Metaverse Reality Check: Should You Care, And Opportunities You Can Grab
By Hod Fleishman, Partner and VP of Deep Tech Innovation, BCG Digital Ventures
This piece was originally published on Forbes.com.
The immediate kneejerk reaction when discussing the Metaverse is to define what it is. However, the Metaverse is aspirational at this point, not a reality. It is open to interpretation, and we already see different views of the Metaverse, as some claim it is already here while others view it as a vision for future things to come.
Before attempting to define what the Metaverse is, a preliminary question we should ask is why the Metaverse and why now?
The term “Metaverse” is not new. Science fiction fans will point you in the direction of a 1992 novel, “Snow Crash,” where the term was coined; game lovers will highlight the movie “Ready player one” as an example of the Metaverse. And a small but dedicated group of around one million “Second Life” users will claim they have been living in the Metaverse since 2003 when Second Life was launched.
These early examples are relevant to a tiny group of people. We should not accuse any industry leader of missing the “next best thing” if the Metaverse was not on their “hot trends o to watch” list. Until Mark Zuckerberg made the famous branding switch of FaceBook to Meta, most people did not know the Metaverse existed. And that holds for companies that today quickly reshuffle their sales decks to prove that they already have Metaverse products.
The Metaverse, in its pure form, alludes to a mix of virtual and augmented worlds, assets, and experiences that are tied in some way to physical activities, efficiencies, and value creation. Current technologies, businesses, user experiences, and social trends show the “Metaverse” will be possible to build, and I will provide a few tech examples in this post.
So why all the hype?
In the chronicles of the Metaverse, October 28, 2021, will deserve mention if not win a virtual holiday with matching virtual gift cards. On that date, Mark Zuckerberg, the CEO of the controversial Facebook, announced the company is now “Meta.” As the name suggests, the company’s focus will shift to a new and somewhat mindblowing user experience: the “Metaverse.” According to Zuckerberg’s Founder’s Letter, the new brand name “represents the company’s move further into the metaverse — a digital world where people can experience a parallel life to their real-world existence.” A few of the highlights in the letter further explain his vision:
- “We are at the beginning of the next chapter for the internet, and it’s the next chapter for our company too.
- The next platform will be even more immersive — an embodied internet where you’re in the experience, not just looking at it.
- The defining quality of the Metaverse will be a feeling of presence.. In the Metaverse, you’ll be able to do almost anything you can imagine
- In this future, you will be able to teleport instantly as a hologram to be at the office without a commute, at a concert with friends, or in your parent’s living room to catch up. This will open up more opportunities no matter where you live. You’ll be able to spend more time on what matters to you, cut downtime in traffic, and reduce your carbon footprint.
- You’ll move across these experiences on different devices — augmented reality glasses to stay present in the physical world, virtual reality to be fully immersed, and phones and computers to jump in from existing platforms. This isn’t about spending more time on screens; it’s about making the time we already spend better.
- The Metaverse will not be created by one company. It will be built by creators and developers making new experiences and digital items that are interoperable and unlock a massively larger creative economy than the one constrained by today’s platforms and their policies.
Because there are available alternatives that allow users today to entertain themselves, collaborate, communicate and work with various digital tools, a call for replacing this world with a new option is a tall order. If a random startup entrepreneur made these claims in a ten-slide pitch deck for a Sandhill Road VC, the idea could have been excused as a fantasy. But the person making this call is a CEO of a company that touches 3.58 billion users through its family of products that includes FaceBook, WhatsApp, FB Messanger, and Instagram. Additionally, FaceBook made Augmented and Virtual Reality investments to show it is serious about its new Meta direction:
- The purchase of Oculus for $2B in 2014. Oculus holds 75% of the VR market and has oversold Microsoft Xbox in 2021 (8.1 million oculus units sold)
- Meta committed to investing $10B in its VR and AR Unit, Facebook Reality Labs
- A plan to hire 10,000 people to work on the Metaverse in the EU has been announced.
Is the Metaverse move a new vision or an attempt to escape Facebook’s troublesome history? New York Times tech columnist Kevin Roose wrote: “If it works, Mr. Zuckerberg’s Metaverse will usher in a new era of dominance — one that would extend Facebook’s influence to entirely new types of culture, communication, and commerce. And if it doesn’t, it will be remembered as a desperate, costly attempt to give a futuristic face-lift to a geriatric social network while steering attention away from pressing societal problems. Either possibility is worth taking seriously.”
Regardless of Zuckerberg’s motivation to push the Meta idea onto the world, the “horses have left the stable,” and the tech world can not ignore a move made by an influential giant such as the newly branded Meta.
If the “Metaverse” wasn’t on anyone’s list, why are so many players choosing to follow the Metaverse vision?
There are a few compelling reasons that cause leading CEO’s such as Microsoft Satya Nadella or Nvidia’s Jensen Huang to include the Metaverse in their Keynote presentations and claim their company’s moves into this space:
#1: The giants of tech are looking for new growth opportunities. We asked ourselves why Microsoft has been investing in education or Amazon in Healthcare in recent years. These companies must find new, extensive domains they can dominate to support their growth needs. With its potential disruption of “everything,” the Metaverse could be such a unique growth opportunity.
