What is the Metaverse?
Delwin Graham - Jan 27, 2022
The common thread here is that the metaverse will be a virtual world that parallels our present physical world. Digital neighborhoods, parks, clubs, and shops will spring up, possibly in a single virtual world or spread across many virtual worlds.
We’ve been hearing a lot about the “metaverse” lately. Microsoft (MSFT: NASDAQ) recently announced that it would buy Activision Blizzard (ATVI:NASDAQ) for US$69 billion and said that the deal was part of an expansion into the metaverse. In 2021, Facebook (FB:NASDAQ) rebranded itself as “Meta Platforms”, which was meant to indicate the social network’s ambition to be a first mover in what they see as the next development of the internet.
The next phase of the internet is thought to be its embodiment – it will be an online space where people can socialize, work, and play as avatars. But these sorts of spaces already exist. Games like Minecraft, Roblox, and Fortnite can be described as metaverses. For example, Fortnite provides a gameplay mode (Party Royale) that allows players to hang out with each other on an island, and since 2019, they have been able to attend live events/concerts featuring some of the world’s most high-profile artists (www.epicgames.com). The Ariana Grande live event hosted in August 2021 was estimated to surpass Travis Scott’s event in 2020 which had 28-million unique users and 12.3-million concurrent users. Many fans attending the Ariana Grande concert paid US$20 (each) to unlock premium player skins, which was a meaningful proof of concept for future metaverse monetization.
In fact, Second Life (www.secondlife.com) is a virtual world that been in existence for almost twenty years (launched in 2003). It initially attracted car companies, record labels, and computer manufacturers to sponsor a digital presence, but its popularity has since waned. It is still active, however, and is being revamped.
But Mark Zuckerberg, CEO of Meta, is not planning on spending US$10 billion this year to build the next Second Life. Virtual experiences like those in Fortnite and Second Life exist in isolation, each being a digital island where its inhabitants and their virtual assets never leave it. Zuckerberg wants to create the next version of the internet as an immersed experience.
“We’ve gone from desktop to web to mobile; from text to photos to video. But this isn’t the end of the line. The next platform will be more immersive – an embodied internet where you’re in the experience, not just looking at it. We call this the metaverse. And it will touch every product we build,” writes Zuckerberg in a recent letter to his employees. (Cf., Brooks Canavesi, “What is the Metaverse: Where We Are and Where We’re Headed”, www.td.org, January 5, 2022)
Understood this way, the metaverse would be a massively scaled and interoperable network of three-dimensional (3D) virtual worlds. If you have an avatar on Facebook, you should be able to use it on a Microsoft platform. Similarly, the items that we buy on one platform should be portable to other platforms. You would be able to enter a huge virtual mall, purchase a unique digital item, and then sell that same item at a later date in a completely different virtual world – or maybe on Amazon or eBay.
The common thread here is that the metaverse will be a virtual world that parallels our present physical world. Digital neighborhoods, parks, clubs, and shops will spring up, possibly in a single virtual world or spread across many virtual worlds. Virtual reality (VR) will co-exist with augmented reality (AR). In fact, the differentiation between real and virtual is already blurring. Tokens.com, a Canadian company, spent almost US$2.5 million on virtual property in Decentraland (www.decentraland.org), a 3D world platform similar to the two‑dimensional (2D) platform of Second Life (purchases are made with an Ethereum blockchain token).
Various companies are working on products with the hopes of grabbing first mover advantage in the metaverse space. Facebook and Sony have developed VR headsets. Microsoft makes an AR headset, which layers digital information on top of the real world. Epic Games (publisher of Fortnite) and Roblox continue to monetize their existing 2D VR platforms. (Cf., “Into the Metaverse: A Primer”, Bank of Singapore, January 2022)
Will there be one metaverse or many metaverses? In Zuckerberg’s idealistic version of the metaverse, it is interoperable in order for users (avatars) and the goods that they buy to travel from one platform to another. In the real world, you can buy a shirt from the mall and then wear it to a concert. However, Morse and Stein argue that “the vision of a single metaverse supporting services from lots of different companies is reminiscent of the utopia ideal of the early internet. When the early pioneers figured out how much money could be made online, however, all bets were off. It’ll likely be the same with the metaverse.” They contend that if Zuckerberg is right about the metaverse, too much money will be on the line to allow customers to pick up and move between platforms. (Cf., Andrew Morse and Scott Stein, “The Metaverse is Just Getting Started: Here’s What You Need to Know”, www.cnet.com, January 20, 2022)
Of course, if the metaverse does represent an opportunity for investors, we should be there – whatever the iteration. Feel free to contact me at firstname.lastname@example.org or 780‑408-1518 to discuss the next development of the internet, as previous developments have certainly been profitable.