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Making sense of the Metaverse

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With Facebook announcing a rebranding to Meta, in line with its intention and commitment to reposition towards the metaverse and bringing it to life, the term has generated a lot of interest from the business and social community.  

Tech evangelists are optimistic the metaverse will be the next big digital evolution, bringing new risks, opportunities and adoption. Firms will be disruptors or disrupted from this new technological wave. If you are a business owner, where will your business be?

 

What is the Metaverse?

The metaverse is being described as a virtual world with virtual and augmented reality capabilities combining with the real world. The innovation is set to bring about convenience, international exposure to goods and services, enhanced communications and engagements, capacity developments in education and training and permeate into most activities within our social lives.

The metaverse name has its origins from a, 1992 science fiction novel ‘Snow Crash’ written by Neal Stephenson to describe a 3D virtual space.

Microsoft Vs Meta Platform (Facebook)

On Jan. 18 2022, Microsoft Corp. announced their intention to acquire Activision Blizzard Inc., a leading American video game publisher and distributor of blockbuster games available on consoles, mobile and PC. This acquisition, estimated to be around $69 billion, will accelerate the growth in Microsoft’s gaming business and be a leverage into the metaverse.

With the recent global pandemic, that forced workers around the globe to abandon their offices to work and collaborate from remote locations, Microsoft announced plans in November, 2021 to unveil a solution early 2022, by introducing Mesh for Microsoft Teams.

Also, with Meta Platform (Facebook) planning to allocate about $10 billion this year alone on Facebook reality Labs (its metaverse division), it’s an indicator on how competitive its going to be in the near future.

 

The quest for market dominance or realizing first mover advantages can be seen from this strategic move. A concept in economics referred to as network effects is deeply rooted in their business models.

Microsoft business model

Microsoft is in the hardware, software, social and advertising business, and makes money by selling products, softwares, services and also provides a platform for advertisers to improve their brand presence (through their social media and search engine).

Microsoft’s network effect is established with the increased number of participants subscribed to their products and services, which improves the value of Microsoft’s platforms for users

Meta business model:

Having about 3 billion monthly users across its family of applications (Facebook, Instagram, WhatsApp, and Messenger), its core revenue generation is from the advertising. It also provides a platform for its users on social networks to connect.

 

With these two technology giants having the audience, the next step to realizing gains from the metaverse is to expand their platform to accommodate the 3D and virtual reality space.

JP Morgan has opened up a lounge (Onyx) in the blockchain – virtual world of Decentraland. It is reported to be the first bank to enter the metaverse.  

Retail, telecommunication and entertainment brands from Walmart and Nike to Disney and Warner Music Group, Verizon are all joining the trend.

Benefits of Investing in the Metaverse for businesses

Metaverse being a technological innovation, is considered a valuable asset, and like all assets, any investment made will produce returns in the medium to long term which can propel a company to have a competitive edge and gain market dominance.
Benefits can be realized in the following ways:

Patents : A patent is an intellectual property right that gives the owner the legal right to exclude others from making, using, or selling an invention for a limited period of time. A patent holder must sue someone infringing the patent in order to enforce their rights. A patent can be granted to successful applicants for their unique device, substance, method or process. In the metaverse space, novel devices, technologies or peripherals which has undergone research can benefit by registering for patents.

Learning curves : The learning curve theory stipulates that for any new activity being performed, efficiency is diminished at the beginning by any engaged workforce. As tasks are repeatedly done, then maximum efficiency is seen.

Market dominance : through an established network of users in the metaverse space (developers, manufacturers, software applications, users), a firm can use it to gain market dominance and enjoy network effects.

Increased profits : being able to stop others from selling a competitive alternative, you essentially have monopoly to exploit the resource. A firm can charge more for its devices on related invention, if the products, device or invention is valuable and the firm has a large customer base, it will generate more profits for the firm.

Use cases of Metaverse

Firms from a wide array of industries are now finding new applicable use cases for the metaverse, from architectural, real estate, tax to accounting sectors. The metaverse being novel and in its infancy, some of the use cases are speculative, however, it is being applied in the following areas, though not fully taken shape:

• Law enforcement training : Law enforcement can adopt the simulated environment in their physical training and communications. It can greatly help to select officers with the right skills and intelligence for service.

• Gaming : In gaming, the virtual reality has already been put in motion, with gamers enjoying a simulated gaming environment and playing with avatars as well as purchase of NFTs and other virtual artifacts. The gaming business will be most impacted.

• Education : In the area of education, it can be used to bridge geographical barriers. Students can be virtually present a live classroom environment and have interactions with lecturers and other professors.

• Real estates : In real estates, architectural designs can be done instantaneously for customers to have a feel of the infrastructure, viability and others. Some investors are even buying virtual spaces of land in the metaverse to develop. • Banking : In the banking industry, customers can virtually telecommute and meet with their fund managers and bankers and conduct other personal banking businesses, they do not have to be physically present.

• Clothing Retail : The clothing industry can benefit from the metaverse and increase demand for products. Users all over the world can try on a shirt or dress and have a feel of the item before purchasing the product. It can reduce retail product-returns and customer dissatisfactions.

• Automotive : In the automotive industry, car prototypes can be quickly developed. Customers can test drive their preferred vehicle without physically being in one. Manufactures can also have the benefit of subjecting their vehicles to test and safety checks before committing resources to start production. Also, 3D or virtual reality show rooms can be created to increase sale of vehicles across the globe.

Generally, the use cases can be grouped into communication, training and education, entertainment, production, sales.

Conclusion
The journey to a well-developed virtual interconnected world is a long one, it will require many considerations as to what can be done and the resultant changes in social, economic, and technological trends that may come along with it, then a stage to encourage adoption. Most people understand the notion of a virtual world, but that of the metaverse, is can be evading because it is a work in progress.

Businesses will have to compete against each other in a new field, and brands must adapt to get a fighting chance. Its no secret, Meta has realized their current business model will not be sustainable in the future, they will have to adopt to accommodate the new trend that is coming.
Like all big innovations, the early bird catches the worm. Take a look at bitcoin in the blockchain space!

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