The metaverse has the potential to disrupt several realms from gaming to advertising to retail and so much more. But to tap into this virtual world’s full power, leaders must address its possibilities and pitfalls over the coming years and determine where it fits in with their business models. To help you do that, Deloitte has shared an overview of metaverse technology and its implications for business leaders.
What Is The Metaverse?
As Deloitte puts it, the metaverse is the term used to describe the convergence of an array of separate technologies that together will provide humanity with an immersive, three-dimensional virtual environment/platform to conduct business, interact, play and access new resources and experiences.
The metaverse, despite remaining years away from full realization and adoption, is a 30-year-old idea that has only just recently come into the spotlight and attracted considerable support and investment. Although it may have a comparable impact on the world as the internet did in the ‘90s or smartphones did at the turn of the century, it’s too early to accurately say.
Other than a virtual space, the metaverse is characterized by two other important elements that could constitute make it the new platform with seemingly unlimited uses. First, it’ll likely include both physical and digital worlds in the user’s experience, fusing both into one. Second, it may have a native economy with digitally native assets and trade.
Other elements of the metaverse that are already at play include immersive virtual worlds with avatars that interact, digital overlays on the physical world that provide data or commentary on what the user sees and digitally native trade and economic activity.
What’s Really At Stake Here?
- Similar to what smartphones did to the world after the year 2000, the metaverse may prove to be a paradigm shift for consumer and enterprise behavior.
- The metaverse could create a massive new market with an estimated commercial opportunity amounting to $13 trillion with 5 billion regular users by 2030.
- It could rearrange the competitive landscape and displace legacy brands with new winners.
Several factors—including technical, social and financial—seem to be converging, which are in turn making the metaverse seem especially appealing. Deloitte says these are:
- Incumbents’ search for growth
- Digital market leaders and existing platforms are currently looking for new avenues to grow
- Behavioral shifts amplified by COVID-19
- Increasingly digitized social and work interactions
- Rise of ecommerce and shifts in consumer preferences
- Evolving digital economy
- Growth of digitally native assets and supporting economic infrastructure
- Increasing popularity of digital asset ownership, cryptocurrencies and digitally native contracts
- Major capital investments
- Over $80 billion in corporate investment in the last 12 months
- Over $10 billion in venture capital investment in 2021
How Will People Use It?
Several use cases for the metaverse exist across categories and industries, including work and learning, entertainment and experiences, retail, health and wellness, and manufacturing.
Within work and learning today, the metaverse is being used for telecommuting, virtual collaboration and immersive professional training. Deloitte predicts emerging trends could include digital renditions of physical operations and locations and even classroom tools and fully native schools. In five or more years, we may begin to see metaverse-native and dependent companies.
Currently, we’re able to “attend” concerts, shows and sports games and even watch movies while socializing with others’ avatars. Emerging entertainment metaverse trends could include interactive sports and events and possibly even tourism. In the long-term, Deloitte predicts there will be immersive “theme park” experiences that adapt to customers’ data profiles.
And in retail, we’re seeing the metaverse’s capacity to host boutique shopping experiences and digital customer contact centers. Soon we may see data-enhanced everyday shopping for things like groceries, furniture and appliances, Deloitte notes. People may even one day be able to purchase homes and cars in the metaverse. In the long-term we can expect to see full sensory immersion in retail experiences, complete with sights, sounds, smells and more.
Where Is It Headed?
According to Deloitte, the metaverse’s evolution will likely depend on consumer response as well as the outcome of at least four key unknowns, each with its own set of questions that will have to be answered:
- To what degree do standards and protocols converge?
- What is the level of interoperability among different platforms?
- Is there a single unified economy across platforms?
- Will digital goods purchased in one metaverse be available in another?
- Are identities persistent across platforms?
- Are there consistent design and programming standards?
- Market fragmentation
- How many market leaders will emerge and what consumer and commercial use cases do they serve?
- How much competition is there in the market, and how does this affect innovation?
- How much M&A/market consolidation will we see or will be allowed?
- Do different platforms serve different use cases? For example, one dominant consumer platform and one dominant enterprise platform.
- How effectively and consistently are content and conduct regulated?
- Are IP and digital assets reliably protected?
- Is there strong government regulation or do platforms rely primarily on self-governance?
- To what degree are interactions and transactions secure and trusted?
- Is there an effective process governing tax jurisdictions and legal liability concerns?
What Leaders Can Do Today
Whether the metaverse has a future and what it might look like remains to be seen but there are four primary actions executives can take now to best prepare for the possibilities of what this potential paradigm shift could bring. Deloitte says these include:
- Don’t underestimate the potential.
- Design a flexible and adaptable strategy for taking your business into the metaverse, respond to new tech and shifting consumer preferences and engage a “test and learn” approach for both consumer-facing and enterprise functions.
- Take the long view.
- Considering the possibility that the mainstream metaverse and accompanying revenue generation may be several years away from being fully realized, take a long-term view on investments. Consider KPIs around consumer and employee engagement along with ROI. Also, consider investments in the context of broader digital transformation agendas.
- Focus on demand and what motivates users.
- Focus on how to create engaging experiences and captivating content—exclusive partnerships or user-generated content tools, for example. This will help you establish share and maintain a competitive edge.
- Commit to a “responsible metaverse.”
- Ensure your strategy can handle many complexities and risks within the metaverse. Privacy, security, accessibility and sustainability are all hot topics that consumers care about currently and will likely continue valuing in the near future. Ensure that your organization can be proactive in building a “responsible metaverse” – which will be indispensable in garnering consumer and employee trust.