Should we care about the metaverse?

In early 2020, Travis Scott performed one of the largest concerts of his career, singing before an audience of 12 million people. For context, this is over 100 times the size of a capacity crowd at the mighty MCG!

The sheer size of the concert was made possible because it was virtual – hosted within the video game Fortnite. People attended as their in-game avatars, taking a break from the usual in-game shooting action. Travis himself appeared as a character that was 100 feet tall, in a visual spectacle impossible to reproduce in real life.

This is the promise of the metaverse; a future not constrained by traditional geography, where imagination can run free. Last year Mark Zuckerberg threw his hat into the ring, renaming Facebook and championing a metaverse future, including their Horizons platform (now with added personal space).

Part of the challenge of discussing the possibilities of the metaverse is defining exactly what it is. Ultimately, it is some combination of:

• 3D virtual worlds, that people can log into and interact with;

• virtual or augmented reality, to create a more immersive experience; and

• freedom of activity, so that people can choose to socialise, play, work, shop or do other things typically done in the real world.

Using this broad definition, the metaverse is already here. The virtual world ‘Second Life’, where people can buy property and interact with others, has been running for nearly 20 years. This included many businesses and news outlets at one time setting up shop in the virtual world. More recently, Roblox is a massive platform where people can play other users’ custom games and participate in a thriving virtual economy. The eponymous company is now valued at well over US$25b at the time of writing. Virtual reality headsets have now been floating around for a few years. Fortnite still has 30 million active users every day.

Business has already started to take notice, and globally recognised brands are trying to engage on online platforms. For example, Hyundai and Gucci have built an experience in Roblox. Fortnite has had tie-ins with the NFL, Avengers and Ferrari. KFC has even built a branch in Animal Crossing, Nintendo’s cute island-building game.

So what should business do? If you’re game, the new virtual world no doubt offers the opportunity to reach people in entertaining and creative ways, often interacting with those traditionally viewed as ‘hard to reach’.

I’m personally in the ‘wait and see’ camp. If there are platforms with massive user bases, building a presence will make more sense. But it is not clear to me how successful any individual metaverse effort will be. So over-investing in any individual area won’t necessarily yield long-term value.

At the same time, it’s easy to have some reservations too. Two of mine:

• Every time a new platform emerges, there will always be people left behind on others (think Gex X Facebookers not yet on Instagram or TikTok). This might mean more fragmentation, and a need to track where people are spending their time.

• Current efforts run the risk of creating many more walled gardens which will feel quite different to the more open internet design we’re used to today. Market concentration and user lock-in may continue to be important topics in the sector.

Perhaps in 10 years’ time our avatars will come together at an actuarial conference hosted in the cloud. Until then, I will still need to keep getting my hair cut.

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