The metaverse is quickly beginning to take shape, and media will play a significant role in using it to engage customers and create new business models. This “Second Life 2.0” offers abundant opportunities for broadcasters to carve out a slice of the metaverse revenue pie. MFM’s Annual Conference featured a plethora of sessions on the metaverse; here’s a cross-section of the array of information shared by scores of experts at the May 2022 event.
If you attended Media Financial Management Association’s annual conference in late May, you may have been a bit intimidated by the number of acronyms and possibly unfamiliar terms being bandied about during at least 18 sessions, including the closing keynote, addressing various aspects of the metaverse.
Encompassing everything from artificial intelligence, Web3, NFTs DAOs, crypto, blockchain, and smart contracts, the metaverse promises to infiltrate our daily lives in the near future. Some of the conference attendees think this prospect is a good thing, others are skeptical and still others want to investigate further before making a judgment.
The July/August issue of TFM, the magazine for members of the Media Financial Management Association, offers a full array of coverage around all the sessions at the conference. One of these features is dedicated to the presentations dealing with the metaverse, though the author said she was challenged trying to consolidate the breadth of topics into a couple of pages of copy. Here’s what I gleaned from the sessions I attended, from conversations with conference attendees, and from our “Keep Calm and Embrace the Metaverse” magazine feature.
If you’re familiar with Second Life, the avatar-driven virtual reality world that was first introduced in 2003, you know it’s a place where people can discard their day-to-day existence for a time and interact with other like-minded individuals, traveling within Second Life’s virtual world, buying and selling products and services, enjoying the arts, entering romantic relationships, taking educational courses, and much more.
The same is true of the metaverse, we were told, but the metaverse will not be run by a single entity, and it will offer an even greater array of technology-driven revenue opportunities. And here’s where the media industry comes in.
Advertising will be a huge player in the metaverse. Jack Myers, media ecologist and founder of MediaVillage, predicted in his closing keynote that a whopping 80% of ad spending will take place in the metaverse, with the remainder spent on linear/legacy media. Because the metaverse will enable each individual to have very tailored experiences, marketing around media will change. Numerous factors dictate why this will happen: custom data and currencies are in the buyers’ control; transactions are more highly automated; and B2B marketing is focused on stakeholder education and team morale.
And retailers, including both online-only sellers like Amazon and the WalmartS, Targets and Krogers of this world, will be integrating advertising in their audio, video and digital content as means of driving consumer spending.
Another arena in which the media industry is already involved, but will continue to evolve as the metaverse becomes pervasive, is NFTs (non-fungible tokens). While NFTs are all the rage, Richard Taub, co-founder and CFO of TreeTrunk Technology, presented his view of why NFTs may or may not be worth the hype and risk.
Movie studios, TV producers and televised sporting event organizers have already jumped in, selling digital collectibles related to movie and TV show releases, sporting events and more. NFTs promote engagement by allowing individuals and organizations to securely own and transfer unique digital assets such as program-related collectibles, gameday experiences, and other merchandise.
Taub noted that because NFTs are closely tied to cryptocurrencies, they’re also subject to wild swings in valuations, which have been evidenced of late. “When crypto dies, NFTs do, too,” he said. Add to that the subjectivity of what is deemed “valuable” in the world of NFTs and risks including legal, copyright, fair use, privacy and asset protection issues, and it gives you cause for pause.
Blockchain is another complex component of the metaverse, and Mark Osis of Deloitte Consulting and Chris Deans of Deloitte & Touche discussed how the metaverse enables new digital revenue streams, many of which will be relevant to media companies. Capital investments between May 2021 and May 2022 alone totaled $80 billion, and Osis said the metaverse will be fully built out in 5 to 10 years.
What makes blockchain intriguing, the Deloitte presenters said, is that it’s considered to be extremely secure since it’s not run by a central organization and offers a verifiable record of every transaction. Blockchain enables a two-way exchange of value and interoperability between virtual realms, allowing users to own the assets they spend time, money and effort on.
Closely aligned to blockchain — and the metaverse as a whole — is Web3, which EY Senior Manager Nuno Leal believes is a truly different iteration of the internet, describing it as “a set of technologies that allows you to own a part of the application. For example, if you buy from Amazon, you can actually own a piece of the company.” This new blockchain-based version of the web includes cryptocurrencies, NFTs, DAOs, decentralized finance and more.
Investors are clearly interested, Leal noted: “VCs like Sequoia [Capital] and A16 are allocating 50% of their funding to Web3,” despite the dangers it could present, including crypto fraud and security issues. “We’re really at the beginning of the transformation that Web3 will enable,” Leal said, but added: “We should look at these things [that are part of Web3] as very promising, but we should also remain skeptical.”
What I gathered from the sessions I attended, the conversations I had with many members of my organization across the media industry, and the conclusions drawn in this article is that there seems to be no question that media companies should be involved in helping to shape the metaverse. It will be a platform to engage customers, create new business models, and align with the next steps of digital adoption. But just how businesses should proceed was a nearly palpable undercurrent running throughout the conference.
The next few years will determine if the media industry — and indeed, the world — fully embrace the metaverse. What seems clear is that broadcasters and others throughout the industry need to prepare to leverage it as much as any other player in this alternate world. We’re starting to see that happen, but outside factors, including the worldwide economy, ongoing war and other conflicts, and climate change may alter or slow how it will play out.
But the bottom line is that while you may never use Bitcoin to purchase an NFT T-shirt for your avatar, your children and grandchildren — and the vast majority of your audience — almost certainly will. It’s time to get on the bus or risk getting run over by it.
Joe Annotti is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. He can be reached at firstname.lastname@example.org and via the association’s LinkedIn, Facebook, Instagram and Twitter accounts.