Making Sense of the Metaverse Mania

It seems businesses around the world are obsessed with the metaverse.

Bloomberg estimates the global Metaverse market opportunity could reach USD800 billion by 2024. JPMorgan’s “metanomics” assessment also indicated the average price of a parcel of virtual land — across the four main Metaverse sites: Decentraland, The Sandbox, Somnium Space, and Voxels—has doubled in six months from USD6,000 in June 2021 to USD12,000 by December.

While businesses are racing to “enter” the metaverse, it is still a concept that is far from existing, according to Forrester.

The metaverse does not exist — yet

“Forrester believes that the Metaverse does not exist yet, but will unfold over the coming decade,” stated the research firm’s report The State of the Metaverse in China. The research firm noted we are still at the first phase — the metaverse precursors — of a three-phase development framework. At this stage, businesses are unlikely to generate substantial value or create a new generation of customer experiences at scale in a few years.

“We are at the Metaverse precursors phase where we have many single-vendor platform activations, not the metaverse,” said Guannan Lu, one of the report authors and analyst at Forrester. “A virtual world built by a single vendor is just a virtual island/metaverse precursor.”

He added the fully federated metaverse would happen when there was interoperability across different immersive platforms with standard protocols for the presence, persistence, and transfer of identity and assets.

“We are not sure how long the three metaverse phases will evolve; it could be a decade or more,” Lu said.

Although the metaverse takes decades to unfold, it does not stop businesses from joining the virtual land party, particularly with their marketing and investment budget.

“[The] Metaverse FOMO [fear of missing out] is real — for VCs, media and tech companies and marketers,” stated Forrester. The firm’s Q1 B2C Marketing CMO Pulse Survey 2022 indicated that 76% of U.S. B2C marketing executives are eager for their brand to explore what’s possible within the metaverse in 2022. Asia has a similar spending pattern.

The Metaverse FOMO in Asia

Forrester’s  Priorities Survey 2022 indicated that 56% of executives in China with significant involvement in planning, funding, and purchasing business and technology products and services said they have plans to adopt the metaverse and virtual world solutions.

The Hong Kong-developed virtual world The Sandbox has already attracted local theme park Ocean Park and global brands like Adidas and Warner Music to join the metaverse. On top of the B2C marketers, The Sandbox has also brought HSBC, PwC Hong Kong, and traditional businesses like Sun Hung Kai & Co onboard the Web 3 bandwagon.

The excitement is not limited to the private sector. Shanghai has also announced the metaverse as part of the government’s technology development plans. In Dubai, the government also launched Dubai Metaverse Strategy in July, aiming to attract more than 1,000 blockchain and Metaverse companies to the city.

Being Cool, But Realistic

“During the Metaverse precursor phrase, ‘being cool’ is a driver for consumer adoption,” said Lu. But it is also a gateway for enterprises in China to stretch their innovation and experiment with new ideas.

“Although most so-called metaverse scenarios today are just 3D experiences rebranded as ‘the Metaverse,’ many companies aim to create differentiating customer and employee experiences, drive new business opportunities, and deliver operational effectiveness,” he said.

Lu said most early adoptions of the metaverse are categorized into four different scenarios. The most common is creating virtual marketing activities to attract novelty-seeking customers. One example is luxury brand owners like Burberry and Kiehl’s participating in Alibaba’s Metaverse Art Exhibition and displaying their virtual products.

The metaverse's second early adoption scenario is creating virtual experiences to drive new engagement. The Chinese travel industry has been using 3D technologies to salvage businesses during COVID via virtual experiences. MIGU, China Mobile’s content subsidiary, also created a virtual idol, Meet Gu, as a sports commentator for the Winter Olympics to drive audience interactions.

On top of engaging with customers, some businesses are also riding on the metaverse to enable virtual collaboration to support the anywhere-work strategy. Shanghai-based Huadong Technologies developed a virtual workspace, bringing its 200 employees from its physical office into the Metaverse office.

Lastly is the use of 3D technologies to enable virtual operations and drive excellence. “With field engineers stuck at home, demand for remote assistance drove the adoption of the Metaverse precursor building blocks such as digital twins and AR solutions,” said Lu.

Responsible innovation

Lu added while businesses are experimenting with the metaverse with these four scenarios, they should also stay real by keeping expectations in check and planning for the long run.

“Be wary of promising specific project results,” stated Forrester’s report. “The Metaverse is still nascent; you will likely fail to achieve these goals. Several iterations will likely be needed before firms reap benefits from Metaverse precursor technologies.”

He added companies should select business cases with ROI potential but also understand the process of estimating ROI remains fuzzy. The immersive spaces may create new digital touchpoints. Still, businesses are advised to evaluate their success with metrics that reflect business performance in the physical world, like revenue generation and employee performance.

As the Metaverse ecosystem is still immature, few companies have the skills to design or operate immersive worlds. “To experiment with Metaverse precursors, apply Forrester’s XR experience design principles — but also expect to need new operational support for business activities in the virtual world. Many firms are building their capabilities with third parties via co-innovation journeys,” Forrester concluded.

Sheila Lam is the contributing editor of CDOTrends. Covering IT for 20 years as a journalist, she has witnessed the emergence, hype, and maturity of different technologies but is always excited about what's next. You can reach her at [email protected].

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