The whirlwind of excitement that initially surrounded the metaverse has given way to pragmatic concerns. Early iterations from metaverse frontrunners, hailed as the future of the 3D web, have fallen well short of expectations, offering little more than gamified virtual reality experiences with limited real world utility. Now that the hype bubble has burst, it’s time for a reality check. What is the current state of play for this emerging technology, and what does the future really hold? The road ahead may be challenging, but it remains promising.
Here are six elements that we need to keep an eye on as we move into the future:
1. REBALANCING PRICING MODELS
One of the more significant issues facing the metaverse is the unrealistic return on investment (ROI) expectations that emerged during the hype phase. In the first five months of 2022 alone, more than US$120 billion was invested in metaverse technology and infrastructure. During this surge, renowned brands such as Gucci, Atari, Adidas, and even rapper Snoop Dogg seized the opportunity to buy real estate in the metaverse, enticed by the prospect of simultaneously engaging with millions of customers or fans. Early adopters and investors pumped massive amounts of money into metaverse projects, especially virtual land grabs, often with little justification for their sky-high valuations. However, pricing models must be based on real-world value and utility, not speculation. Rebalancing the industry is essential to reestablish trust, and foster a more sustainable and credible metaverse landscape.
2. NEW BUSINESS MODELS THAT BETTER SUIT USERS AND CLIENTS
Metaverse builders need to relook at their business models and prioritize understanding their clients and users. Long gone are the days where buying “scarce land” in the metaverse was a thing. Builders and founders need to understand that clients and brands are looking at rebalancing the over inflated pricing models that hit the market. There is a bigger focus on the prolonged vision and strategy rather than the hype train.
3. PRIORITIZING USE CASES AND FUNCTIONALITIES
Show me the strategy! As more brands enter the market across multiple industries and platforms, it’s becoming very clear who has a strategy for growth and who doesn’t. Attention must lie in building strategies for growth with use cases and functionalities rather than purely launching non-fungible tokens (NFTs) and digital assets with limited to no value for the holder. This has ensured that more people are focusing on uplifting or building Web3-focused loyalty programs. However, for this to happen, we need clearly defined virtual worlds with seamless customer experiences and interactions.
4. IDENTITY, SAFETY, AND SECURITY: STILL A CONCERN
As the metaverse develops, so do concerns about identity, safety, and security. It’s imperative that we construct virtual realms that not only reflect our society accurately, but also foster inclusivity. Anonymity can encourage misleading behavior, and digital spaces must find ways to ensure user safety without compromising privacy. Robust know-your-customer (KYC) verification systems and proactive moderation are essential elements. As the metaverse matures, we will need new governance standards and regulation to protect users and businesses. Building a culture of responsibility and accountability within the metaverse community is equally important. User communities need to play an active role in shaping these rules. This also applies to intellectual property (IP) and ownership rights which help to maintain integrity in the creator marketplace. A case in point is the dispute between Hermès and Mason Rothschild over the MetaBirkins NFTs, which raised questions about trademark infringements and design integrity associated with the iconic Birkin handbag. This highlights the need for better legal frameworks when navigating the complexities of digital asset ownership.
5. COMMUNITY AT THE CORE
The objective of the metaverse should shift from being an activation that brings quick attention to a brand, to more about opening a new engagement channel between brand and user. The focus on collaboration and feedback loops have evolved and the community is looking for rewards and incentives for their user generated content (UGC) as well as the push in the creator economy. Platforms like Fortnite and Zepetto are making significant breakthroughs. These platforms have evolved from pure gameplay to prioritize user engagement, creativity, and community-building. In doing so, they have set new benchmarks for what the metaverse can offer. They demonstrate how user-generated content creates a thriving creative community within the game, and they are paving the way for a more immersive and interconnected metaverse. This shift in platform appeal is a positive sign, and it demonstrates the potential for the metaverse to become a genuine cultural and economic force.