Since Facebook changed its name to Meta in October 2021, prices of virtual real estate have jumped by as much as 500%. Consumers are paying millions of dollars to acquire plots of pixelated property in this virtual world, even though it doesn't completely exist yet.
Living In The Metaverse
Immersive: The idea goes that people will spend more time in the Metaverse when the technology catches up to the concept (basically a 3D, immersive version of today's Internet).
That's if you believe Facebook CEO Mark Zuckerberg's version of tomorrow's digital world. He claims that the Metaverse is a place where people will be able to get experiences that they can only get (today) in the real world.
It's big business already, with more than $500 million traded in Metaverse virtual land sales as at the end of January.
"It's a multi-trillion dollar industry", says Epic Games CEO Tim Sweeney, who founded the business behind Metaverse game Fortnite. It's "essential" for firms like Epic, Roblox, Microsoft, and Facebook to make progress in the Metaverse during the next three years, he adds.
"Getting to 1 billion users is like a race. Whoever gets a billion users first is regarded to be the standard-setter." Epic Games CEO, Tim Sweeney
In the Metaverse, How Does Real Estate Work?
Today, the Metaverse has four primary real estate ecosystems, totaling 268,645 virtual square miles in total. They are:
- The Sandbox,
- Cryptovoxels, and
- Somnium Space.
Andrew Kiguel of Tokens.com is one of the largest property owners in Decentraland. He claims branding and advertising will be where virtual world value is found.
Kiguel compares the purchase of land in the Metaverse to that of advertising space on the internet today, saying that for many brands, the Metaverse is more like billboards than buildings.
“Why is Google more valuable than your mom's website? Because more people visit and use it over and over and over again,” says Janine Yorio, CEO of Republic Realm, a firm that owns millions of dollars of virtual real estate.
That is why plots in Decentraland located near plazas such as Dragon City and Vegas City are more expensive, Decentraland’s Head of Partnerships Adam De Cata told the Financial Times.
Who Is A Metaverse Landowner Already?
Adidas: Adidas have bought land in The Sandbox. They describe the Metaverse as "a natural place for Adidas Originals to enter: a wild world where possibilities are truly limitless and where anyone can express and be rewarded for their most original ideas."
Samsung: Electronics maker Samsung launched its metaverse location, known as Samsung 837X, in Decentraland earlier this year. It was designed based on the Samsung 837 store in New York City, where all sorts of products can be experienced directly, and it offers a similarly immersive experience with NFTs, games, product introductions, and live performances.
Atari: Atari owns virtual property in both Decentraland and The Sandbox, metaverse platforms where visitors can play Atari-themed games and attend branded events, with plans to expand digital gaming opportunities across the board.
PWC: PWC are establishing "a Web3 advising hub for the facilitation of a new generation of professional services, including accounting and taxation" on its plot in The Sandbox.
Warner: Warner Music Group is building a virtual performance venue there, while Adidas has purchased land there to "convey our excitement around the potential it holds."
Miller Lite: Molson Coors constructed the Meta Lite Bar, just in time for the Super Bowl, with nothing but Miller Lite as far as the eye can see. Along with virtual pool tables and virtual beer on tap, visitors can win REAL suds and experience exclusive content on Game Day.
Barbados: Barbados is even opening an embassy in the Metaverse after someone paid $450,000 to be musician Snoop Dogg's neighbour.
Crypto: Exchange Tokens.com's $2.4 million acquisition of land in Decentraland and Republic Realm's $4.3 million land purchase in The Sandbox are the two biggest deals in the Metaverse.
Microsoft: According to speculation, Microsoft's $68.7 billion acquisition of Activision Blizzard, a major publisher of video games, is a clue that virtual reality gaming would play a significant role in the Metaverse.
Boom or bust: Is it possible?
Skeptics: While some believe that the Metaverse's real estate market is thriving, others remain sceptical.
Having a headset means you'll be able to teleport to any area within seconds, according to the narrator. Advertising and commercial real estate are likely to see a benefit even if everyone is teleporting to the same retail centres or virtual concert halls.
Artur Sychov, CEO and founder of Somnium Space, believes that while interest in virtual real estate has increased over the past six months, "it is evident that most people do not yet completely comprehend the genuine use-case of those plots."
To avoid a speculative bubble, virtual commodities should only have monetary worth if they give genuine utility to their owners. Otherwise, consumers and businesses would be harmed.
Others believe that all this virtual land will someday become useless, as the Metaverse itself has no need to be finite, as more and more platforms might be added. Their concern is that the virtual real estate industry is being fuelled by FOMO (fear of missing out).
And that it's a virtual house of cards, ready to collapsed at any moment.
There are still many unanswered issues regarding the Metaverse's future, but one thing is certain: we'll be hearing a lot more about it in the months to come.
Let us know what you think about this subject by putting your comments, thoughts or feedback in the comment section below. ☟
- Calling It Real Estate Doesn’t Make It Real Estate’: What CRE Gets Wrong About The Metaverse Land Rush
- 5 Myths About Virtual Real Estate in the Metaverse
- The “Metaverse” & the Virtual Real Estate Bubble
- Virtual events, land and financial services in the Metaverse will unlock a trillion-dollar deal that will drive the next NFT investing boom.
w/Donate to Wiser!
☕️ Wiser! is a free newsletter thanks to the donations of readers like you. It is easy and quick to make a small contribution to the costs of running Wiser! Use this link to BuyMeACoffee.🙏