The State of the Metaverse Oct 2022
This is a longer, deep dive post.
Jump to the Metaverse Experiences section to see what people are doing today on the Metaverse.
Stick through the Definition and Metaverse Infrastructure to understand more about the Why things are so on the apps level 😉
I’m wrapping this article off with a few Predictions for the Future of the Metaverse.
What is the Metaverse
I recently gave a talk for Societe Generale with this exact title and, on purpose, over half my talk was answering audience questions. Because everyone has a different take on the topic which is otherwise extremely broad.
Though not the scope of this article, I want to give a working definition to put everything else in perspective.
By Metaverse or Metaverse ecosystem, I’m referring to a digital, virtual space where massive number of people can meet — certainly not at the same time, not necessarily, and interact. These interactions should be very diverse and, in many ways, mirror real-life interactions. Just like the term suggests, this should be an alternative universe, similar to the one we know.
But the Metaverse, being a digital universe brings two elements that complete the definition:
- Given hardware and software current limitations, it doesn’t try to fully emulate existing interactions, so many behaviors, inputs and outputs are simplified versions of the real-life ones.
- Not being bound the laws of physics it also means many other interactions and behaviors can be enhanced.
So, it’s a win-some-lose-some scenario. In the Metaverse you can’t expect to taste foods or feel the texture of a wooden tree, but you can expect to fly or teleport, or actually look handsome 😎
Note that we’re talking about THE Metaverse or the Metaverse Ecosystem, as a singular entity where users have persistence through their avatar and owned digital assets. This can be manifested through a single very popular app, or, more likely, through a suite of apps/experiences that are interoperable. The same user should be able to share, at least partially, digital assets and their identity between apps that define the Metaverse.
Metaverse Infrastructure
While easily neglected by most, the State of the Metaverse is to a great extent the state of Metaverse-enabling hardware.
Actually, the reason we don’t have a true Metaverse right now is because the underlying infrastructure isn’t mature enough.
When discussing infrastructure, I’m particularly focusing on Virtual Reality headsets, Blockchain technology and traditional Web services.
First off, the Metaverse does not equal Virtual Reality. VR is just a medium to experience the Metaverse and it’s arguably the most immersive one, but not the only one.
From a hardware perspective, we’re in a great place. After many years we have a de facto winning standard for VR headsets. And that is standalone, mobile VR. Many specific features are also standard, like the XR2 chipset, more recently pancake lens systems, hand tracking, body tracking.
Both consumers and developers like predictability. Nobody wants to optimize an app for a dozen platforms and consumers don’t want to upgrade too often just to have the new basic features.
Some interesting developments happened on the software infrastructure. We now have much more efficient blockchains, such as the Internet Computer, that can host 3D and other data fully on-chain. With near instant transaction times and negligible costs.
On traditional server architecture, we’ve now seen demos that show thousands of concurrent players in the same space, all with voice chat and all.
Otherside First Trip — M² (msquared.io)
Note that, just like in real life, the metaverse doesn’t mean you have to see thousands of people at the same time. Just have the option to meet any small group of those people.
Metaverse Experiences
This is where the Metaverse magic happens. Everyone speaks of the Metaverse but when it comes down to it, which apps are representative for the Metaverse?
I’ve recently spent days exploring the top Metaverse projects firsthand. As a founder I’m mostly focused on our product, but I took a deliberate dive into these apps to see where they are now, how people are using them.
I’ve looked at the two most popular decentralized metaverse apps, Decentraland and Sandbox and then at private, centralized apps VRChat, Rec Room, Roblox and somewhat in a different category, Horizon Workrooms.
Overview
TLDR. We have a wide array of projects trying very different, sometimes opposite strategies to win and retain users. Enough time passed and enough users went through these apps that we’re at a point where we can clearly see why some strategies were successful and why some were not.
So, we’ve been through a stage of experimentation and we’re just about to enter a stage of consolidation.
None of the Metaverse experiences that are live today would fully fit our Metaverse definition and they all rank differently on the various attributes that would define a true Metaverse Experience. They all however have the potential to reach that state.
There are perhaps thousands of Metaverse projects with Billions of dollars in investments. But the ones I listed are shaping the State of the Metaverse today!
I’ll structure my experience based on the key different approaches and lessons learned by all these projects.
Decentralization
I personally believe the Metaverse needs to be open and inclusive. And I think decentralization is the best way to ensure this for end consumers.
But what we’ve learned so far is that blockchain technology was primarily used to hype users and to create unrealistic expectations. Decentraland and Sandbox are apps that actually delivered something as opposed to many other projects that were very speculatory and too often downright scams.
Even so, both decentralized apps in our list focused too much on the underlying tech, that they forgot to focus on the actual product.
As crypto market went into a bear period, the true value of the Land and other NFTs from these projects turned out to be much lower. And Decentraland reported abysmal daily average users numbers for the past few months.
The main lesson that is slowly shaping up is that using blockchain technology just for the sake of it (and to lure investors) is not a solid long-term strategy. Also, as both projects showed, using primitive blockchains doesn’t allow for full decentralization. It ends up that they’re using mostly the NFTs aspects of blockchain but in a manner that could, to a great extent, be replaced by a traditional in-game currency approach.
This is the only category where more insights can be drawn from younger projects, like UnfoldVR and many others, built on more modern blockchains such as the Internet Computer.
