The metaverse is ready, but are businesses, consumers and you?

Today’s ‘metaverse’ is at its most commercially viable since the term was minted in the 1992 novel Snow Crash by Neal Stephenson, yet it’s still very much under development, with businesses and consumers exploring its potential.

Industry leaders like Verizon, Disney, Google, Walmart, Nike, Adidas, Microsoft, Apple and Meta (Facebook) are aggressively spinning strategies to own a share of voice in the new space. The technologies that comprise today’s metaverse – AR, VR, AI, 3D reconstruction, IoT, 5G and blockchain – are maturing, reaching saturation and becoming more affordable. Independently, these technologies are powerful, but leveraged in concert they form the fabric of what people seem to crave about the metaverse. 

The metaverse meets people’s needs and holds the promise of connections between them in ways each of these technologies cannot provide on their own. When combined, these technologies have the powerful ability to influence behaviors and, ultimately, our sense of belonging and social satisfaction. Of course, the timing of this technological confluence – within a period of human history where so many feel socially isolated – fuels a greater desire for synthetic experiences, whether personal, professional, academic, civic or commercial.

As we start seeing the metaverse adapted to everyday life, such as Facebook changing to Meta, are businesses and consumers ready? 

Advertising is Meta’s primary source of income. Facebook renaming itself Meta is partly a reaction to Apple gaining greater control of the advertising ecosystem. Apple changed its technology, forcing Facebook to aggregate data it previously controlled. Oculus might be the platform Meta is betting will help it regain control in the future. 

Meta wants to own the edge – the device feeding the data into the platform – to power Meta’s business. In the same way that Amazon has taken ownership of smart speakers and doorbell cameras, Meta is going after headsets. Advertising in the metaverse will have a strong kinship to traditional experiential marketing, sponsorship and activation.

Consumers are ready for new experiences, and the pandemic has accelerated the adoption of the metaverse. Although the technologies that enable the metaverse have existed for some time, it took a confluence of events driven, at the core, by the desire for experience to force a tipping point.

How have consumer attitudes changed due to the pandemic, and are they now ready to engage with the metaverse?

Spending money on experiences increases happiness. Memories of happiness can last a lifetime. Buying experiences, even fleeting ones, can increase the overall benefits to our happiness. We take care of the basics – buying food, shelter and clothing. And we also buy experiences – concerts, movies, restaurants, bars, gyms, sporting events, art classes and so on. The world went virtual because of the pandemic, so the metaverse’s growth, adoption and popularity is no surprise.

Virtual goods are inherently experiential. They can play a role in our ability to achieve results, conquer challenges or express ourselves, all while being entertained. We have seen this truth in gaming culture since the advent of micro-transactions 15 years ago. Now, NFTs (non-fungible tokens) enabled by the blockchain prove this in finance with much higher stakes. Buying things can fill an emotional void, and nothing demonstrates this more purely than virtual goods. ‘Power-ups’ that can double experience points in games, better weapons and armor, or some rare wardrobe for a character help us feel a little cooler, more attractive and more awesome than we already are. Virtual goods provide instant gratification thanks to a nearly frictionless money exchange for emotion. And given the state of the world in the past two years, it’s providing the positive emotional stimulation we all crave.

A study in the Journal of Consumer Psychology surveyed 5,000 people over four years. The results were definitive: investing in experiences increases happiness. The research demonstrates that people became more satisfied with their lives because of the experiences they chose. People who invested in experiences for their social life had a positive view and a feeling of satisfaction with that aspect of their life. The same is true with fitness and feeling satisfied with health. The study found an overall benefit, as there was increased satisfaction and an overall sense of wellbeing and happiness.

The truth is that we do not have direct control of our happiness. About half of the determining factors for our happiness are genetic since our personalities are influenced and programmed by our genes. Of the remaining half, 10% of our happiness comes from wealth and life partner choices, and 40% is attributed to what we do – our behaviors.

The Journal of Consumer Psychology study discusses the importance of making more frequent small purchases rather than infrequent large ones. Virtual goods and services fit this sentiment perfectly. In the metaverse, we can acquire many small items for a little money, and amass collections and experiences we could never manage or achieve in the physical world. And now, given the evolution of fintech, some of these small investments might rapidly grow to tremendous value.

What are the pros and cons of the metaverse for businesses? And how can businesses leverage the metaverse to gain a competitive advantage?

We need to think about the world differently. Today, virtual worlds and 3D spaces are not usually considered the ‘primary asset’. We place greater value on physical things. Increasingly, the physical asset is simply becoming a derivative of the 3D or virtual object.

The tech industry is pushing boundaries with new graphics processing units (GPUs) that enable graphics, video rendering and AR. Working from home and hybrid working models have millions of us laying the groundwork for a metaverse where moving seamlessly between the physical world and virtual space becomes routine, just like sending a text message.

NFTs are part of this world, enabling us to buy, own, license and protect digital assets. The metaverse will spur a renaissance of innovation for privacy, security and data protection since the 3D data captured is many orders of magnitude larger than the data sets we manage with 2D objects. And as earphones, glasses and headsets get cheaper, these applications will impact our lives at work and home.

And we are starting to see the land grab as brands snap up valuable virtual property. Adidas has invested in NFTs and has partnered with cryptocurrency exchange Coinbase, signaling its intent to participate in the metaverse. Nike patented digital goods, so it’ll sell digital products in the future. The French champagne Armand de Brignac has recently filed trademark applications to register the appearance of its iconic gold bottle packaging in virtual reality, augmented reality, video, social media and the web. These measures test new territory to understand if a product or its packaging has distinctiveness outside the metaverse. If so, will those rights be enough to claim infringement in the metaverse successfully? Time will tell.

I do not see any of this as negative or dystopian. There are too many positive benefits resulting from this virtual shift to count. So many of the technologies that have been building steam for years (blockchain, VR, AR, AI, IoT, 5G) are coming together in totally amazing and new ways. The metaverse of today may seem clunky, weird and unusual, just as Second Life did to many almost 20 years ago. But one day soon, the utility resulting from the intersection of these technologies and the innovations resulting from the metaverse will be incidentally crucial to our lives.

Jason Alan Snyder is the global chief technology officer at Momentum Worldwide.

For more on the exciting new opportunities for marketers in this rapidly evolving space, check out The Drum’s Metaverse hub.