A deep interest in the metaverse is emerging. It comes at a time when companies increasingly want to fund value-creation initiatives that enable competing better and engaging clients and employees in new and better ways. To help your company consider how it could benefit from the metaverse, I’ll discuss in this blog what companies are doing today – those that have a first-mover advantage with a presence in the metaverse already, as well as companies currently investigating its potential for creating business value.
The term “metaverse” has been around since it was mentioned in a 1992 science fiction novel. Then in 2014, Facebook CEO Mark Zuckerberg bought Oculus, a virtual reality company, and began building Facebook’s virtual world. He later proclaimed his company would lead in the metaverse and, in October 2021, renamed Facebook Inc. as Meta Platforms Inc. His actions and claims put the metaverse on the map and captured attention; even so, Facebook still had no real competition in the metaverse, even in April 2021.
Now a year later, there is serious and growing competition. A McKinsey & Company report in 2022 (“Value Creation in the Metaverse”) stated investment in the metaverse so far in 2022 has already more than doubled the total investment for 2021. Certainly, the COVID-19 pandemic helped accelerate interest in the metaverse because of the demand for online tools in business settings.
However, the primary driver for the fast-growing interest in the metaverse is because companies now recognize that investing in the metaverse presents a more compelling form of creating business value than investing in technology to increase efficiencies.
Companies see the metaverse as a new way to engage their clients and create new growth opportunities. From my recent discussions with CIOs discussing their companies’ activities in the metaverse today, I see three segments of activity:
· Companies that have active metaverse initiatives or are investigating how to launch projects
· Companies trying to determine how they can potentially participate in the metaverse to gain new customers or engage existing customers in a different way
· Companies that are watching the metaverse marketplace within their own industry to identify opportunities that they should move into and what part of the metaverse to engage in
The fear of missing out (FOMO) is a significant driver. Companies look at what other companies in their industry are doing as a way to both gain ideas and build conviction that they, too, should invest in initiatives in the metaverse.
If they can uncover what others in their industry are doing, they know they need to at least be a fast follower so as not to lose out on growth opportunities. If other firms in their industry launch metaverse initiatives, they are quick to duplicate. They also look to industries other than their own to try to gain fresh ideas that could potentially give them a fast first-mover advantage in their own industry.
Industry creates important contexts in which the problems around the metaverse (such as how to launch a project) get solved and how issues around customer engagement differ and get solved.
In banks and financial services firms, for instance, there is a lot of focus on payments. In customer service, manufacturing firms focus on enabling DYI repair for consumer products.
In retail, companies focus on directly engaging with their end customers, thus bypassing their sales channels. They establish games in the metaverse, through which they can interact directly with consumers. It builds loyalty and creates community. It also enables companies to learn more about how customers use their products. An example is the Fender Play™ guitar company, where people can learn to play the guitar. It simulates being in a rock band. In the metaverse, people can experience the product before they buy it.
How the metaverse works
A definition of the metaverse is still evolving. Basically, the metaverse is a fictional (virtual) world or universe, which people can access via their avatar (a tech lifelike imitation) to engage with or do business with others or experience travel and entertainment by using virtual reality and augmented reality technologies. The virtual technologies enable people’s avatars to go “inside” the metaverse environment and participate in the action in real time. Some activities in the metaverse are immersive, such as gaming or conducting real-time meetings, and others present an environment that mirrors real life. All aim to expand users’ real-life experiences.
Non-fungible Tokens (NFTs) can be traded for goods in metaverse storefronts. Current well-known virtual space examples are Meta Horizon World, Sandbox, and Microsoft Altspace.
Besides NFTs and avatars, the metaverse technologies also include cloud computing, Blockchain, AI, 3D, visualization, digital-twins, smartphone apps, network/connectivity technologies, and Web 3.0 architecture (which decentralizes the internet from its current domination by a few platform companies).
Metaverse use cases and frontrunners
If your company is not already studying its potential value-creation opportunities in the metaverse, I expect in the near future that technology vendors and media will push metaverse adoption in some way. So, it is important to understand use cases. We can segment the metaverse marketplace into either (a) customer/partner-related use cases or (b) employee-related use cases.
In customer or partner-related initiatives, companies currently use the metaverse for marketing activities, creating customer interaction lounge spaces, building shopping platforms, selling digital assets using NFTs, and creating virtual spaces for real estate transactions and events.
Companies use the metaverse in employee-related initiatives to build virtual spaces for day-to-day collaboration meetings using platforms such as Microsoft Teams, Meta Horizon World, and Immersed. Employees enter the platform through avatars representing them in the meeting or event.
Another use case in employee-related initiatives is conducting the hiring and onboarding processes through platforms such as Journee and Zepeto to engage with prospective employees. Portal-based job fairs also will be created in the metaverse. Some companies buy virtual reality or augmented reality devices to make new hires comfortable with their potential office, colleagues, and leaders.
Companies also build virtual spaces and provide virtual devices for training/development/upskilling use cases. Educational enterprises consider using the metaverse to create virtual universities. Industrial companies are building digital twins of factories in the metaverse to improve worker safety, productivity, and time to market.
Leading enterprises in several industries have begun experimenting with platforms they created in the metaverse such as the following:
· JPMorgan built a digital lounge on the virtual platform Decentraland to better understand metaverse functioning and provide financial advice to its clients about the metaverse.
· Walmart filed multiple trademarks to build and sell virtual goods such as sporting equipment, toys, and electronics in the metaverse
· Nike acquired a company that builds virtual sneakers and other collectibles. It also launched Nikeland, a gaming platform in the metaverse
· Samsung opened a virtual version of its physical store on the virtual platform Decentraland and conducted an event there to promote its new smartphones
Companies recognize that the metaverse gives them a new way to engage their customers, have them experience their product before they buy it, or service their product better once purchased. Those are just a few examples of current use cases.
The full way in which the metaverse will manifest itself is evolving, but interest in it is growing rapidly. One aspect that will evolve is security. Every company looking at the metaverse today is acutely aware of the need for robust security. As the metaverse evolves, companies must take a much more structured and deeper view into how they can engineer better security into the metaverse.