What is Metaverse, and how to leverage it for business?
Since the dawn of humanity, people have told stories to escape into fantasy worlds. Modern technologies turn this dream into reality by allowing the creation of highly immersive virtual worlds.
Since the dawn of humanity, people have told stories to escape into fantasy worlds. Modern technologies turn this dream into reality by allowing the creation of highly immersive virtual worlds. A growing number of people spend hours socializing, playing, and even earning money in these alternative universes. Blockchain further accelerated this trend by providing the last piece of a Metaverse puzzle – a sustainable economics basis for monetizing virtual activities.
Such a global transformation of human experience will influence businesses in all industries. Those who understand the Metaverse and seize this opportunity will earn tremendous wealth.
What is Metaverse?
The Metaverse is a set of virtual realities where people can engage in different activities. Some virtual worlds aim to replace real life, implementing a vast range of mechanics, professions, items, and interactions. For example, Sandbox has an actual virtual map where one can buy land and create experiences (such as a rock concert or webinar), sell tickets, and offer an advertising placement to companies. In contrast, there are simpler mechanics providing a smaller number of activities developed with deeper nuance. For instance, Axie Infinity is a much simpler game that focuses on raising Pokemon-like creatures who can fight with each other, grow in power, and even be sold. Long story short, Metaverse entails quite a broad range of use cases.
The ultimate goal is to engage users to spend as much time in Metaverse as possible, interact with its content, and generate this content. Attention and engagement are the key resources that are monetized.
Historically, the roots of Metaverse lie in Massive Multiplayer Online Games known as MMOs. The first versions of such games were known back in the '70s, even before the advent Internet. Back then, MMOs were played not within the graphic interface but via text. The first MMOs in a modern understanding of the word were conceived in the early nineties. These games became increasingly popular, attracted colossal player bases, and earned substantial profits. The stunning success of the World of Warcraft in the 2000s gave ground to widespread discussions in the media about gaming addiction and virtual life overtaking the real one. The MMO genre flourished, and multiple new franchises emerged, offering self-sufficient mythology and the game world's history.
The fact that MMOs pre-date even the Internet and their overall popularity indicates that the dream of virtual worlds where people can be anyone isn't a temporary hype but an expression of an inherent human drive for connection, adventure, and mystery.
Despite such high promises, the majority of the population hasn't migrated into virtual worlds yet. The big reason for that is economics. A continuous virtual world requires an economic basis for the interaction between players and a healthy way for developers to monetize their efforts. The lack of proper financial infrastructure halted the potential of Metaverse; blockchain technology can change this.
How does blockchain make Metaverse economically viable?
Blockchain has three vital functions in the fabric of Metaverse.
Firstly, it creates an infrastructure for economic activity within Metaverse. Initially, the in-game economy mainly consisted of marketplaces where players could sell gaming items for an internal currency. Blockchain enables a significantly more expansive number of mechanics in which game objects can be fractionalized, transferred between universes, and linked to a stream of royalties. It enables lending, short selling, issuance derivates, and myriad other possibilities.
For example, you have a unique sword, which is one of three swords that participated in all the battles since the game's launch, making it quite expensive. In Metaverse, you can leverage this sword as NFT collateral to take a loan in the in-game currency. Using this loan, you hire other players to attack the castle with immense treasures hidden in dungeons collectively. You can use this treasure to repay a loan and sell the rest for in-game currency. Moreover, as the game currency is traded on a crypto exchange, you can withdraw it for cash and buy a new Porsche.
While you were engaged in this adventure, your sword was added to a pool of collateral items, securitized, and sold to a syndicate of funds that invest in the virtual economy to hedge against the subsequent lockdown. Such a level of economic activity and sophistication is vital to allow the virtual world to evolve to the complexity of the real one.
Related: Digital art, business ecosystem gamification, and football cards: NFT and its best practices explained
The second contribution of blockchain to the Metaverse world is introducing new monetization strategies. Development and maintenance of virtual worlds are extremely expensive, which leads to very aggressive monetization, which, in turn, is not warmly met by the players. On the other hand, blockchain creates a range of indirect monetization approaches like selling the virtual land or issuing the game's utility token, which grows in demand alongside the game and brings profit to the developing company. When the in-game items and currency are actual assets, players see more value in purchasing them. This simultaneously increases revenue from the game item sale, so player satisfaction rises as the game develops, boosting the asset price.
Thirdly, blockchain enables participative governance in Metaverse. Due to superior governance, DAOs (Decentralized Autonomous Organizations) are rising in popularity. In the last two years, the market capitalization of top-10 DAO tokens increased tenfold.
