The Metaverse does not exist

The title of this article may offend ardent Roblox, Fortnite or Second Life fans, but if you focus on the leading ‘the’ then the statement is factually correct. Sure, there are lots of separate virtual worlds, but moving between them is a pain and requires logging out of the platform and switching to the new one. Perhaps we should call them meta-galaxies as there is not yet an all-encompassing virtual universe from which you can access them all.

It may never happen to be honest. There will be twists and turns as various players try and create the one virtual world to rule them all. Or maybe creating metaverses will become as commonplace as building a website and every business will have one. The most likely outcome is probably somewhere between those two extremes.

Meta in typical fashion have gone in with an open checkbook and invested $10 billion in metaverse projects in 2021 alone. They claim that they don’t want to own the metaverse, however, you don’t have to own something to make a huge amount of money from it.

As metaverse commentator Mathew Ball points out in his in-depth paper:

So that explains why so many companies and individuals are looking to establish themselves virtually – it is estimated by some analysts that the global value creation opportunity from the metaverse could be in the trillions of dollars. Everyone wants their slice of that pie.

Let’s get back to basics. The first hurdle to overcome is agreeing on a definition of what the metaverse actually is. You would be surprised at what an issue this is causing.

If you are being idealistic, in a true metaverse anyone could create a virtual representation of themselves that could go anywhere, meet anyone, and buy whatever goods and services they wanted with a currency that had real value in both the virtual and real world. Under this definition people could work and earn a real living in the metaverse by exchanging their labor for currency that they could use both virtually and in the flesh.

This automatically excludes virtual gaming platforms which, not being based on blockchain, do not generate anything that has value outside of the game. In other words, you can buy stuff in the game with real money, but you can’t directly exchange the stuff you earn or create in the game for real world cash or assets (although that doesn’t stop people from exchanging or selling items to other users of the game who also value them).

Metaverses based on blockchain enable users to trade virtual assets using cryptocurrencies, with some of the major platforms having their own currencies that can be traded on real-world crypto exchanges. This means that any virtual asset in the platform, from land parcels to handbags can be irrefutably owned by users and sold on for a profit.

Still a bit lost? Perhaps it is best to adopt a fuzzy definition of what the metaverse is and view it as an evolution of today’s internet. Like Alice going through the looking glass, it is something that you can immerse yourself in rather than browse like you would with a website or magazine. Instead of watching an Ariana Grande video on YouTube, you can put on a VR headset and join thousands of other fans at a virtual concert in all its visceral 3D glory.

Crucially we must accept that the metaverse won’t one day be ‘ready’ and open fully formed like the first day at Disneyland. It will emerge slowly, and messily, as multiple technologies, products and services converge to form something new and different that may or may not change the world.

You market where your customers are. If your core market is spending most of its time in a specific place, virtual or real, then you should consider engaging with them in that space.

But how do you know?

Again, because of the difficulty in defining what the metaverse actually is, it is even harder to estimate how many people are in it.

With multiple platforms vying to be ‘The One’, the companies behind them are reluctant to publish exact figures, unless it is attention grabbing stats about their exponential growth. Subtext alert “We are the next big thing – jump in with us!”.

The figures are also skewed by the number of people (predominantly kids) who spend a lot of time gaming on sites like Roblox and Fortnite that are certainly virtual worlds, but don’t have ambitions to take over the actual world.

When it comes to platforms without a primary gaming element that are closer to what most adults envisage the metaverse to be, then there are plenty to choose from. Maybe that is part of the problem, users are spread over so many platforms that individually, the figures look a bit underwhelming.

We are not sure who originally said it, but ‘follow the money’ is a relevant quote when it comes to establishing who the major players are. Even so, market analysts have been quick to point out that even the user bases of the most hyped platforms have fallen short of market expectations.

The problem with all platforms is the barriers to getting up and running. Experienced gamers are used to downloading massive games that can take several hours to install. They normally kick off an install and then go and do something else until it is ready to play.

Your average internet user on the other hand is used to instant gratification. They get bored easily and even if they are genuinely interested in checking out a metaverse platform, they tend to abort the download when the progress bar still hasn’t even hit 50% after 10 minutes.

This will improve over time as platforms become more streamlined and roll out new ‘lite’ ways of experiencing their metaverse without the need to install the whole world. For now, it is a significant blocker.

