Web 3.0 is primarily decentralised, it will be critical for brands to make an opt-in connection with consumers to engage their crypto wallets for a prolonged connection to audiences.
3D Asset Libraries
The Metaverse is generally built-in 3D and brands will need to upgrade from flat content to fully immersive.
- Experiential content – It will be critical for brands to strategise the building of their 3D asset library for quick and easy implementation across multiple metaverse experiences in VR, AR, Mobile, and PC devices. Brands likely have these assets and, in most cases, own the IP for characters, 3D models of products, and CAD files of brick-and-mortar locations. It’s time to secure those rights, collect and index those assets to build branded experiences more easily across multiple metaverses.
Extension of IRL Investments
- Web 3.0 metaverses will allow brands to extend their existing media investments by inserting live broadcast, live social, or 2D content into the metaverse experience; influencer meet and greets, live performances and NFT versions of brand merchandise can all be used to extend and enhance the value of those investments to much larger audiences. These extensions will empower brands to cultivate new audiences, drive loyalty, and ultimately enable commerce through the sale of both physical and virtual goods.
Author: Anil Pandit, Senior VP, Precision, Publicis Media India