TAKEAWAYS
Social media is well known to us. This is, in fact, a massive understatement since Statista estimates that active social media penetration in Singapore is a whopping 89.5%. However, these numbers are admittedly a bit misleading, because the term ‘social media’ is pretty generic and covers anything that might count as a digital interaction between individuals or groups. This typically not only includes platforms such as Facebook, Tik Tok and Instagram, but also WhatsApp and WeChat. In addition, if you are a YouTube Premium subscriber or actively subscribe to YouTube channels, ‘like’ videos or comment on videos, then you are, technically, also an active social media user, according to this very broad definition.
Given the omnipresent nature of the Internet, thanks to smartphone usage, companies large and small are no strangers to trying to find growth opportunities in it. Relevance, within the frame of reference of this article, is linked with the proposed next phase of social media, and perhaps the Internet – the metaverse. The reason is simple – the biggest player in the social media world, Meta, is banking so hard on it that it even changed its name (from Facebook) to match its ambitions.
Confusingly, the metaverse is actually a collection of diverse metaverses, and is not actually the creation of Meta. It is, broadly speaking, an evolution of social media in general – a way for groups to be social, or work socially, outside of the real world. More specifically, you could think of it as a way to virtually walk around the Internet as a digital representation of yourself, and meet other such avatars. Another definition, this one off the cuff from Philip Rosedale, creator of Second Life (more on this later), casts the metaverse as the “three-dimensional Internet”. Like the Internet, the metaverse is promised to be persistent – meaning, it continues whether any given user or groups of users are on it; and immersive – you can drop in to a virtual location whenever you want and it will feel like you are really there.
Whatever the case may be, it is clear that technology firms – Meta most of all – believe that the metaverse will be big, literally and figuratively, and can support businesses in their growth ambitions. Broadly speaking, they base this on the overall success of the Internet in changing the world in general, and social media’s leading role here; after all, there are more than four billion active social media users globally.
In other words, the current pitch to companies is not to miss out on another opportunity, as many did with the Internet. “A lot of brands that chose to ‘sit back and observe’ (how the Internet developed) ended up losing out when Internet adoption took off,” says Isaiah Chua, CMO Playground Metaverse Global Limited. “Essentially, you see everyone is into the Internet right now, and the biggest winners are those that kind of just went into it at the start. So, we see the same thing happening right now with the metaverse.” Mr Chua observes that major names in fashion and sports were eager to leap headfirst into the metaverse, including Nike, Adidas, Gucci, Bulgari and Prada. Some of these brands have experimented with offerings on metaverse platforms such as Decentraland and Sandbox.
So how is this supposed to work exactly, especially when the metaverse is not quite here … or, is it? In fact, the word ‘metaverse’ itself is taken from a 1992 science fiction novel called Snow Crash by Neal Stephenson, which did indeed feature something like an immersive virtual reality network. The Economist noted that in reality, the idea of creating a network like this had been going on in the world of video-game development from the 1970s, including the development of the text-only MMORPGs (massively multiplayer online role-playing games). Indeed, the first time the metaverse came into prominence was in 2002, via the game Second Life, which invited the public to immerse themselves in its digital environment, offering a second life in a virtual world. In fact, gaming companies continue to play important roles in the development of the metaverse, and business analysts speculate that this partially explains Microsoft’s move to acquire Activision Blizzard.
Building on the example of Second Life, there are a number of metaverses in existence, including but not limited to Active Worlds, World of Warcraft, Minecraft, Fortnite and VRChat. In fact, a massive part of game developer Roblox’s platforms are metaverse projects. Roblox has more than 100 million active users, and actively uses the term ‘metaverse’ in its marketing materials.
The view from the gaming world on how the nascent metaverse will help businesses is encapsulated in this statement from GamesPad, a private gaming, metaverse and web3 firm. “The metaverse will unlock new opportunities for almost all businesses. First of all, metaverse experiences can help businesses connect with their existing clients on a whole new level of personalisation, as well as reach new markets. Moreover, the metaverse can transform products and services, production and distribution processes, organisational operations and more.”
This is very ambitious forecasting, considering that the metaverse does not yet have anything close to interoperability between individual established metaverses, or the new metaverses that are being developed. The Internet and the web are connected by TCP/IP and html, for example, and no such protocols exist – or are even close to existing – for the metaverse. What then can companies do while the technical folks sort things out? Meta, for one, has a down-to-earth suggestion, albeit one that is heavily biased. In a November 2021 announcement, it said, “The business opportunity will follow consumer behaviour. That’s why it’s important to continue building your business for today’s opportunities by innovating, experimenting and growing your audience, whether on Facebook, Instagram, Messenger or WhatsApp – because the connections that you’re building on these platforms now will still apply in the metaverse.”
Aside from the platforms listed, the implication is that the audience is key, and that plenty of people already on social media may one day be connecting in the metaverse. The global market is certainly sizeable, at an estimated US$22.79 billion in 2021, and this is projected to grow to US$400 billion by 2028.
This is why advocates such as Aaron De Silva, Account Director at Elliot & Co (a PR agency catering to SMEs and startups) are upbeat. “With digital transformation shaping so many businesses today, understanding the opportunities and challenges presented by the metaverse is essential for business leaders and company founders to devise a strategic roadmap,” he explains. “This is especially so if the nature of your business has the potential to be impacted by VR, AR and XR. Industries as diverse as education and healthcare to entertainment, logistics, manufacturing and retail all have the potential to be disrupted by such technologies.”
Again, the implicit suggestion here is that what happened with the Internet and social media will repeat itself with the metaverse, and this does lead to some pushback, from within the metaverse community no less. “I believe we don’t have a crystal ball to spell out what’s right or wrong for companies and organisations to take the plunge into developing their own metaverse,” says Jack Soh, Co-Founder of metaverse and web3 firm Do-XX Studios. “I honestly feel that the strong metaverse initiative by Meta to push humanity to adopt a realistic virtual environment as a work/play/learn venue made ‘metaverse’ the biggest buzzword for the last couple of years (and perhaps more years to come).” As a result, he feels that brands are simply jumping onto the bandwagon without much consideration on its viability and feasibility, just to signal to the market that they are forward-looking.
Nevertheless, the metaverse is broad enough to support potential real-world benefits, even if such benefits are the result of tools that emerged separately from the metaverse itself. In Singapore, for example, JTC is using building information modelling (BIM) as the basis for the creation of a complex and promising platform called the open digital platform (ODP) that will be implemented in the upcoming Punggol Digital District (PDD). According to JTC, ODP will allow the optimisation of building management and resources with real-time data, with the system having control of virtually every aspect of PDD. PDD tenants can use the ODP to model and test their own products virtually, thus potentially saving time and money.
So, should companies consider the metaverse as the new frontier and jump in now? It all depends on their business and risk management strategy including risk appetite. Perhaps Meta’s advice to businesses is the most useful one – because there is still plenty to learn before the true shape and form of the metaverse will come into being.
© 2024 Institute of Singapore Chartered Accountants