Content and Openness
We see two different strategies around the type of content that can be created or imported in all metaverse projects. And this covers user avatars as well.
On one side we have projects that are very open and allow a wide array of content inside. This means you can import 3D models made in external apps including external textures. We have VRChat, Roblox and Decentraland in this camp.
Then we have apps that have a much firmer control on the type of content that ends up in the public environment. Here we have RecRoom and Sandbox. Both have custom, internal tools for creating content, so the end result is something that inherently follows certain limitation and a visual style.
The result is that the more open experiences quickly end up looking very chaotic. The others are much more visually coherent.
On this aspect, it’s still too early to draw proper conclusions. Instinctively you’d think more options, more freedom, is always better. But without a very robust interface and software structure it’s very easy to just create chaos.
At the same time, especially for the younger demographic, chaos might be welcomed. When you go in Roblox or VRChat, you can see the chaos from the first interaction with their visual interface. In fact, early on it can be baffling how users manage their way around these apps which promote both an UX and UI that is completely antithetical to the minimalist trend that we’re experiencing now in web apps. Spending more time makes you understand how the chaos itself can be regarded as a puzzle you need to solve to experience the apps.
Persistence
A critical aspect of the Metaverse is Persistence. This is because our conscious experience is based on the persistence of our thoughts and actions.
Also, at this early stage of the Metaverse development, persistence is one of the things that set a Metaverse project apart from a pure game experience.
Without exception, all projects spend a lot of focus on the user Avatar’s persistence. You have one avatar that you can configure and that accumulates digital accessories and other items over time.
In Roblox for instance, even if the entire experience is a collection of user-made mini-games you experience it all through your avatar. And the avatar ends up telling your story, it becomes a reflection of who you are as you purchase various parts and accessories from experiences that matter to you, with in-game currency.
The two main directions that we see on this front are: Avatars that try to match your real appearance, including your religious beliefs and Avatars that allow you to go to fantasy land.
RecRoom, Horizon Workrooms and Decentraland fall in the category of human-looking avatars while the others allow you to be a robot, a walking tree, a zombie and just about everything in between.
Here too we’re too early to say which option is best. I personally think humanoid avatars will end up dominating the Metaverse. The problem with crazy avatars is that they interfere with the virtual space and the interactions that are possible there. It’s also not conducive to good accessory integrations if your body can be wildly different in size and shape.
Other than Avatars, unfortunately we see very little persistence happening in all the metaverse projects. You do have your home which you can customize and many types of leaderboards that all reflect your permanent inputs, but it doesn’t feel like the virtual worlds are forever changed by your actions, with the exception of land constructions that you see in Decentraland.
As such, I think Persistence will be a key differentiator between Metaverse projects going forward and will likely set some projects apart.
Content Experience
The last criteria that I looked at is around the actual content within these metaverse projects. What you can do, what you can’t do and how users participate in the Metaverse activities.
I think there is a lot of subjectivity around this, and different demographics will like different things. I’ve also already covered that the decentralized options don’t offer anywhere as rich as an experience as the other projects.
There is however a very interesting common thread. If previously we could trace different strategies in the case of content, we see a universally similar approach across the board.
All the Metaverse projects understood that they need to rely on Creators to drive content in their vast worlds. Without exception, all projects have developed a Creator Economy. These are users that spend hours and hours of their time building content, static and interactive, that the community enjoys.
Roblox paid out developers building experiences and accessories on its platform $538M in 2021. RecRoom now has more rooms Apple has apps on the App store. On RecRoom, each room is a mini game.
I believe the winning Metaverse projects will be those that do a good job managing their Creator Economies. So much so that our product UnfoldVR is built around this thesis. UnfoldVR is decentralizing asset creation for the Metaverse.
Enterprise
I wanted to briefly touch up on Horizon Workrooms. This is the only business or work related metaverse that I approached. I’ve included it because Meta very recently made a dramatic shift towards bringing the enterprise sector in the Metaverse.
I tested Horizon Workrooms on a Quest2 not on the newly released Quest Pro which retails at $1500.
I will just say this, for all the hate that Zuckerberg and Meta attracted with their latest announcements, Horizon Workrooms is extremely well designed. It’s very easy to use, very intuitive and most importantly, practical. Nothing feels forced which is a great achievement. And Meta’s newfound openness towards other external partners such as Adobe and Microsoft, is a step in the right direction.
So where are we going next?
Actually, this ties in with the last mention. I strongly believe that the enterprise sector will be a key factor driving Metaverse adoption. This is in part tied with VR adoption. We should be seeing this dynamic unfold in the next 1–2 years.
On the opposite direction, a clear pattern across all other projects is just how popular they are with the younger demographic. Most Roblox users, over 2/3, are under 13 years old. Only Sandbox and Decentraland impose over 18 rules given their gambling and speculatory specific.
These many millions of teens and kids users are growing up with an intuitive understanding of the Metaverse.
So you can make a strong prediction that the younger generation will be spending real $ in the Metaverse when they’ll be old enough to earn their own money. And many will make an income within the Metaverse
Realistically, taking everything in account including market dynamics that are needed to reach mass adoption, we’ll see a first real Metaverse Ecosystem emerge in 3 to 5 years.
Reach out on social and in the comments here for your thoughts on the State of the Metaverse. What surprised you, what do you think is missing from this conversation? Let me know!
