At one time, businesses had to prepare for the digital age. Now, the newest vanguard of technological development is the metaverse. In October 2021, Facebook CEO Mark Zuckerberg announced that the social media behemoth would be rebranded as Meta, indicating the company’s intention to dominate the emerging metaverse market. A metaverse is a Virtual Reality (VR) world, where users can interact with each other and share common experiences within a simulation. Like other Big Tech companies, Facebook has been pushing for widespread consumer adoption of VR technology since at least 2014, when it acquired the Oculus Rift VR headset.
Although public uptake has so far been slow, steady investment in metaverse technology indicates that Big Tech still sees the area’s potential, and the coronavirus pandemic has accelerated consumer uptake. Gaming company Epic Games has long endorsed the metaverse idea and ran a successful proof of concept in April 2020 during the first wave of the pandemic. Travis Scott, arguably the most-popular rapper in the world at the time, held a virtual concert in the Fortnite game which the avatars of 12 million gamers attended. When Scott raised his arms in the air, gamers experienced their avatars take flight as they rose.
Long before the Travis Scott concert, Fortnite was attracting attention for its unique financial model. The game itself is totally free, but players are encouraged to make in-game purchases on unique clothes, accessories and weapons, known as ‘skins’ for their avatars. Although it might sound strange to people who haven’t spent time in virtual worlds, Fortnite players have a strong sympathetic attachment to their avatars’ appearance and identity. As in a physical playground, there’s sneering at players who don’t adopt trends; during game play, avatars in the free outfits are derogatorily referred to as ‘no skins’. There are subcultures too – the ‘sweatiest’ skins (the coolest; those worn by the avatars who are considered the most skilful in-game) are those that were released during the first iteration of the game in 2018. Fortnite made Epic Games $5.1 billion in 2020 from in-app purchases of skins and promotions like the Scott concert.
Perhaps perceiving it as a marketing opportunity and a chance to gain relevance with a new demographic, last year saw the first significant partnerships between fashion houses and gaming companies. Gucci collaborated with metaverse and gaming platform Roblox in May 2021, opening a virtual boutique where players could purchase Gucci clothes for their avatars to wear in-game. Although initially items were priced affordably, with a Dionysus bag costing only 475 Robux (or $5.50), its limited-edition nature meant the resale value in-game skyrocketed. In the end, the virtual Gucci Dionysus sold for 350,000 Robux, or $4,115 – which is more than the bag costs in the real world. This was followed by Balenciaga collaborating with Fortnite in September 2021. Branded hoodies sold for 1000 V Bucks, or $8.00, making them accessible to those who couldn’t wear the hoodie in real life.
Fashion and gaming companies can both be considered early adopters of metaverse technology. Nike followed on from luxury brands in November 2021 when it filed seven patents for virtual-only clothing and apparel. In light of this, it is no stretch to say that the intersection of social media, gaming and retail is where consumers will be first exposed to the metaverse. However, despite all the excitement, the metaverse is still very much an emerging concept. At the minute, all virtual worlds are distinct from each other – we are currently in a world of metaverses, rather than a metaverse – and every world requires a different avatar. The Wall Street Journal reporter Joanna Stern described her experience of one day spent in the metaverse as one in which: “everything was fractured. I ended up creating four different avatars over the course of 24 hours.”
Augmented reality (AR) is already a more widely-adopted technology which is reshaping the experience of media and retail for the masses right now. Spend five minutes scrolling on TikTok, and you will see innumerable human faces with their natural features distorted or enhanced by filters, which themselves are AR digital overlays onto the real world. It is not uncommon to virtually try on glasses while online shopping and this development is expected to extend to other kinds of apparel. Retail adoption of AR is a natural conclusion of the years following the pandemic, a time when many high-streets remain empty and some consumers are showing increased reticence to shop in-store. Giving consumers the ability to visualise products on themselves and in their homes will distinguish retailers at a time when there is growing consumer demand for this sort of technology.
Business leaders outside of retail and gaming might not yet understand how metaverse technology could apply to them, but its potential is worth exploring now. The AR and VR market is anticipated to increase in value from $41.8billion in 2021 to $135.4billion in 2025, so it’s likely that other sectors will follow soon. An early-adopter outside of consumer retail, Big Tech and entertainment is BMW, which is currently constructing a ‘digital twin’ – a digital rendering of a physical asset or system – for its assembly factory on the metaverse platform Omniverse. BMW publicly stated that it believes this will ‘revolutionise’ BMW’s planning process in advance of constructing new vehicles at its factory site.
Increased investment, alongside sustained excitement from Big Tech, demonstrates that metaverse technology is coming, and business should prepare for this next stage of digitisation. Future-proofing can be perceived as intimidating, but it is also invigorating, as new opportunities that were not previously available are emerging. BMW’s decision to increase efficiency with a digital twin of its factory provides a good benchmark for how business leaders can consider potential applications of metaverse technology. Other ways business leaders could use VR to enhance their businesses’ operations include implementing blockchain processes which combine simulations with audit trails to ensure legal and regulatory compliance. While virtual boards are not a new concept, board meetings held in VR or the metaverse are. This would help ameliorate any local talent shortages by allowing for meetings as dynamic and immediate in a virtual world as those held in-person, with board members located potentially thousands of miles away from each other.
As corporate plans for the digital world increase, our computation power must too. Intel estimate that metaverse projects will eventually demand x1,000 the computing power we have now. Although this statistic is certainly intimidating, it provides an interesting jumping-off point for businesses in diverse sectors to consider how their work could be applied to this objective. For example, semi-conductor businesses will have to continuously advance their technology so this kind of traffic is possible and reliable. The opportunities the metaverse presents for businesses in widely different sectors is expansive.
Adopting emerging technology like this can drive value in multiple areas. This can be from a sales and marketing perspective, or a talent attraction perspective. As is the case with retail, VR and AR has already been used to drive real-life sales. BMW is using this technology to drive operational efficiency, which sets a fine example for others in the manufacturing sector. In an era when talent shortages are increasingly challenging for many companies, presenting yourself as future-focused can be a strong cultural incentive to drive young talent to your business. Board members might prepare themselves for the next phase of digitisation by examining their businesses’ current operations and seeing how the metaverse concept might apply to them. With an entire new virtual world blossoming inside our reality, the possibilities for growth driven by metaverse technology are as limitless as our computational power and earthly resources will allow them to be.