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The Metaverse is Flat. Not.

News flow on the latest buzzword abound — the Singularity Think Tank and our CIO Gregory Hung bring the Metaverse down to earth and explain which technologies have converged to shape and drive a phenomenon that is more tangible than its name suggests.

The term “Metaverse” sounds abstract, yet it’s more concrete than perhaps initially perceived. The prefix “meta” derives from Greek and means “after, along with, beyond, among, behind”. So far, a commonly agreed upon definition of the Metaverse doesn’t exist yet, but if you look at the etymology, it could be described as a (virtual) world beyond the one we know. A world that allows for new forms of interaction, collaboration, and entertainment. It’s less of a fantasy scenario than a complementing concept to augment what is possible in “reality”. Social Media as we know it and the world of gaming have laid the foundation for the Metaverse: Is a filtered and photoshopped picture of someone a depiction of their actual selves or already an avatar? How much of a metaverse has already long existed in the form of games like Fortnite in which the players acquire digital outfits, so called skins, with actual money for their avatars? Don’t avatars already meet up to join perfectly staged and orchestrated virtual concerts of real-life artists?

Is the Metaverse investible?

“Think of the Metaverse as a convergence of technologies that allows for an enhanced experience surpassing the limitations of space, time, and what’s physically possible”, says TSG’s CIO Gregory Hung. “Our approach is a very pragmatic one — we don’t use a crystal ball or science fiction scenarios but cover the innovations that enable the Metaverse and with that capture to which extent it is already happening now.” He has monitored the Metaverse for a while now and shared some of his conclusions in the Seeking Singularity Q2 2021 report. Artificial intelligence expert Donnacha Daly, PhD, adds: “We should picture the Metaverse as shaping the coming generation in the same way previous generations were defined over the decades: by print-media, cinema, radio, television, the internet, mobile phones, and social media. And there is little to no doubt it will be as pervasive as its predecessors.” In other words: Just because we can’t imagine the Metaverse yet, that doesn’t mean it’s not coming — or already here. At TSG, we focus on the status quo. We do so by capturing a set of core enabling technologies and their individual evolutions and interactions that build such themes and shape the future continually.

To make the Metaverse more graspable and help us understand which technologies converge how to form the Metaverse, we had conversations with some of our Singularity Think Tank fellows. Here’s what they say.

Which industries will see the strongest growth from the Metaverse?

“First, areas in which companies currently engage in Metaverse-like offerings — Facebook/Meta, Epic, Microsoft, Roblox. These will also be primary recipients of ad revenue. Certainly, it’s also interesting for companies that fill the Metaverse with content, for example, franchises like Warner Brothers, Lego, etc.”, answers Artificial Intelligence expert Alexander Stumpfegger. A view that Virtual/Augmented Reality expert Lukas Schleuniger emphasizes further: “Players like Facebook/Meta will do everything they can to cover this area. The metaverse, if you break it down, is about picking up the user with immersion, which is characterized by time spent in the metaverse. Of course, all the gaming players are in here, too. The question is what exactly defines a metaverse and which metaverse will achieve the most user time.” Daly adds collaboration tools, pornography, and interface equipment to the list of early growth areas. He agrees with Stumpfegger and Schleuniger highlighting the current players and vast possibilities for the advertisement industry. “Starting with advertising, regulation will be way behind the curve as always, and creative marketing people will be salivating at the massive canvas and unlimited eyeballs that will open up as we all plug-in and zone-out.”

Daly furthermore describes the Metaverse as a low-cost way to experiment with new public spaces, through visualization and interaction, but also through experience-based design. On a larger scale, he sees the white-collar services industry and knowledge based economy moving to the Metaverse as an alternative for road-warrior based international business travel. “This will derive from the pull of convenience and the push of heavy carbon taxes on aviation fuel”, he concludes. The transition to video conferencing during Covid has demonstrated that these shifts can be fast and permanent. “The Metaverse will break down barriers and costs everywhere there is a need for collaborative engagement. When we all moved to Zoom or Teams during COVID, productivity actually went up, not down. This will only accelerate as we move to avatar based meetings, with access to a wider array of communications media and interaction formats. While video meetings got rid of the commute, the Metaverse will get rid of the need to get suited-&-booted.” At the same time, he says, it will solve a lot of the things we all hate about back-to-back Zoom meetings by providing re-imagined virtual workspaces and collaboration tools.

