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Wiser! #45 (Premium): All of a sudden, everyone is talking about the Metaverse. Thanks Meta! In this 2 part series, Part 1 explained what it is and Part 2 looks at what it does.

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In Part 1 I covered Facebook's rebranding to Meta and a 101 on "what the Metaverse is". This gave you an entry point into the subject, albeit a subject which is still a bit abstract, a bit conceptual and, frankly, a bit nuts in places.

The Metaverse Part 1; Facebook’s big bet
Wiser! #43 (Premium): When Facebook, the world’s largest social network, renames to “Meta”, it positions the Metaverse as the Next Computing Platform, aka Web3, the next generation of the Internet.

However, you now know that when I talk about "the Metaverse", you know I'm talking about the coming together of a whole bunch of new technologies that are the key components of this next generation of the Internet. These include cryptocurrencies, decentralised systems like blockchain, NFTs (non-fungible tokens), DAOs (decentralised autonomous organisations) and DeFi (decentralised finance). Plus virtual reality and augmented reality, with digital wearables like smart glasses, haptic gloves and headsets. And of artificial intelligence and avatars that run on super fast 5G networks running virtual worlds with virtual assets that you can't physically touch but can still own, sell and make money with.

Yep, it all sounds a bit nuts!

The context for this is that our experiences on the Internet have evolved from being text-based in the early days (pre-2005/6), to becoming video-based in the era of the iPhone (upto today), and now transitioning to immersive-based as we enter the Metaverse generation, aka Web3.

Gaming has proven to be the breeding ground and natural starting point for this next generation of the Internet. Earlier this year I reported in Wiser! how Epic Games had raised $1 billion to invest in developing its vision for the Metaverse. Epic Games are behind the immersive game called Fortnite, arguably the best example of the Metaverse today. Last year, Epic Games made $5 billion from Fortnite (which is why they were pretty keen to get Apple to change its pricing policy for the App Store.)

If you know any teenage kids, you'll probably be aware that for many of them their social interaction with their best friends is done whilst playing games online. Note the key words being "social" and "interaction". In my day, teenagers would be outside playing with their friends, honing their social skills as they played and interacted in small friendship groups.

Nowadays, the kids are learning their social skills from behind a Playstation, each one of them in their own bedroom wearing headphones and fiddling with their games console. To this generation this is a perfectly normal way to interact with their friends. However, I struggle to see how this is going to play out in terms of adolescent development. What are the unintended consequences of reduced physical interaction during this important developmental period of their lives? (Boys and girls and their courtship during this wonderfully naive, innocent and awkward stage of their development is one issue that comes to mind.)

Anyway, that genie is already out of the bottle, so back to the Metaverse!

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The way NOT to think of the Metaverse is as (simply) a 3D virtual reality world. The mental leap you have to make is to imagine a more immersive experience on the Internet than you have today. Remember the bricks that we used to call mobile phones in the 1980s and compare them to the smartphones we use today that carry more computing power than Apollo 11 had to get to the Moon and back. That's the magnitude of the leap we're about to take from today's version of the Internet to the Metaverse.

To bring this to life and create some sense of reality for this virtual world, in this Part 2, I'll take you through some examples of what's going on as the Metaverse takes shape.


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Games, Gamification and Gaming

The first place to look for the Metaverse is in the world of gaming. It is already being played out by many of the estimated 2.5 billion people who play some sort of online/video games across platforms such as Fortnite, Roblox, and Minecraft.  According to Statista, gamers spend 54 minutes on average per day, or 6.33 hours per week, doing their thing.

Two of the leading Metaverse gaming platforms are Unreal Engine and Roblox. Unreal is the platform for Epic Games' Fortnite, which is arguably the most advanced version of the Metaverse in play today.

Roblox is interesting because it is a game development platform for "Lego-like" user-generated games. Roblox has been around since 2006 and is known for its popularity with children and teens. Of the top 1000 games on Roblox, 28% of them have a majority of users as low as 13 years old. There is little doubt that Roblox are one of the winners from the pandemic and they saw a significant acceleration in their business with revenues growing 102% YoY in the latest quarter. In the year to June 2021, Roblox reported annual revenues of around $2.5bn from their 47 million daily active users across 180 countries.

The value of the video game market worldwide is forecast to grow beyond $200billion by 2023. The greatest share of this games market revenue is generated by mobile games, while console games make up almost a third of the revenue generated worldwide.

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Think about this. A third of the world's population spends over 6 hours a week playing online games. There is already a significant user population spending their time, focus and resources in a virtual world. For many of them, they're already in the game and the transition to a more involved Metaverse is already underway.