You can obviously buy virtual things in virtual worlds. Fortunes have been made (and lost) buying and selling NFTs, virtual real estate, accessories, and other products that only exist as bits of data on a server somewhere.

This can cause new and bizarre legal conundrums – see the case of the luxury brand Hermes issuing an NFT creator (and self-proclaimed artist) with a cease and desist order after they made almost $1 million selling virtual handbags ‘inspired’ by Hermes’ real bags.

There are even companies that allow you to rent land in the metaverse if you are not ready to commit to a full purchase.

However, a bit like the dot.com bubble, prices that were perhaps overinflated by hype have been hit hard by the crash in the market value of crypto currencies. You have to feel for the investor who paid a recording breaking $2.4 million for a shop space in the ‘Shopping arcade’ of Decentraland, which is now doing a realistic impersonation of many real-world downtown shopping districts by being just about deserted.

Across the board, the charts of metaverse currency values look like a Big Dipper rollercoaster ride. Take Decentraland’s Mana for example – from flatlining at about $0.40 for the first three years after launch, it caught fire in 2021 peaking at $5.48 in November followed by a rapid decline to where it is now trading at $0.38. Ouch.

You can buy some real products, for example in Decentraland you could buy a Domino’s pizza with Mana that would get delivered to your door in the real world (if you live in the US). These examples are fairly rare though and tend to be promotional gimmicks. We seem to be a very long way from a fully functional commercial metaverse where you can browse for actual products, book real holidays, and do necessary but mundane chores like browsing for a better insurance deal for the physical car parked on your actual driveway.

To get a taste for a virtual world we recommend trying Decentraland. Like we did, you can join as a visitor, create your own avatar, and jump in via your browser without needing a VR headset.

You need to download the maps, which took about fifteen minutes for us, and the experience is a little glitchy compared to first person computer games, but the graphics aren’t too bad, and we were soon walking, and even skipping around the virtual world.

As a visitor you can’t actually buy anything without a crypto wallet, but you can access all the main areas of the map and interact with other users.

Walking about the downtown area there were definitely people about, but a lot of them just seemed to be standing around doing nothing, and the cynic in me couldn’t help wondering if they were bots created to make the place appear livelier. Or if they were actual people, they were perhaps doing something else in the real world and hadn’t logged out of the app.

The people that were active seemed to have names like ‘GetNFTsCheap’ – so it seems that virtual worlds have shady street vendors too.

As we have said, brands market where their customers are – physically or virtually. There are definite opportunities for brands to do impactful and effective marketing in the metaverse. However, tread with caution – some users have reacted badly to real-world brands invading what they consider their ‘private space’. You don’t want to do the virtual equivalent of ‘dad dancing’ at a wedding. You think you look awesome while everyone else is laughing at you.

If you are considering dipping your virtual marketing toe in the metaverse you should definitely check out McKinsey’s detailed article on the subject.

Their advice is to concentrate on exposing your brand to a new and youthful audience rather than trying to drive sales directly. Traditional measurements of digital marketing success are also going to have to be rethought with no concept of likes, shares, or comments. ‘Interactions’ become the primary focus – so you will have the tricky task of working out how to define, measure and report on virtual brand touches in metaverse worlds.

And finally, they make the very valid point that data privacy laws are in the process of adapting to a world where the disconnect between real people and their avatars is a fundamental attribute of the experience. How can age controls be applied and how will first-party consumer data be stored, managed, and protected?

So, have you missed the boat when it comes to the metaverse? That is a definite no. There is no one boat whose mast you could nail your colors to. Boats have been built, rebuilt, and some do appear to be sinking.

The internet was once described as the ‘information super-highway’, which apart from sounding like the most 1990’s thing ever, suggests an orderly high-speed continuum of traffic heading in the same direction, all obeying the same rules of the road. In other words, nothing like the multi-dimensional anarchic labyrinth that we know the internet to be today.

Similarly, it is very early days for the metaverse. Who knows what it will end up looking like – could we even know?

So, monitor where your target market is spending their virtual time, do some targeted experiments to learn what works and what doesn’t in the new paradigm. Perhaps start by exploring some low-risk opportunities to host events and training sessions and see where that leads.

As for allocating your precious marketing budget – with so many proven and unexploited opportunities in the real world for joined-up omnichannel and conversational marketing, perhaps your time and money is best spent getting maximum value from those before going virtual.