What if everyone is wrong about the metaverse?

Wednesday 15 December 2021 | News

Some sceptics see the metaverse as the tech industry’s attempt to conjure up the next big thing. Six out of every ten people on earth now have a smartphone, and the technology is mature. Meanwhile buzzwords such as AR, VR, blockchain and open-world games are at the beginning of their curves: what will it all add up to? It’s a good time for Mark Zuckerberg and others to say “metaverse” a lot and hope that something comes of it.

A different but widely-held view is that the metaverse will emerge from games like Fortnight or Roblox. As a16z’s Chris Dixon remarked, the next big thing always starts out looking like a toy. Parents might scratch their heads at paying for their kids to accessorise their avatar in Gucci. But we can all see the cultural influence of games and understand the appeal of putting on your goggles and entering an immersive fantasy world.

But what if the metaverse turns out not to be like that at all. What if the metaverse is not an experience you go to, but somewhere you will live?

What if there is a tipping point: a moment when digital life becomes smarter, more engaging, more valuable than physical life?  

For many of us, our working life is already reaching this tipping point. ‘Working from home’ is a misnomer: it’s working online, which just happens mostly to be at home, but can be in the office or anywhere. From meeting rooms or dining rooms to Zoom.

In other aspects of life, the tipping point seems not far away. Facebook friends are more coveted than physical friends. Our Insta Stories are more carefully curated than our physical appearance. Education, training, health and fitness, are all likely to be principally virtual. As you wind this forward – perhaps 20 years, perhaps 10, maybe shorter – then the digital world becomes where we lead our lives.

If it’s difficult to appreciate how different this could feel from today’s internet, then some draw the distinction that the metaverse is persistent and synchronous. It is not something we switch on and access when it suits us – it’s a parallel world in real time, and we could choose to move there. And increasingly, many will.

We used to talk about the tipping point of online shopping – where online sales would overtake shops. But a tipping point into the metaverse, if it is reached, could be more profound still. If the majority of our attention and interest is in the virtual world, then it becomes where we play, work, earn and travel (without restrictions). It supersedes the physical world, and even the legacy internet we know today.

Perhaps a better historical precedent is rural to urban migration. For families caught up in that global transition, the city was not a place to visit but a new life with a different economy, more promise, more opportunity. No going back. The rural world was left behind, remote and extrinsic.

At this moment we can only speculate what this new city might look like, whether it will have retail and if so in what form, but here are some stabs in the dark.

If the metaverse is a parallel economy then it will have growing commerce opportunities, but it seems unlikely to have room for pre-digital retail concepts. What’s the point of a shop, even an online one, when you can enter a contest for beauty styling, test drive your car round Le Mans, or create a new dish with your favourite chef?

Much, perhaps most, spending will shift to wholly virtual products. Filters replace cosmetics. Avatar skins substitute for clothing. Whole new markets emerge for digital collectables and luxuries.

Users’ needs will continue the shift from secondary demand (products, such as apparel or movies) to primary demand (emotions such as amusement, comfort or belonging). Brands will need to understand the primary demand to own the secondary demand.

The most fundamental primary needs will be identity and self-expression – to stand out. And digital tokens now promise limitless uniqueness: the paradox of abundant scarcity. This is a challenge for most retail brands which sell mass-produced duplicates. And especially for luxury brands which have managed to do so while maintaining the aura of rarity.

Every user will be able to own a piece of the metaverse – NFTs will assert their rights to self-created art, or fashion, or music. And crypto will monetise it. Everyone becomes a retailer.

Finally Facebook, or Meta, would dearly like to be the landlord. How much more powerful for Zuck to be president of the metaverse, rather than his previous ambition just to be president of the USA. But I think that’s unlikely and that no centralised platform will dominate.

More probable is that there will be multiple worlds, with ownership and control decentralised to many developers, communities of users, brands, and service providers. Like physical cities, the metaverse will be a user-defined, decentralised and entrepreneurial society.

This article appeared in Retail Week, 9 December 2021