This is because a large proportion of today's game playing teen generation socialises through playing multiplayer online games (as I said at the beginning). When they were in lockdown and parents were worrying that little Jimmy was not getting out and about with his friends, they need not have worried. Because little Jimmy was engaged in remote, socially distanced gameplay with his friends at a time when they couldn’t meet in person.

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Avatars have replaced Barbie and GI Joe

In the Metaverse, the characters that we used for role-play as kids have been replaced by Avatars. These are digital representations of a virtual us, which means that they can do anything, be anywhere, be like anyone you want them to be like, and they have limitless talents and capabilities.

Roblox has designed its Avatars to be a digital version of the user, mimicking how they move, talk, and dress. The latest updates in the Roblox armoury are called the Layered Clothing Studio, and Dynamic Heads. These are the first step in enabling users to express the breadth and depth of their individual emotions and identities in the virtual make-up of their personal Avatar(s). (You're not limited to one representation of yourself in the Metaverse!)

Layered Clothing will allow limitless possibilities for dressing and customizing an Avatar, whilst Dynamic Heads will bring facial expressions and "feelings" to life. These new features from Roblox represent important stepping stones in their evolution in the Metaverse.

Ethereum, Non-Fungible Tokens & the $500k cat
Newsletter #4 (Premium): The emerging world of NFTs and its connection to digital art and artists.

NFTs and the Fashion Industry

The virtual fashion world hardly existed a year ago. And then last month came the staggering news that a Dolce & Gabbana NFT fashion collection sold for almost $5.7 million at auction. The Dolce & Gabbana auction has given us a peek at the fashion industry’s potential to become a focal point for the whole NFT market, which last quarter alone recorded more than $10 billion in trading volume.

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D&G NFT Collection

The market for in-game clothing and cosmetics on its own is already valued at $40 billion (where do you think a big chunk of the $5 billion Epic Games made on Fortnite came from? It was from selling "skins", the digital outfits that the game's Avatars wear.).

The fashion industry as we know it today is a $2 trillion industry and I've seen some commentators predicting that the virtual fashion industry could eclipse this. I don't doubt the integrity of the commentators but I find this one hard to believe. You can't wear your new Massimo Dutto speedos to the beach if they're a virtual pair, can you?

Other examples in this sector include Kate Moss selling NFT videos of her going about her daily life, and Gucci and Burberry making and selling digital assets for between $20,000 and $375,000.

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High Street clothes retailer H&M has debuted a virtual fashion collection via Nintendo’s Animal Crossing game. The virtual fashion pieces will launch alongside an in-game update to H&M's Looop Island, transforming it into a vegan-friendly destination for gamers. H&M’s first virtual fashion show in Animal Crossing will be held to unveil the virtual styles, with the female gamer BrookeAB modelling alongside other gaming influencers.

via GIPHY

Clothing: Where Virtual meets Physical Reality

Unreal Engine has a platform called BODS and has developed a unique garment-fitting technology. The tech simulates the fit of garments on an Avatar that matches the buyer’s body. The user uploads a few body profile photos or enters body measurements and the AI inside the BODS system creates an Avatar that represents the customer. The customer can then choose clothing to place on the BOD, change sizes, spin the BOD around 360° to see how the garment fits from every angle, and can even style the look with choices of different accessories, handbags, or shoes.

The BODS system combines a photorealistic virtual fitting room with real-time streaming and rendering technology so that the user can see what the clothes look like on themselves without having to leave their sofa. (This is what is meant by the Metaverse being an immersive experience.)

BODS’ has a client called KHAITE (pronounced “kate”) which is a "women’s ready-to-wear luxury collection that offers a combination of comfort and detail-oriented polish" (their words not mine).

To Nike, the Metaverse is strategic

Nike is the world's largest manufacturer of athletic shoes, apparel and other sports equipment. They have also just filed several new trademarks this week as they prepare to enter the Metaverse. The sports company is looking to make and sell virtual Nike-branded sneakers and apparel. Quite simply, Nike sees preparing for the Metaverse as strategic.

But this is not new ground for Nike. Back in 2019, the Jordan brand partnered with Fortnite, the most established version of the Metaverse out there today. Travis Scott's Avatar was seen wearing the Nike Jordans and game characters were able to try them on in the virtual world on their own Avatars.

Nike has been signing up patents for the Metaverse since around 2018 as they plan for a world of intelligent electronic shoes, digital sneakers, virtual drops, and avatars. It is no surprise that the current CEO, John Donahoe, who started in January 2020 is the former CEO of tech companies eBay and servicenow.

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Microsoft, Virtual Humans and Avatars

In the Metaverse, we will all have a virtual version of ourselves, called an Avatar. Being able to take our Avatar with us as we move around the Internet is fundamental if the Metaverse is to become the next generation of the Internet. (This is called Interoperability and I covered it in Part 1.)

