However, there is another more-grounded perspective to consider on the Metaverse’s progression from science fiction to viable business model. Igor Tishin, an Information Technology analyst at Harding Loevner, has thought a lot about the Metaverse and its implications for big technology companies—Facebook, Apple, Google, and Amazon as well as chipmakers and related equipment suppliers like NVIDIA, TSMC, and ASML—whose growth depends on continually expanding the applications of their technology. Still-evolving areas of technology like the Metaverse may be highly speculative, but these companies’ share prices already reflect an expectation that such growth opportunities will become a reality, and not in a too-distant timeframe. “A lot of people get hung up on how we’re going to get from where we are today to there,” Tishin says. By “there,” he means the Metaverse. “I’m more sanguine about the ability, and motivation, of these companies to figure it out.”
A Brief History of the Metaverse
The concept of the Metaverse has been a source of fascination, and hype, since before there was a commercial internet. Neal Stephenson originally coined the term in his 1992 novel Snow Crash. In the novel, considered a classic by tech professionals, users entered this original “Metaverse” via a pair of goggles onto which a 3-D world was holographically projected with a blueish beam of light. So, in 2012, when Google co-founder Sergei Brin arrived at a charity event in San Francisco wearing a pair of goggles with an eerie bluish, laser-like spot covering his right iris, it sent shockwaves through the tech industry. Within two years, however, Google’s consumer AR goggle product, Google Glass, would become the company’s highest-profile failure. Other companies’ stumbles have followed. Magic Leap, a much-hyped AR company, has repeatedly fallen short of its soaring ambitions to, among other things, create a humanlike virtual assistant or city-sized holographic overlay. And forecasters have continued to overshoot. In 2016, one industry group declared the market for AR and VR would reach US$150 billion in 2020—they were off by US$117 billion.2
Yet there is still an undeniable feeling that something must eventually replace the handheld screen. The exact next step for consumer tech is still up in the air, but many futurists in Silicon Valley believe it will be some combination of devices and platforms that delivers the sense of “presence” described by Sychov. To date, VR has mainly been applied to gaming. But recently tech captains have talked up VR’s practical applications like remote work. In interviews, Zuckerberg has reported conducting more of his meetings via the company’s new Horizon Workrooms VR platform and how helpful it is not only to meet remotely but also to share a sense of space with other people that allows a better read on body language or wheeling around to the same side of a table when working through a problem with a colleague.
At this point, anyone able to join Mark Zuckerberg in the Metaverse will be doing it as an avatar—interacting cartoon-to-cartoon, as it were. Achieving the body scanning, processing speeds, high-resolution cameras, and lens/displays capable of real-time photo-realistic image generation is an essential precondition of the next stage of the development of the Metaverse. Streaming capacity will also need to expand. In April 2020, Fortnite developer Epic Games co-produced a Travis Scott concert attended by more than 27 million avatars, all putatively beamed into the same venue in the Metaverse. In actuality, current technology can only handle a hundred or so avatars meeting at once; a technique called “sharding” is required to bring together thousands of these avatar groups to create a mostly identical and near-simultaneous communal digital experience. For billions to move about freely together in the Metaverse, the shards will somehow need to fuse.
Overcoming such hurdles is not a trivial endeavor. Nevertheless, Tishin says, “my suspicion is that we’re solidly in the realm of an engineering problem as opposed to a scientific problem.” The latter, like commercially viable nuclear fusion, cannot be solved without some fundamental breakthrough. With an engineering problem, the breakthroughs have already occurred, and the remaining challenges can be solved with time and money.
For now, the Metaverse is not a unified phenomenon, but a loose collection of devices, digital environments, and related technologies. Microsoft has spoken of its Digital Twins as an “enterprise Metaverse.” Google, as it happens, never fully abandoned Google Glass. It has continued to develop and sell the eyewear for enterprise customers, including the shipper DHL, whose workers use the glasses for item picking at its warehouses. The data and images that appear in the pickers’ field of vision, too, form an emerging Metaverse. Somnium Space is clearly a Metaverse, but so is Decentraland, where, earlier this year, parcels of digital land were going for the cryptocurrency equivalent of hundreds of thousands of dollars. Some users experience Decentraland in VR, but most simply choose to use the 2-D interface of their tablet or smart phone.
There will come a time, however, when all these individual platforms will merge to form the Metaverse. At least, that’s the vision articulated by venture capitalist Matthew Ball in a pair of widely circulated essays in May 2020 and June 2021.3 Ball elucidated some half dozen different developments (beyond the required engineering advancements) that need to occur before an all-encompassing Metaverse can be realized. One of them is a set of standard programming protocols—like HTML with which the web is built—to provide interoperability between platforms. Another is an integrated, functioning economy within the Metaverse that matches the freedom from the physical world’s constraints with a system— presumably relying on some version of blockchain—that establishes immediate and immutable provenance over economic goods and services.
No one can say with precision how long it will take for these pieces to fall into place or how big the economic opportunity could be. “The entire global economy is roughly US$84 trillion now,” Tishin observes. “In 10 years, it will be way over US$100 trillion. What percentage of that will have moved into the Metaverse? It’s clearly not all of it, or probably even most of it, but if it’s even one-tenth, you’re talking several trillions of dollars.”
During his “Ready Player One” conference presentation, Sychov tried to give a sense of how he sees the business opportunity unfolding in his corner of the Metaverse. Currently, Somnium Space generates most of its revenue from “primary” sales, including plots of virtual land as well as the commissions it charges on avatars,4 virtual cars, and other non-fungible tokens (NFTs). However, he projects the company’s revenues will increasingly come from the cut it takes on transactions between users when they exchange goods, services, games, and even whole sub-worlds created within its platform. As the user base grows from the couple thousand avatars a month who interact inside its virtual world now, he expects advertising naturally to follow. Already, Sony has erected a pop-up shop in Somnium Space to advertise its VR headsets.
Sychov predicts that it won’t be long before major brands catch on to the possibilities of taking things a step further. While commerce in the Metaverse at the early stages is likely to focus on virtual advertising for physical goods (a glorified extension of the internet, in other words), the next stage will be a shift to advertising for and selling virtual ones.