#2: Technology advancements around Virtual and Augmented reality start to show promise of a new way to interact with data. As Mark Zuckerberg phrased it in his “Founder’s Letter”: “In recent decades, technology has given people the power to connect and express ourselves more naturally. When I started Facebook, we mostly typed text on websites. When we got phones with cameras, the internet became more visual and mobile. As connections got faster, video became a richer way to share experiences. We’ve gone from desktop to web to mobile; from text to photos to video. But this isn’t the end of the line.”
It’s not just AR and VR (or XR and Spatial Computing”) that are advancing and breaking the path to worlds “beyond screens.” Advancement in AI on topics such as Generalized Adversarial Networks and Transformers accelerate machines’ ability to learn. With these advancements, virtual worlds and real-life avatars are becoming a reality. Gone are the days when a 3D artist designed every component to enable virtual worlds. Machine Learning can create new virtual environments and augment our (sometimes) limited human capabilities. Consider these few examples as teasers of recent tech advancements that will help make the Metaverse a reality; if you have a few minutes, watch the videos in the links. When these examples converge, it is easier to see how a Metaverse future will form:
- Unreal engine “Metahuman Creator”
- Nvidia’s pose estimation and tracking as well as tools to mesh the physical and cyber worlds, as well as create new imaginative worlds
- Snap “Real world physics,” new “API Library,” and “Custom landmarkers”
#3: New monetization opportunities that leverage the physical and cyber worlds’ meshing are emerging. A few recent famous examples include RFTK insane NFT sale of virtual sneakers, where $3.1 Million worth of virtual goods were gone in just 7 min and Pablo Rodriguez-Fraile’s 10-second video that sold for $6.8 Million
#4: And last, there is the Hype factor and the Fear Of Missing Out. When giants such as Meta, Apple or Nvidia invest billions in a Metaversian future, they cause a ripple effect, pulling others to invest further and promote this topic. With more investment, more tools will reach the market. Such development tools will save entrepreneurs the time needed to create new technologies and will allow them to focus on their innovations. More investors are likely to notice the trend and fund new companies increasing the number of participants. And with more new companies, new and exciting products will hit the market. We have seen such acceleration cycles during the digital revolution, and a similar effect will happen for the Metaverse. Maybe tech hypes are not that bad after all.
To sum up, if we take companies’ growth needs, new experiences enabled by the advancements of technology from hardware to software, communication (5 and 6G), and AI, and add in new monetization opportunities, and a good dose of FOMO, we’ve got ourselves the perfect storm.
The heavy hitters of the tech industry are already moving in the Metaverse direction — should we saddle up and join the stampede?
Can we go and build a Metaverse?
There are a few lenses we can look through to answer this question. First, there is “desirability.” Let’s imagine that we can build the Metaverse. What will be the Metaverse “killer apps” that will provide users with a better or new alternative to how things are done today? And here, it does not suffice to say, “the Metaverse will deliver more exciting shopping experiences.” Specifically, which functionalities, optimizations, or experiences would draw in the crowds? We need to specify the use-cases for which a Metaverse solution will be the better alternative.
Secondly, there is the question of Feasibility. Only a fraction of mobile phone and laptop users have a VR set. If they do, it is most likely an Oculus product, and if they use it regularly, it is for entertainment purposes. The AR crowd is even narrower — as there aren’t off-the-shelf AR products available to the mass consumer or business market. There are mobile phone-enabled AR solutions (filters and measurement tools, for example), but mobile phone AR is a bit like watching David Attenborough’s stunning “A life on our planet” through a keyhole. Not great.
The tech wish list for a Metaverse reality is long from a feasibility perspective. For example, we will need low-cost yet high-quality AR and VR headsets. Such devices require technology leaps on processing power, battery storage, communication, optics, using cameras or LiDAR sensors to understand the context around the user, to name a few product gaps.
Additionally, interoperable platforms to enable users of different devices and various applications to interact will need to become commonplace. These platforms require advancements in communication (5G and 6G) to transfer large amounts of data. AI and ML advancements are needed to help build avatars and environments and better understand the context of what is happening to benefit the user experience. To this end, from a feasibility perspective, there are still miles to cover before the Metaverse is a reality. It is not to say we can not build “Meraverse type” solutions today — solutions that do not include the full functionality of the Metaverse. But it will be some time before we put on a low-cost AR headset that lasts all day and can replace our mobile phone and laptop.
Last, there is the question of Viability. Let’s assume we do have the needed technology and a killer app; how will it make money? Capturing data descriptive of user behavior is at the basis of many of the digital business models. Will end-user data keep its high value in a world of avatars and alternative realities? What new business models need to come into play without such data? Are current business models transferable to the Metaverse, or should we consider new models that better match the DNA of the Metaverse?
What are leading CEO’s saying about the Metaverse?
