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Building for the Metaverse Generation

Opportunities and Predictions for the Metaverse Economy

Jul 13, 2022

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This article was originally published on our Medium page.

 


 

 

​​In his novel Ready Player One, Ernest Cline describes a virtual world where people spend the majority of their time, where digital currency is more stable than fiat, and players assume any identity they can imagine. It offers an escape from a reality battered by social, economic, and political strife.

 

That virtual world that is being built today in our non-fictional reality.

 

In a few years, we will wonder how we ever lived without the metaverse, much as we already do about the internet. The metaverse consolidates the digital elements of our life — video games, social media, messaging, e-commerce — into a comprehensive experience.

 

Here are our predictions for what to expect when the metaverse becomes more mainstream, and what users and brands need to know to prepare for these seismic changes.

 


 

 

Kids know what’s next.

Web3 pioneer and investor Chris Dixon famously stated: “The next big thing will start out looking like a toy.”

 

Children globally have spent the last decade engulfed in video games — where they play games, socialize with friends, build small businesses, and, buy and sell things.

 

Most children between the ages of 7 and 18 are already living in the metaverse, as video games have become one of their primary forms of socialization and technology consumption. But this “metaverse generation” expects more from technology, even compared to millennials.

 

For them, Facebook is truly for the geriatric set. TikTok is interesting, but not quite interactive enough.

 

Netflix is something you do when you want to spend time with your parents. For them, YouTube has replaced cable TV because it is short-form and on-demand.

 

Today’s youth are as addicted to technology as their parents, but they are consuming it in a new way. They are consuming technology in the metaverse.

 

 

The metaverse will become our primary form of procrastination, just as the internet and smart phones have filled our free moments–and then some. We will consume it casually, sneaking a few moments here and there when we can, but we will also settle in for longer stretches of time when our schedule permits (or perhaps when it doesn’t, to the detriment of our real lives and obligations).

 


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The Liberation of the Human Spirit

The metaverse will allow us to do things we cannot do in the world, much as video games do.

 

We can be risqué and push cultural and societal norms beyond traditional boundaries, cloaked by our anonymity and invincibility in the metaverse. We can fly, experiment with drugs, and live out our romantic fantasies. We can act in ways that would be penalized in the real world without fear of punishment or retribution.

 

The metaverse will, at times, be trippy and hallucinogenic. We can live our best, most ideal lives in a body-like avatar that we deem to be better than our reality.

 

We can parachute in and out of this world in seconds, seamlessly interweaving multiple different realities into the natural rhythms of our lives.

 

 

Metaverse is appealing to all — crossing cultures and boundaries.

The metaverse will be equally appealing to all genders. Research shows that the male gender seems to be especially drawn to the possibilities of killing, shooting and blowing things up in video games. Admittedly, women also enjoy death and destruction, but to a lesser extent. The metaverse will cater to a wider range of pursuits inside video game environments, including hosting events, decorating homes, learning new things.

 

The metaverse will transcend cultures and geographic borders. The metaverse will speak to everyone regardless of direct interests as it is a home for people who want to play games, produce music, socialize, or just people watch.

 


 

 

Websites to Webspaces

Through vast, interconnected networks, 2D websites become 3D webspaces that are interactive, immersive, and social. Rather than scrolling through webpages alone, players engage with the same persistent content simultaneously with others, allowing anyone to congregate inside a virtual environment to play, shop, talk, and search together.

 

The metaverse offers the opportunity to be a more productive and socially redeeming form of the internet. It grants people anonymity and the freedom to forge a digital identity that may be more liberated than their real world identity permits. Perceived physical disabilities will no longer preclude participation, and the lack of a common language won’t prevent shared experiences.

 

“In digital worlds, communities fuel innovation, adoption, and longevity.”

 

Dismantling these barriers is the positive feedback loop that drives the entire metaverse. In digital worlds, communities fuel innovation, adoption, and longevity. With ease of community development, the metaverse adoption flywheel kicks in.

 

Gaming takes a front seat.

The thing we will all do together in the metaverse is play video games. That is the primary activity that will bring us there the first time, and then make us return again and again. These video games will not be after-thoughts or mini games, but rather the main piece de resistance.

 

Not all games will be first person shooters (like Fortnite or Valorant). Sometimes we will play old school arcade games that resemble Super Mario Brothers or Pac Man; other times we will procrastinate with more relaxing match-3 games (like Candy Crush), or we’ll build worlds (like the Sims or Second Life). The video games we play in the metaverse will be of an extremely high quality, often built by AAA gaming studios, and they will keep us coming back for more. Games will be the single largest time sink within the metaverse. Casual gamers today spend 50+ hours a month gaming. Hardcore gamers spend hundreds.

 

Additionally, esports have typically been the rocket fuel for gaming, so much so that top gamers sell out stadiums in real life. With high-quality web3 first-person-shooter titles come esports exposure, and the gamers will seek out competition to climb the ranks.

 

 

In the same way that children become more athletic by playing outside with friends, in the future people will generally be better gamers and more technologically literate overall due to spending a higher portion of time tapped into the metaverse.