This is where Microsoft showed us a glimpse of their vision for the Metaverse at their recent annual developers' conference called Ignite.

Microsoft's focus is on the future of working. In direct competition to Facebook's Horizon workrooms, Microsoft plans to combine their Mesh virtual reality platform with MS Teams, one of the fastest-growing platforms during the pandemic. Today, Teams is used by around 150 million people daily.

Microsoft CEO Satya Nadella, described the Mesh/Teams integration as ‘a shared, immersive experience’. There's that word immersive again! What it means is that you will be able to appear as a custom made 3D Avatar in your Teams call. There will be no need for energy-sapping green screens or to rearrange your background (bookshelves are the most effective background if you want to make a power move on a video call).

Instead of turning your video on, Teams/Mesh will use AI to turn your voice into an animated 3D Avatar with actions and movements to reflect how you're saying whatever it is that you're saying. Eventually, Microsoft intends to make Teams a suite of fully immersive VR rooms to hold meetings, give presentations, make sales calls, or handle customer services calls.

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As David Mattin put it in a recent issue of New World Same Humans;

"Meta and Microsoft are on a collision course. A war to own the next iteration of the Internet is beginning, and the future of work will constitute crucial terrain. Ready your Avatar, and strap in."

Virtual Humans; the Quest for Realism, Experience & Influence
Newsletter #10 (Premium): Virtual Humans. Mark Zuckerberg says that Mixed Reality is the next big thing.

Owning digital assets in a virtual world

It's not just virtual clothes that you can buy and own in the Metaverse. You can own real estate too! They exist in virtual reality worlds that run on the Ethereum network and include Decentraland, Sandbox and TCG World.

The idea is the same as in the real world. You find a listing for sale, make a bid, buy it, move in and live there. Except that in the virtual world you can do whatever you want on your digital estate. Atari paid $250k for their land, Tesla has built a virtual garage and even Gordon Ramsey has a restaurant on his. Or in this example, a sock shop!

Take TCG World, which is also the largest NFT based virtual gaming experience where people can earn real money, work, play and socialize. TCG World consists of 100,000 user owned plots of virtual land, each sold in the form of NFTs. Within TCG World, there are different sized plots available.

Over the past couple of months, TCG Gaming has sold plots of land in their presale round of sales for more than $1,000,000 (the sales are made using a cryptocurrency called BinanceCoin). Once plots have been bought, owners can use those plots to make money. For example, if you owned a farming plot you could stake TCGcoin (the native cryptocurrency of TCG World) to earn a return renting the farm plot out. (If you're thinking this is the place for some of your pension money, forget, all the farms have been sold!)

Ethereum's role in the Metaverse

Finally, it would be remiss of me to not include anything about Ethereum over these first two parts of the Metaverse journey (there's more to come!).

Ethereum is the cryptocurrency-fuelled platform that too many, is the next Internet. The platform is built on blockchain technology, the decentralised distributed ledger that is the underlying technology of Bitcoin. To understand the significance of Ethereum, it is best to understand how computer systems work today. Which is that all the data is stored in a central system under the control of one entity, say Google or Amazon. The entity is the gatekeeper for the data and the apps that run on their computer system.

But Ethereum is the total opposite because it runs as a decentralised network. Instead of the data being in the cloud or on central servers, the data is distributed across nodes on a network. The point is that there is no single copy of your data making it less vulnerable to being hacked or tampered with. This is what is known as a decentralised network.

Ethereum has first-mover advantage and is the place to be as the leading platform for NFTs, including such popular projects as CryptoPunks and Art Blocks. The Ethereum-based marketplace called OpenSea generated more than $3.4 billion in transaction volume in August alone from trading NFTs.

In total, the trading volume of NFTs exceeded $10 billion in the third quarter of the year, according to data from analytics platform Dappradar. Over 77% of these transactions were on the Ethereum network, according to the Dapp Industry Report.

Meanwhile, play-to-earn NFT game Axie Infinity became the most traded NFT collection ever, topping $2 billion in all-time trading volume during the quarter—making it the first Dapp to reach that figure.

Ok, if you got this far then you're still probably thinking that this is all about games. And if you dont play games or see yourself as a gamer then what has this got to do with you? It's a good question, but don't give up now, because gaming is just the breeding ground for technology.



Sources of Insight and Information

Ethereum: toward an open metaverse. Source: Bankless

Nike has detailed plans for the Metaverse. Source: Business Insider

Are digital running products here to stay. Source: Running Culture

Roblox earnings pop. Source: CNBC

Metaverse is still a nascent technology. Source: Analytics India Magazine

What we do and don't know about the Metaverse. Source: HackerNoon

There's an NFT band with no music. Source: Vice

What's a DAO? Source: New Yorker


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