Decentralized governance allows for a shared creation of a virtual multiverse. The history of MMO games has shown that players would consume any game content developers create extremely fast. Therefore, the only way for Metaverse to engage players sustainably is to have players create the game content themselves. In some way, as in real life, players and their interactions are the game content.
Such participatory creation requires shared governance because of two reasons. Firstly, it aligns players and developers incentives, which reduces an amount of aggressive monetization the players hate. Thus, players are more likely to create a world where they want to stay longer. Secondly, governance itself is another engagement mechanic that forces people to interact, argue, form alliances, and grow even more attached to the game world.
Related: DAOs: a new and better way to consolidate people thanks to blockchain
What can businesses achieve in Metaverse?
- Metaverse is populated with an engaged audience, which spends tons of time in this world. You can deliver your messages in multiple interactive ways to build a relationship with your customers.
- Global reach. The audience in Metaverse isn't limited to a particular country, so your company can deliver experiences or expand its audience without complicating the logistics. This allows a brick-and-mortar business to reach a much broader audience at a drastically lower operating cost in virtual reality.
- Any product you offer becomes software. You can apply the economics of infinite scalability and network effects to traditional physical products. It means accelerating digital production is much easier than physical: while the latter takes building new factories and managing distribution, the first is just about writing a code. Increasing production in Metaverse is much easier. As Marc Andreessen put it in his essay, the software is literally eating the world.
How can companies enter and use Metaverse?
Let’s see what you can actually do in Metaverse to attract the clients’ attention there.
The most straightforward application available to any company. Even if a business makes an entirely offline product, its audience is likely to be in the Metaverse already or will be there soon. Such ads can be cheaper because few companies have recognized the opportunity so far, which is painfully relevant considering advertising prices nowadays.
You can extend your real-life products and services into Metaverse to create gamification for an existing audience. For instance, customers who have accumulated enough loyalty points are admitted to the particular location in Metaverse owned by the company. This area is unique because you can hang out with other brand fans, and once a week, a C-level manager gives a short talk exclusive to the visitors of a company's virtual space.
Develop virtual products
Sometimes, what you can offer in a virtual world is very obvious: for example, driving a Ferrari in Metaverse is undoubtedly as cool as it would be in real life, so even a virtual Ferrari is extremely expensive. In other cases, going virtual may require more creativity.
Even things that seem deeply linked to the physical world and meaningless in a virtual one can still be adapted with the correct dose of inventiveness. Imagine, for example, a Metaverse where buildings have different properties depending on which virtual resources have been spent to create them. The cement-producing company can venture into Metaverse to offer unique resources for virtual construction as it did for a physical one. However, for this vision to come true, there has to be virtual reality, which has the mechanic of customizable resources and construction. Given that Metaverse projects develop every day, it's realistic to expect the emergence of such a complex world in the medium term.
Create your own virtual experiences
An example of this can be a concert or an exhibition. Superstars such as Ariana Grande and Justin Bieber have already held concerts in Metaverse with millions of viewers.
As the physical needs of a typical person in a developed world are fully satisfied, technological progress is heading towards experiential consumerism, where people primarily shop for entertainment. Therefore, creating immersive virtual experiences is a strong bet.
Repurpose your services to a virtual world
Going back to applications requiring less extension of business capabilities described earlier. Both companies and individuals will require a vast range of services related to Metaverse: promotion, brand management, technical issues, experience design, graphic designs, accounting, legal services, and even virtual real estate brokerage. Now is your chance to establish yourself as a first-mover in the market of the future.
Investing and developing software are other activities that naturally extend from the physical world into a virtual one. The former includes investing in virtual businesses, speculating on in-game currencies and items, and supporting Metaverse projects. The latter contains Metaverse-related software, ranging from the tool to track your inventory level in a certain universe to interoperability protocol for transferring data between virtual worlds.
Create your own Metaverse
The most ambitious feat you can undertake. If you have a strong intellectual property ― for instance, a story or characters ― you can make it come to life. Disneyland in Metaverse is just a matter of time; in the future, as the software develops, creating your virtual universe will be as easy as making a website now, which offers an unimaginable extension of humanity's creative potential.
There are plenty of ways you can leverage the emerging trend to build wealth. However, simply offering an excellent product is not enough to succeed in Metaverse. It's also important to comprehend the principles of the crypto economy in which you will embed yourself. Stobox is ready to give you a hand in your exciting adventures in Metaverse and provide advice on their implementation's suitable applications and nuances. To assess how we can help you book a 30-minute call with our specialists by filling in the form on our website.