 

The metaverse will be built by video game developers, because at its core the metaverse is a video game. It is not a 3D architectural model (although that is a good starting point) because when a player turns a door knob in the metaverse, the door swings open. That is a video game, and it must be built by a developer who understands that kind of cause & effect coding. As a result, the world will experience a shortage of video game development talent.

 

“Users will come for the content (events, shows, esports) but they will stay for the social connections fostered through shared gaming experiences.”

 

In fact, there already is a shortage. Video game developers are typically among the best and brightest graduates of computer science programs because video game development is highly complex; the person writing the code must think in 3D.

 

These developers cannot be created rapidly in coding schools the way that HTML developers could be, which means that there will be a greater demand for game development talent from remote locations and emerging markets. This will create new economic opportunities for those who are crafty enough to teach themselves game development. It will also create demand for no-code or low-code, metaverse-as-a-service solutions, the equivalent of Wix or Squarespace for the metaverse.

 

Not as Novel as It Might Seem

The metaverse may be more mundane than we are expecting to be. Rather than a sci-fi, futuristic, and dystopian version of the world, the metaverse is likely to look a lot like the real world.

 

We know this because people who are spending time in the metaverse already (on platforms like IMVU, High Rise, Second Life, and Fortnite) generally buy clothing that resembles their IRL counterparts and build houses that look pretty ordinary. While the metaverse allows for futuristic versions of reality, the human mind may prefer to live in an environment that is mostly evocative of the one they already know best.

 

“Rather than a sci-fi, futuristic, and dystopian version of the world, the metaverse is likely to look a lot like the real world.”

 

The actual platform or virtual world in which communities form will take a backseat, becoming an invisible infrastructure layer, much as websites are now hosted on AWS or Google Cloud. Instead, users will choose a metaverse platform based on ease of use, technical capabilities, and quality of content.

 

Creators that master the production of metaverse content or developers who build tools that make it easy for mainstream users to create and distribute their own metaverse content will attract the most users and therefore build the most valuable platforms. Users will come for the content (events, shows, esports) but they will stay for the social connections fostered through shared gaming experiences.

 

Decentraland: A notable MVP but only the beginning

Current platforms, such as Decentraland, have benefited from the recent wave of interest in metaverse technology, but Decentraland is more akin to a proof-of-concept than the eventual addictive and superior experiences coming down the pipeline.

 

Shopping in Decentraland is arguably worse than shopping on Amazon. Music concerts in Decentraland are arguably worse than they are on Zoom.

 

That is because Decentraland is mostly an attempt to recreate digital twins of the real world, buildings and spaces that simulate experiences we already have in real life, but in ways that are not demonstrably better than the real life alternative. Decentraland’s vision for the metaverse is missing a few key elements: high quality, addictive video games, high quality visuals, strong communities, and activities that we cannot easily replicate in real life.

 


 

 

Blockchain and Crypto

Crypto will become an invisible, infrastructure layer that facilitates micropayments and secondary sales, making it easier to move money from inside and outside metaverses and games. There will be many metaverse tokens, but there is likely to be one super currency (the equivalent of USD and probably a stablecoin) that can be used in nearly all of them.

 

Tokens are fundamental to a decentralized metaverse with a diverse community because they solve problems like exchange rates between local currencies, political issues in transacting with certain denominations, and they allow the exchange of goods to stay within the metaverse (not having to go to outside middlemen to verify or regulate transactions). These crypto-based economies will create real jobs that pay well enough to supplement or even replace traditional sources of employment.

 

NFTs

NFTs will be important to the metaverse, but not as important as they currently seem. The metaverse will give NFTs utility, and NFTs will unlock the metaverse.

 

But the potential for the metaverse once it becomes mainstream will dwarf the size of the NFT market today, which is only around $22 billion as of July 2022 according to NFTGO. (About 30 million people hold NFTs in their wallets. Compare that to the ~250 million million people who play video games and the 4 billion people who use social media, and we can begin to understand why the NFT market is to the metaverse as the tail is to the dog.)

 

Brand Activations

The metaverse can be viewed as an all-inclusive hub in which fashion, games, music, and large consumer brands and companies further connect with everyday users regardless of status or geographical borders. Since there is a place in the metaverse for everyone, it will be the pinpoint of everyday culture for generations to come and the new norm in which big brands communicate to their respective audiences to enhance their digital identity.

 

New brands will be built in the metaverse that are more valuable than some existing brands. Today, the most powerful brands in the metaverse are Bored Ape Yacht Club, RTFKT, Genies, Zed Run…You may be unfamiliar with these brands, and that proves our point.

 

 

The metaverse and web3 are ushering in a new wave of brands that are becoming more powerful than existing brands inside this ecosystem. For example, Nike acquired RTFKT in order to make a play into the metaverse space.

 

Nike, one of the world’s most powerful brands, did not enter the metaverse with its existing brand, but rather acquired a young metaverse-native brand to make a play in the metaverse. That’s because the web3 community sees big, corporate brands as anathema to the ethos of community-built brands that share and reward loyal brand evangelists.