One way to assess the future of the Metaverse is to listen to what the CEO’s of companies at the forefront of the race have to say. As we do so, we will hear different views regarding the vision of what is the Metaverse across a few key parameters:
- Is the Metaverse a consumer or business opportunity
- Will we experience the Metaverse in an AR or VR way?
- Will the Metaverse focus on Interoperability, or will it initiate Platform wars?
- Is the Metaverse closer to “digital twins,” or will it be an actual virtual experience?
- And most interestingly, is the Metaverse here, or is it an objective for the future?
We already gave “Meta” and its vision ample cover in this post, so to provide alternative points of view, let’s quickly dive into the vision of two other companies active in the space, Nvidia and Niantic.
According to Jensen Huang, Nvidia’s CEO, the Metaverse (or as Nvidia brands it, the “Omniverse”) is already here. Nvidia already has a few exciting “Metaversian” products that focus on topics other than AR or VR solutions. Nvidia sees the Metaverse as a junction connecting multiple applications and users of different trades to collaborate in “Metaverse” type spaces. Additionally, Nvidia takes a fresh “digital-first approach.” According to Huang, everything we build today is first created using digital tools and in digital spaces. A new building, for example, is made to great detail digitally, and only then it is built into the physical world. Under such an approach, it is not the digital world that is a copy of the physical world (as we are used to thinking in the “digital twins” mindset), but the physical world, which is a copy of the digital world. First, we collaborate, design, and simulate in digital environments, and then we build a copy of this work in the physical world. This interpretation of the Metaverse does not require the development of AR or VR solutions. Therefore, it is possible to implement this approach immediately.
The name “Niantic” may not immediately jump to mind when discussing the Metaverse. The company behind the immensely successful PokemonGo Augmented Reality game, Niantic, is investing in developing an AR Metaverse. According to John Hanke, Niantic’s CEO, the future of the Metaverse is not about escaping from reality into Virtual worlds; it is about building a better reality, a place of purpose, novelty, and community, with better opportunities to engage with reality in the physical world. The Augmented Reality world will enable users to leave “markers” of information at physical sites. For example, if you visit the Eifel Tower in Paris, you will be able to use AR devices to see comments others left around the tower or leave your digital impressions.
When exercising, you could have an avatar as a partner at the gym or gulf course. Or, at a restaurant, AR glasses will augment the dishes for you on the table. A much more exciting way for choosing your meal instead of using a traditional menu. Such a version of the Metaverse is more complicated to build than a Virtual Reality metaverse. There are many complexities to solve when augmenting data visually and in real-time.
Which Metaverse use-cases are likely in the near term?
Considering all of the above, what may be early use cases or opportunities to put us on the path to a Metaverse future? And when we think about these opportunities, do they have a near-term version (the Nvidia approach), or must they wait for future tech developments before they become a reality (the Meta and Niantic vision)?
There are several lower hanging fruit opportunities we should consider:
- Content creation: this will be a short sales pitch. Get your hands on an Oculus Quest device, and watch a few VR movies. I believe the experience will sell itself. Content creators have a grand opportunity to engage with users in new and exciting ways in VR worlds, and publishers are taking notice. Please have a look at NYTimes R&D and its open-source aframevr as an example.
- Entertainment and gaming: the two industry domains that caught on first to the benefits of moving from screens to VR. As mentioned above, Oculus oversold Xbox last year, and Sony announced its Playstation VR2. Gamers, representing a $37 Billion market and an additional $77 Billion mobile market, are taking notice.
- Training and Collaboration: As the world moves further into remote work, collaboration tools become ever more critical due to Covid or newly gained operational efficiencies. Meeting face to face and international travel are diminishing, and Zoom-style meetings have become the norm. Metaverse environments are a viable option for online meetings. In its “innovation Stories” section, Microsoft shares this story about its collaboration with Accenture to onboard new hires: “Now, new hires meet together on Teams where they receive instructions on creating a digital avatar and access One Accenture Park, a shared virtual space that enables immersive experiences during onboarding.”
- Analytics and simulation: The Metaverse-future Nvidia envisions will consist of many different universes, each with a unique set of analytics and simulation tools. One example Nvidia provides is for Erickson. The two companies collaborated to optimize the location of 5G communication towers, using an Omniverse environment: “In NVIDIA Omniverse, Ericsson is building city-scale digital twins to help accurately simulate the interplay between 5G cells and the environment for maximum performance and coverage.”
Additional use cases are covered above, such as new Monetisation opportunities of virtual assets and alternative experiences.
Should you join the Metaverse revolution?
That, of course, depends on who “you” are. As you know, the world divides into companies that build technologies and companies that use technologies. But, as it is now early days for the Metaverse, most of the opportunities are for the companies that “build technologies.” The Metaverse “tech stack” needs to be built, and “tech building” companies will find opportunities from HW through communication, SW tools, platform, and applications.
If you are on the “I use technologies when they are ready to scale” side of the fence, the opportunities at this moment in time are limited. However, as the Metaverse tech stack matures, more opportunities will become a reality for a greater audience.
I hope you found this overview interesting. Feel free to get in touch, and please read the other articles I published on tech, business, and innovation.