The metaverse represents the next version of the web, creating immersive 3D experiences that evolve traditional 2D websites into a connected series of virtual worlds. Already, consumers and businesses are exploring ways to enhance their everyday activities, deepen connectivity, and unlock more exciting applications. New McKinsey research estimates that the potential economic value of the metaverse could generate up to $5 trillion by 2030. The report, “Value Creation in the Metaverse” also found that 57% of metaverse-aware companies say that they are adopters. The excitement is also on the demand side. Fifty-nine percent of consumers are excited about transitioning their everyday activities to the metaverse.
So, what will the metaverse be, what will it look like, and how will we interact in this next chapter of the web?
A separate report published by Salesforce that explored the “State of the Connected Customer” found that a majority of customers plan to spend even more time online than before 2020. And 90% claim that the “experience” they have with companies is as important as its products and services. The key to the metaverse and all online engagement is connected to the experience people have in each world and touchpoint. That’s where value creation starts.
The metaverse, even in its nascency, offers a glimpse of the next chapter of digital-first experiences. And unlike earlier digital revolutions like e-commerce, social media, and the mobile and app economy, businesses are investing early this time around.
In its report, McKinsey learned that consumers and executives are already engaging.
The top five activities consumers are most excited about:
The top five enterprise use cases companies are implementing today:
- Marketing campaigns or initiatives
- Learning and development for employees
- Events or conferences
- Product design or digital twinning
During its research process, McKinsey interviewed executives and leading authorities to explore value creation in the metaverse, what the metaverse is and isn’t, and how it will evolve. Experts included Matthew Ball, Cathy Hackl, Marc Petit, John Hanke, Rob Lowe, Ken Wee, among others. I too, had the opportunity to share my thoughts with co-author and McKinsey partner, Hamza Khan.
Defining the Metaverse
The metaverse doesn’t quite exist yet, but it is taking shape.
Some might visualize the metaverse as a single, universal virtual world that looks a lot like Ready Player One, where everyone lives their “second life” in one communal space. This is Meta’s vision for its Horizon Worlds platform. Other often cited examples point to popular virtual worlds and games such as Roblox, Minecraft, and Fortnite, and Web3 variants Decentraland and Sandbox.
In its essence, the metaverse represents the next era of the web. It transforms traditional 2D internet experiences into connected 3D, immersive, virtual worlds where users intuitively engage through VR and AR interfaces.
Add to that the rise of Web3, the next web also becomes powered by a blockchain (and its applications including cryptocurrencies, non-fungible tokens (NFTs), and others), self-sovereign identities, and more.
Next-web applications already include immersive e-commerce and shopping experiences, hyper-personalized, gamified learning and training, dynamic events and communal activities featuring holograms and user-driven experiences, and simulations or digital twins in manufacturing and operations.
As “killer” metaverse applications materialize, the metaverse or a 3D web won’t likely replace the internet as we know it today. They will coexist, much like Web 1.0 and social media (Web 2.0) and the mobile-app economy do today.
Why Businesses are Accelerating Experimentation
There’s a sense of excitement and urgency this time around. Businesses are increasingly shifting digital budgets to metaverse-related activities across almost every industry.
According to McKinsey research, more than $120 billion was invested into metaverse companies in 2022, which was more than double the $57 billion invested in 2021.
In addition to those digital investments, companies are also actively creating roles to lead metaverse initiatives.
Some examples include…
Disney appointed Mark Bozon to help oversee the company’s push into the metaverse. LEGO invested in Epic Games, makers of Fortnite. Luxury brand Balenciaga created a metaverse division. CAA named Joanna Popper as its Chief Metaverse Officer. Cathy Hackl was hired as the co-founder and chief metaverse officer at innovation and design consultancy Journey. Spanish telecommunications Telefónica hired Yaiza Rubio as its Chief Metaverse Officer.
This led The Drum to recently explore this trend asking, “Is there a new CMO (Chief Metaverse Officer) in town?”
Perhaps early adopters still feel the sting of past mistakes. For the most part, incumbent companies were a late to the party during the rise of Web 1.0, social media, and mobile.
For example, e-commerce continues to evolve slowly. Almost 30 years after the launch of Amazon.com in 1994, e-commerce sites are still mostly 2D digital catalogs connected by search and transaction capabilities. Events in 2020 forced companies to finally accelerate their digital investments, introducing new digital-first and hybrid models such as buy online pick up in-store (BOPIS), social commerce, live shopping, and delivery.
Perhaps the current excitement is also reflective of the continued momentum behind Web3 and nonfungible tokens (NFTs), where leading brands such as Nike and Gucci have generated significant new-revenue creation already.
Exploring Value Creation in the Metaverse
For organizations to deliver value in the metaverse, they must do more than just parlay legacy value propositions in these new worlds.
Value is in the eye of the beholder and is defined by what someone is willing to invest or pay. At the same time, not everything has to deliver direct ROI immediately. Learning, expertise, and experience also represent investments that lead to positive ROI over time.
As world builders explore value creation, they are also shaping the ecosystem for the exchange of value, including…
- Platform players (for example, Meta, Decentraland, and Sandbox)
- Developers and creators that contribute assets, content, levels, immersive layers, and hardware
- Organizations and brands that connect with users in virtual worlds, build activations or destinations on virtual lands, set up shops for commerce, training, or recruitment, or even create their own purpose-built worlds
- Infrastructure and services enterprises that facilitate design standards, transactions, currencies, smart contracts, and blockchains.
For developers and platforms, value can be defined by the economics of the virtual world they create, including subscriptions or memberships, land deals, and in-world transactions between platform and users and between users themselves.
For users, their time, attention, and engagement activities are also currencies. For them to invest in any virtual world, they have to find it entertaining, beneficial, productive, or relevant. What is it that they value and how is that value delivered in perpetuity? What’s going to compel them to pay to play, shift their attention to an experience, or engage with a brand’s products, services, or assets? Additionally, their data and content are also currencies. Social media has taught them that their data and content are valuable, and now they are looking for returns on their contributions.
Businesses and organizations know they have to be present where their customers, partners, consumers, and employees are active. To participate in virtual worlds or create purpose-built 3D destinations— whether for branding, e-commerce, talent recruitment, learning and development, product or digital-twin simulations, or research— they need to assess the ROI of their investments against user expectations, culture and technology trends, and mutually beneficial outcomes across the board.
Creative companies will also find opportunities to communicate and create personal value for users who provide data and content. It’s important to note that as Web3 technologies become part of the metaverse, user data, digital assets, and identity will become portable. Users’ Web3 wallets contain their assets, experiences, achievements, behaviors, credentials, affinities, and interest and social graphs. Users will become even more empowered.
How Businesses can Approach the Metaverse
The metaverse will be about community. The value of belonging to any community is one where belonging matters to all stakeholders and collaborators, including world builders, creators, developers, brands, and users.
Sometimes executives and decision makers are not the ultimate users of the next web. This leads to adapting legacy engagement and business models for new opportunities without building upon the tenets of these emerging communities.
Experience and empathy are essential components of human-centered design and value creation. This is one of the reasons companies have started hiring metaverse-focused leaders and partnering extensively: to focus and accelerate efforts that are creative, native, and appealing to metaverse users.
Seek to understand what users value in early 3D virtual experiences, how preferences evolve as the metaverse evolves, what role your company will play now and over time, and how organize to meet and exceed user expectations in every iteration of the next web.