 

It’s a different way of building a brand. In the real world, you can easily assess the quality of a retail mall by the number of “blue chip” tenants inside (Louis Vuitton, Gucci, Cartier, etc.) However, in the metaverse, the most valuable brands were born in the metaverse and are metaverse native.

 

The metaverse has its own brands that connote authenticity and quality, in different ways than traditional brands do. Many of these brands are very new, but they are truly global and have rabid, cult-like fanbases.

 

“They will be the Nike, Disney, Gucci and Coca-Cola of tomorrow.”

 

As advertisers wake up to the new reality that the metaverse has replaced scheduled television programming as the primary cultural influence for the next generation of consumers, they will need metrics in order to calculate their ROI. Analytics platforms for the metaverse will become increasingly valuable to marketers, and new ways of measuring impressions and foot traffic will emerge.

 

The metaverse will become mainstream and accessible through standard hardware. It will not be something that only gamers with gaming rigs will be able to access.

 

At some point, it will also be accessible on mobile, which is important because over 7 billion people have smartphones globally.

 


 

 

There are many innovations that must occur between now and when this seamless, mainstream version of the metaverse takes hold.

 

  • Improved audio quality. As we learned from two years of video conference calls, audio quality is a critical component to online socialization. You may have noticed that your brain feels more fatigued after a day of zoom than it does after a day of in real life conversations. That is because audio on Zoom experiences what is called “packet loss” which is what happens when packets of data fail to reach their destination across the network. This occurs for a number of reasons, mainly network congestion. Crosstalk and spatial audio, the audio styles utilized in Gather.town, make for a more natural, intuitive, and engaging audio experience for players. We are excited to see how audio experiences can improve, potentially to the point where music concerts are truly engaging. This is both a hardware and a software issue, and solutions will need to take both into account.
     
  • Better UX. The metaverse must have a pleasant user interface, one that allows players to join from mobile and seamlessly, without a hitch, transfer to a PC without hindering gameplay experience and user features.
     
  • Higher numbers of concurrent players. Most multiplayer games that exist today are limited by the number of users who can participate at the same time. For example, Ariana Grande’s concert in Fortnite — which was seen by nearly 80 million people — actually happened on the private Rift server. That is because current game engine solutions such as Unity and Unreal Engine don’t allow for massive player instances that future metaverse projects will solve. The metaverse will have one instance in which up to 5,000 people (and potentially more) can huddle in the same area of a game without network or latency issues, creating a more immersive and engaging experience for everyone involved.
     
  • NPC. Non-player characters in the metaverse will act with emotion that seems more real and life-like. This will occur through more advanced AI technology, designed to recognize traces of emotion in text, voice, and emoji chat.
     
  • Photo-realistic graphics. The metaverse will most likely be built in Unity or on the Unreal Engine, with high fidelity graphics, but this will need to be balanced alongside hardware requirements and wifi/internet quality limitations.
     
  • Wallets. To drive further web3 and metaverse adoption, users require frictionless onboarding. This starts with a friendly user interface that is also intuitive, and even gamified. Wallet onboarding should feel as frictionless as web2 logins in order to allow people to participate as quickly as possible without delay.
     
  • Financial microtransactions on the blockchain and reduced transaction (gas) fees. High rates of transactions (throughput) combined with low transaction costs are a prerequisite for a seamless metaverse experience. We are seeing an increasing amount of games building on alternate blockchains from Ethereum such as Avalanche, Polygon, and Solana because these alternate blockchains offer high transaction speed combined with lower transaction costs. We expect even more refinement in this area, and change appears to be happening quickly.
     
  • Security. Security and decentralization are of the utmost importance in blockchain-based metaverse and gaming products. Developers are actively reducing the risk of breaches and hacks by building and integrating with reliable, high-validator blockchains that are truly decentralized and distributed.
     
  • Metaverse and blockchain interoperability. The future is multichain! A multichain future is the goal within the blockchain community but we aren’t there yet. Today, blockchains are not directly integrated and require bridges to transfer assets from one another. Bridges have been the primary cause of several hacks as there has been over $1bn in bridge-related hacks in just over a year.
     
  • DAOs. DAOs will govern the metaverse and DAO tooling will simplify DAO governance and formation. Users control the protocols through active governance within DAOs. While the DAO model is often thought as the future of corporations, there is an inherent lack of tooling to make this thesis a reality today. The DAO tooling space is extremely active with new and improved protocols making headwinds.
     
  • Hardware improvements. In order to experience a truly immersive metaverse product with photoreal graphics, developers must use a platform such as Unreal Engine 5 and hardware improvements are a must. Metaverse products and games today are low fidelity and only run on web browsers. This is a current limitation and the future metaverse product offerings that users will come to love will likely require hardware improvements such as medium-tier GPU/CPUs.

 

In some ways, the metaverse is evolving rapidly, but in other ways the rate of improvement feels almost glacial. It is important to remember that this new environment is comprised of robust and highly customizable video game worlds, and those take a long time to develop and test appropriately.

 

We are encouraged by the wave of new entrants into the field, and believe that the metaverse that we are all hoping for will evolve and ship much more quickly than previous technological innovations.

 


 

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