Transitioning to Metaverse
for the greater good
Last week was the earnings season and we saw technology companies talking about their financial performance and their way forward. One earning release that caught my attention was of Facebook Inc., especially where they spoke about the way forward.
They envision people living, working and doing all the activities inside the platform — creating their own metaverse. Before we get into the details of the metaverse, it is important to understand the reason behind launching the ‘metaverse’ ballon.
Facebook owns the leading digital platforms in the world which collectively have more than 3.5 bn users. Its services encompass communication, content creation, commerce and next-generation technologies (AR/VR/MR). Their dominant revenue model which is ad-driven is been threatened by Apple’s new privacy policies that ban apps and advertisers from collecting user data.
This is a clear red flag, as in the long run, more users are expected to reject the idea of being tracked by apps across the internet. This is pushing companies including Facebook, to explore other revenue streams such as enabling e-commerce on their platforms, which is more of a short to medium-term trend.
Mixed reality, the first step to a metaverse
From a long term perspective, there is another area that is seeing a lot of traction and that is the field of augmented/virtual reality (AR/VR) aka mixed reality. Leading technology companies have thousands of people working on various projects in this realm, ranging from smart glasses to wristbands to mixed reality headsets. This is critical for their survival as they compete with their rivals to build the next computing platform. The enabling ecosystem is already in the works with AR/VR headsets and smart glasses becoming the gateway to the world of mixed reality.
Microsoft Holo Lens uses augmented reality to take learning and productivity to new heights and is specifically targeted towards enterprises. Facebook (which owns Oculus VR) has announced the launch of their first smart glasses in association with Essilor Luxottica under the Ray-Ban brand. An interesting thing to note over here is that, although smart glasses were brought into mainstream discourse by Google, they have been left behind by their peers.
The promise of an open and decentralised economy
With the context being set, let’s understand the world of the metaverse.
Metaverse as a term has been derived from the world of science fiction. It is an all-encompassing space in which all digital experience sits — going beyond the physical realm.
Metaverse is created on the premise of an open economy and is not controlled by any one company. The economic reality at present is focused on creating products and services that aren’t compatible with any competitor’s products. Building and protecting moats is the endeavour of all businesses. Only, governments and organisations which are set up in the public interest have the incentive to truly democratise access to key resources and services.
Facebook’s effort to build a metaverse is not the first effort, there are similar initiatives at play but primarily led by the gaming industry. Games have always provided a cocoon for people to escape from the reality and to live a life that is non-conformist or free of any judgement.
In an era defined by immersive experiences, the popularity of video game broadcasting, with platforms such as Twitch (owned by Amazon) and YouTube gave birth to a new breed of celebrities — the gamers. They are the most sought after by the younger generation, one that exists in a world undiscoverable by those who don’t actively seek it out.
Fortnite is one of the flag bearers of this world. Created by Epic Games in 2017, it has become a global phenomenon that turned celebrities into players and players into celebrities, laying the foundations of the internet’s future. In less than four years, Fortnite has garnered more than 350 million users and has generated $5.1 bn in revenues in 2020. With more than half of its userbase under the age of 30 years, Fortnite is a type of social network that can be a big threat to the Facebook juggernaut.
In my opinion, this can be one of the key reasons why Facebook is doubling down its effort in this space. Facebook Horizon, which is in beta for the past two years is an indication of its metaverse journey. It is a virtual reality sandbox universe where one can build own environments and games, play and socialise with friends. Will this be the gateway to the Facebook metaverse? Only time will tell.
For the greater good
The open ecosystem has also empowered individuals and organisations working for the better. We live in a world where media in many regions is either blocked or controlled, and the numbers of free media are dwindling rapidly. In such a scenario, an international nonprofit Reporters Without Borders chose Minecraft as its venue for millions of publicly censored documents, all archived in a massive 12 million-block library built inside the game over the course of three months.
Minecraft is a ‘sandbox game’, that is a virtual land where users can create their own worlds and experiences, using building blocks, resources discovered on the site and their own creativity. It has also moved into the classroom, as teachers increasingly find ways to use the game for educational purposes.
The above use cases of Minecraft demonstrate the flexibility of the online world. If you see this from the lens of a social megatrend, the democratisation of technology has provided access to opportunities to people irrespective of their backgrounds or economic standing. It has become a tool of empowerment by providing upward social mobility and a platform for free speech.
On the other hand, Blockchain, Bitcoin, Ehterum and the likes are other examples of how the same trend is playing out in the financial domain, with decentralisation as the central theme. Blockchain-based currencies are in some way upending the international monetary system but blockchain as a technology is having a positive impact on the governance aspect.
To sum up, through this article I have laid out the various building blocks of the metaverse ecosystem from my perspective, that are mutually exclusive and can be powerful when combined together, leading to a better metaverse. Let’s not forget that we will not transition into a metaverse one fine day, it is an evolution of the multiple building blocks that will synergize together at some point in time.
What are your thought? Would love to hear them.
Until next time!
~ Sajid
(Sajid is the founder at Le Monturé Strategy, a boutique strategy consulting and advisory firm that works at the intersection of behaviour, business and innovation)
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