What is the metaverse and how will it transform business?

The term 'metaverse' was coined in 1992 by science fiction novelist Neal Stephenson in his novel Snow Crash which describes a virtual reality which people enter using digital avatars.

What is the metaverse and how will it transform business?

The term ‘metaverse’ was coined in 1992 by science fiction novelist Neal Stephenson in his novel Snow Crash which describes a virtual reality which people enter using digital avatars. The concept, though, goes back much further, starting with the first virtual reality equipment in the 1950s. While VR technology improved dramatically in the 1990s, VR headsets for games consoles only started to become commercially viable in the middle of the last decade.

High-speed networks and improvements in the graphical capabilities of games consoles has led to an explosion of online multi-player gaming, making Stephenson’s sci-fi vision a reality. In 2020, for example, Fortnite had 300 million registered users and 80 million active monthly users.

One of the most interesting aspects of these virtual worlds is the way in which they have attracted passionate communities of fans who not only compete with each other, but who collaborate together in tribes and trade virtual inventories using tokens and crypto currencies. Reality Gaming, for example, creates non-fungilble tokens (NFTs) and blockchain-powered games. Even though their new game Dr Who: Worlds Apart has not yet been released, half-a-million collectible cards have already been purchased. These can sell for as little as 50 cents, but according to the company, some have sold for $4,000. 

Many businesses only became aware of the term ‘metaverse’ when Facebook changed its name to Meta to reflect its new strategic focus to evolving its current social network into a digital virtual world. The idea of a metaverse is to allow users to work, play and shop not as fictional characters but as permanent digitalised versions of themselves. Given the huge economic and organisational possibilities for businesses to extend their own products, services and operations into metaverses, it is important to lift up the bonnet and understand how they are constructed and where the new opportunities will lie.

Any business wishing to explore metaverse-based business opportunities needs to heed Steve Job’s call from to start with the experience and work back towards the technology. Just because something is technically possible does not mean that it will be embraced by inhabitants of future metaverses. For this reason, leaders can learn a huge amount from game designers. Customer experience teams of the future will need to acquire expertise in many aspects of game design such as narratives, story structures, characters, aesthetics, architectures and community dynamics.

Once a business has explored the way in which they expect to deliver new forms of value to customers in virtual realities, they then need to think about how their current business models will be disrupted. One of the most important insights for leaders is to understand that from a technology perspective, metaverses are first and foremost platforms. Leaders must therefore understand the logic of platform architectures, platform-based business models and deep analytical AI-driven tools to be able to transform the way in which they deliver value to customers.

A key attribute of metaverses platforms is that they are open and therefore provide interfaces for third-party developers to build and connect their own services and offerings. Unlike Meta, which is likely to provide a closed ‘walled garden’ metaverse with the company owning, controlling and selling user data, other platforms promise to be decentralised ecosystems in which both large and small enterprises will be able to flourish through symbiotic relationships. 

This freedom will allow entrepreneurs to use their imaginations to envisage new types of virtual and hybrid products, services and brand experiences that engage and connect with people in new ways. Vogu, for example, has the vision of creating a new form of Disney-like media company where it is the fans who own the rights to characters, allowing them complete control over the creation of the characters’ stories and narratives in their Voguverse.

Given the power of deep technologies to monitor and observe people, digital businesses will need to work continually to develop trust through transparency, and commit to the ethical use of algorithms and other deep technologies, such as natural language processing and gesture recognition. This means businesses will need competencies in quantum computing, crypto technologies and data security to complement new roles such as metaverse architects and metaverse security and safety officers. 

Metaverses represent the next incarnation of the internet which will impact on every industry and market sector. Businesses need to start preparing for the new commercial opportunities they will bring by understanding the architecture of platforms, gaming dynamics, enterprise ecosystems and digital economy business models. 

The current scandals surrounding Facebook’s use of algorithms has shown us that technology built without human values is not deep tech. It is just technology.

Purpose-driven leaders in the era of metaverse therefore will be those who amplify the impact of their organisations by producing extraordinary hybrid experiences which are inclusive and contribute the betterment of society.

Simon Robinson
Simon Robinson

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