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We are on the cusp of a revolution similar to what companies and brands experienced in the mid-1990s with the World Wide Web.
If you are a fan of science fiction, you may have read the novel “Snow Crash” (“The Virtual Samurai”) by Neal Stephenson or watched the movie “Ready Player One”. If not, you must have heard of the “Matrix” trilogy. You might have thought that spending the majority of your online time in a virtual universe would be scary. As reality meets fiction, a whole new economy, very real, will emerge.
A revolution similar to that of the Internet?
This is not new: for example, it is possible to apply filters, sometimes for a fee, to optimize its appearance during a video conference. This is especially the case on Zoom with the “Touch Up My Appearance” option, which among other things has the effect of smoothing the skin. In addition, cosmetic brands have started offering their virtual beauty products. Thus, at the end of April 2020, L’Oréal enabled Snapchat users to virtually try the products of several of their brands such as Garnier and Lancôme. And teenagers spend money (sometimes a lot) to dress their Fortnite avatar in a fashionable “skin”.
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Is all this an epiphenomenon? Or is the weak signal, on the contrary, becoming a real trend? There is plenty of evidence to suggest that we are on the cusp of a revolution similar to what businesses and brands experienced in the mid-1990s with the World Wide Web.
I define the “metaverse” (combination of “meta” and “universe”, i.e. meta-universe, a term first described by Neal Stephenson in “The Virtual Samurai”, ed. note) as the future version of the web, where immersive 3D virtual universes derived from video games meet social networks, co-working spaces, marketplaces and e-commerce.
The use cases to imagine are endless, both in the private sphere (e.g. a cinema with friends each at home) and professional (e.g. a remote work meeting as if we were there).
Although the beginning of the metaverse is not new and we have been promised this revolution for years (even decades), this time may be the right one because three essential ingredients are coming together for the first time.
Hardware: everything becomes possible
It has become physically possible to create such virtual universes and find friends or professional relationships there in a convincing way.
On the one hand, the computing power of computers and very high-speed Internet access make it possible to generate realistic virtual universes and have one’s avatar evolve there with a completely acceptable latency.
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On the other hand, the progress in human-machine interface is enormous and extremely fast. Anyone who has tested virtual reality glasses such as Oculus, marketed by the Facebook subsidiary, can imagine their full potential. Especially since it seems that Apple, after filing several patents, is about to launch its own glasses – remember what happened when Apple entered the music market! Glasses are also just the beginning as advances in the brain-machine interface are advancing at breakneck speed.
Software: an enabling infrastructure
Your kids may have told you about the Roblox video game. In reality, Roblox is not a video game, but an infrastructure platform (what some call a metaplatform). By making its development environment and data available, Roblox allows, on the one hand, everyone to develop games available in Roblox’s virtual world, and on the other hand, players to purchase virtual assets (such as Apple’s App Store, which provides developers possibility to create apps). and users to buy them). Roblox is a bit like the YouTube of video games, bringing together creators and consumers.
Epic Games, the publisher of Fortnite, also announced in April 2021 that it had raised one billion dollars, which will enable the company to support its future growth and its long-term vision for the metaverse.
Last example, Mark Zuckerberg, the founder of Facebook, has been saying for months that the future of the social network is in the metaverse. And Facebook’s latest announcements confirm this vision: on August 19, 2021, its subsidiary Oculus VR will launch Horizon Workrooms in beta, a virtual reality room that allows a company’s teams to communicate virtually in the same room.
Imagine that tomorrow you meet your friends for a virtual dinner. This is (almost) no longer science fiction.
Users: towards widespread adoption
Technologically (hardware and software) everything is there. What about the users? Here, too, the speed of progress is dazzling. The health crisis and repeated incarcerations have been a huge accelerator. Companies have been looking for solutions that allow their employees to continue communicating, teenagers for solutions to continue meeting their friends.
The crisis has accelerated trends that were already at work, but also created new uses that will last. The number of users who find themselves daily in one of the universes of the metaverse continues to grow. For example, Travis Scott’s 2020 concert drew an audience of 12 million across the metaverse (fortnite in the game – but are we still talking about games?). At the same time, more than 40 million users log on to Roblox daily (more than twice as many as two years ago).
Virtual assets for a real economy
Where this becomes particularly interesting is when we observe the development of the revenue generated. For example, Roblox generated more than 450 million euros in revenue in the second quarter of 2021. A drop of water in the video game industry, which weighs 300 billion dollars a year, but a drop of water that is growing very quickly: it has more than doubled in a year. How is this income generated? Through the sale of virtual assets. When I was in college, I saved my pocket money for months so I could buy the latest Nike Air Base. Today’s teenagers buy virtual “skins” to make their avatar look cool. And tomorrow they will buy virtual Gucci bags.
Brands, including luxury brands, are already in the race for virtual assets. For example, a virtual space called “Gucci Garden” was available on Roblox for two weeks at the end of May 2021. Gucci also released a limited edition of virtual in-game bags, which sold for over $4,000.
New economy, new challenges
A new and very real economy is therefore emerging. With the new challenges for companies and brands:
– Counter Digital Native Virtual Brand (DNVB). For companies and historical brands, it will be a matter of being able to face the arrival of new brands, known as DNVB, which will arise in the virtual with an extension in the real world, and which will have the potential to generate billions in revenue after only a few years of existence.
– Combine physical and virtual assets. This new economy will not be 100% in the virtual world. Often, success will come from the ability to exploit the continuity between the virtual and the real, and the ability to sell virtual assets to sell physical assets (and vice versa).
– Manage and leverage on-demand talent. The hybridization and continuity between the virtual and the real will accelerate the emergence of talents of all kinds in society. An independent designer can, for example, design a Nike basketball in the virtual world, make it a success that can become real. The Metaverse will be the Youtube of design and creation.
– Avoid counterfeiting thanks to blockchain and NFTs (“non-fungible token”, it is a form of unique digital asset that cannot be duplicated, modified or deleted, and which is recorded in a blockchain in an immutable and indestructible way).
– Enable interoperability to ensure that a virtual asset purchased for example in Roblox can also be used in Second Life or Fortnite. While this may not be in the interest of the platforms, it will be in the interest of the brands.
To the question “Is a real economy in a virtual world possible?” », it seems the answer will soon be « Yes! “. The opportunities are enormous, the challenges too.
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