Perspectives
27 May 2022
When Mark Zuckerberg announced in October 2021 that the parent organisation of Facebook, Instagram and WhatsApp would be rebranded Meta, it was pitched as the beginning of the next chapter not only for the guardian of the world’s most popular social media platform, but for the internet itself1.
Enormously symbolic, the retitling was accompanied by a significant financial investment2 by the company into developing a more immersive version of the internet – the metaverse – and has been a catalyst for others to follow suit, with expectations that the global metaverse market could reach $US476 billion by 2025F.3
The metaverse - a combination of the prefix meta (beyond) and the stem verse (universe) - is an amorphous concept encompassing both virtual and real-world experiences; Meta calls it ‘an embodied internet where you’re in the experience, not just looking at it'1. Users access the metaverse by creating an avatar in one of a growing number of virtual world platforms, where they enjoy various activities like socialising with friends, attending virtual concerts and buying digital items - activities which are not that different from those experienced in the real world.
Meta’s timing was far from coincidental. Just as the mass digitalisation of life as we know it has been accelerated by the COVID-19 pandemic, it has also sped up the ushering in of the next stage of the internet. Roblox, a leading metaverse player, saw its monthly active users rise by a quarter to 202 million in the twelve months to April 20214; 33 million people visited Roblox every day during the period5.
Unclear, however, of how fast and to what extent the next evolution of the Internet – of which some proponents coin as ‘Web 3.0’ – will disrupt the online landscape and when it will demand to be integrated into our everyday lives, corporate engagement remains embryonic.
Over the last year, non-fungible tokens (NFTs) have become prevalent in online commentary around the metaverse6, with consumer adoption being driven by the play-to-earn (P2E) gaming industry. Alongside the emergence of immersive online brand experiences, the growing familiarity indicates that the concept of a ‘virtual reality’ internet is not merely short-term hype for consumers and corporates alike7.
Using similar blockchain technology as cryptocurrencies, an NFT is a secure digital asset that incorporates easily verifiable ownership that can be publicly viewed and verified. Unlike cryptocurrencies, though, NFTs have unique values and cannot easily be traded for another. They were made recognisable by CryptoPunks, CryptoCats and CryptoKitties in 20188 but became mainstream in early 2021 with avatars created by a website called Bored Ape Yacht Club. 9 Ten thousand unique iterations of artworks of cartoon primates were sold for two hundred US dollars in Ethereum cryptocurrency.
The popularisation of NFTs represents two important elements crucial to the success of the metaverse: trust and value. The elimination of third-party verification encourages trust for consumers; and by creating a limited edition of something, the newest trend in the digital and art landscape became scarce and thus, value was created.
Macquarie Capital’s Associate Director of Institutional Sales, Alex Williams says, “The ability for a brand – or anyone for that matter – to create value in the virtual world comes firstly from having verifiable scarcity. But the potential of the metaverse for brands goes beyond transactions – it’s about the indirect benefits that come from building a network and culture around a brand or product.” This is what Williams describes as one of the biggest opportunities for corporates and brands in the metaverse.
Aside from the ability to better monetise assets, the metaverse allows [brands and corporates] to build trusted, inclusive networks unrestricted by borders and third parties."
Alex Williams
Associate Director - Institutional Sales
Macquarie Capital
At this year’s Macquarie Australia Conference, Yat Siu, Co-Founder and Chairman of Animoca Brands, spoke to 1500+ attendees from around the world about how NFTs are advancing the ability to create incredible soft power through building culture and community online.
“Virtual land ownership is about collective membership and building community. That’s what is so powerful here. Owning a Bored Ape is not about owning one piece of art or land, it’s about being a part of a large community that increases and enhances value for its owners,” says Siu.
As adoption of the metaverse increases, the early winners will be the brands that build communities and empower their members to freely compose on top of that foundation and co-own a part of it.
“Two of the most popular games in the world are Roblox and Minecraft – not necessarily because they look good but because people can create something and co-own it inside that space,” says Siu.
Similar to the success of YouTube, Web 3.0 will be dependent on user-generated content. But, unlike YouTube, Web 3.0’s decentralised blockchain will enable individuals to connect to an internet where they can own and be properly compensated for their time and data.10
According to Siu, that’s why culture and community are so important: the metaverse will reflect humanity as a collective.
“Building an open ecosystem like the metaverse cannot be done by a single entity. The metaverse relies on being open and on-chain because that’s how you can have trust and that’s how you can ensure that whoever is building on it is accountable for both the good and the bad.”
Contrary to the portrayal of one virtual world in Ready Player One, there will not be one metaverse and one economy. People will be able to choose their virtual worlds and freely move in and out. According to Michael Wu, Co-Founder and CEO of Amber Group, a leading global crypto finance service provider, this choice will make our collective digital future a more inclusive one.
“I doubt that everyone will ever be forced into one metaverse. Customers like different things and the Web 3.0 customers will be the same. We will be entering a very open environment, that’s the point of a decentralised and open-source Internet: we get to choose,” says Wu.
Wu explains that this self-determination will create diverse economies on the platform that cater to almost any digital lifestyles an individual wants. And, if people are early adopters – they can expect to be rewarded for this over time.
However, one of the biggest barriers to participation is understanding. According to Williams, like any mass adoption, it starts slow. “For consumers, many will be guided by their real-world networks. Trust in those real-world networks will influence adoption of a digital network.”
For corporates, access to talent in the cryptocurrency world is scarce and expensive, which poses a risk for companies that haven’t closed the digital gap to become even further left behind.
“At Amber Group, we have 1000 employees and most of those are engineers. The metaverse and its related industries are evolving and iterating every day and the real value in this world is being up to date,” says Wu.
“That’s why we need to empower game companies, lifestyle companies, consumer brands, sports organisations, social platforms – because all of a sudden – all their customers will now have wallets and have real value digital assets in those wallets that need financial services.”