A view that blockchain expert John Orthwein shares: “The Metaverse is all about collaboration tools. We’ve gone from audio to visual to tools, and now virtual collaboration.” Laurenz Apiarius, who also covers the Blockchain sector for us, states: “The Metaverse is a platform for interaction, self-display, and communication, and might also revolutionize the trade fairs and exhibitions landscape.” David Orban, Managing Advisor atBeyond Enterprizes, also sees the retail world on the edge of transformation. 10 years ago it was deemed unthinkable to buy a $50,000 car over the internet, but today, very few people hesitate to click buy on a Tesla web page. “Similarly, It will be quite common to buy a house, buy an apartment, sight unseen, over the internet, enhanced by the ability of visiting it, experiencing it, seeing it in a very, very rich environment enhanced both via VR and AR”, Orban says. He sees additional applications in general industrial maintenance and training remote workers. All Think Tank members agree that education will be a huge, but laggard adopter further democratizing access to knowledge.

Which technologies will play a crucial role in enabling the Metaverse?

The summed up answer to this question according to our Think Tank is: Artificial Intelligence, Blockchain (and especially NFTs), Virtual/Augmented Reality, Big Data, and Compute Power.

  • “Artificial Intelligence will have a huge role to play in boosting B2B and B2C efficiency. With Nvidia’s & Microsoft’s latest 530 billion parameter language model pushing conversational abilities of chatbots closer to the Turing limit, we have to imagine that Avatar based interaction in the Metaverse may not always be between humans, or even between a human and a bot. The scale of deployable agency in the Metaverse is not limited to an FTE headcount [an employee’s scheduled hours divided by the employer’s hours for a full-time workweek] as in the real world, in the scenario where Natural Language Processing technology continues to follow its current performance improvement trajectory. This could be hugely disruptive in the mid-term in driving interactions and ultimately transactions in B2B areas”, states Daly
  • Orthwein highlights: “Open-source software is one of the biggest assets of humanity. It will be harder and harder to build things in a proprietary way, especially where value is exchanged. Otherwise, there is no foundation for trust. The idea of owning your data is key. This is also where NFTs come in. They are fundamentally a pointer to arbitrary metadata in standardized JSON format. The token, then, is a transferrable, ownable, unique identifier immutably linked to that metadata. The metadata can be anything, e.g., all tweets you’ve ever tweeted could be metadata content that you own and control. Ownership and control of your data and digital assets is the big idea behind Web3, which is probably a necessary condition for the Metaverse. You own your data. You can decide what you show or share, or even remove yourself. It’s the opposite of Web 2.0 where firms own and profit from your data.”
  • Blockchain expert Tommaso Bonanata is certain that the blockchain will be an integral part of the Metaverse ecosystem: “We are not yet sure what the metaverse will look like. Whether it will be in the form of a single open-source universal platform or various implementations compatible with one another, blockchain will play an important role in enabling digital property to be moved around the metaverse ecosystem.” Orban adds: “So, there’s hardware and software, then 3D and 2D i.e. immersive or not immersive, and the completely different aspect of centralized or decentralized. The software architecture today cannot ignore Blockchain. Any metaverse that is not decentralized, and is not based on NFTs is bound to be completely out of sync with what modern software architectures enable today.”
  • “As for the technology and equipment providers, such as telecoms and semiconductors, the wave of investment required to realize the Metaverse in the first place will ensure that some of the strongest growth will be in this sector, certainly at the beginning”, Daly answers. He states that the smooth hosting of a global, glitch-free Metaverse with full scalability and no down-time will be an engineering challenge on a scale never seen before. “Many technologists recognize worldwide electrification in the 20th century and our power-grids as the most complex and large-scale infrastructure transformation ever undertaken. The Metaverse deployment will be in the same vein”, he pins down. “This will drive a relentless demand for data-warehouses, blisteringly high-speed full coverage mobile networks, seamlessly scalable compute power, and endless stocks of switch gear, networking equipment and of course interface devices. I would see companies like Cisco and Logitech having great exposure here, also the 5G Telcos and in particular Intel as it steadies its ship after some turbulent years, will stay in the pack with the other big semiconductor providers.”

We’ll continue the conversation with the Singularity Think Tank as the Metaverse unfolds and keep sharing their insights which — as always — feed the Singularity Strategy.

For more input on companies covering this hot subject, those feeding into its value chain, and how they show up in the Singularity Strategies, do checkup on our Q2 Seeking Singularity Report or contact us.

By Katharina Boehringer

Exploring the impact of exponential innovation

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The Singularity Group

The Singularity Group

Tracking the future of exponential innovations.

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