A reason for the recent investment in the Metaverse by Nike, Gucci, BMW, Vans, Stella Artois and Wendy’s is the fear they will join the list of past companies slow to adopt disruptive technologies. These included Kodak, Blockbuster, Nokia, Xerox, IBM, and JCPenney. However, there is no consensus on:

a) What ultimate form it will take?

b) What applications will drive it?

c) How many years until it becomes substantial?

According to Kath Blackham, CEO of VERSA, “The growth of Conversational AI, including bots, voice assistants, and more recently Chat GPT into the mainstream has laid the foundation for consumers to start to get excited about online experiences that feel like human-to-human contact. Those who decide to leverage the first-mover advantage will have the opportunity to surprise and delight while building brand loyalty which is not the case when consumers come to expect it.”

Recent June 2022 research by McKinsey estimated that the potential economic value of the Metaverse could be $5 trillion by 2030. However, the recent slide in Meta value of 60% suggests something quite different.

Possibly the reasons for McKinsey’s optimism included: growth in virtual reality games, AI, IoT, cloud storage and processing power, 3D modelling, advancement and cheaper VR headsets/haptic interfaces, consumers’ and organisations’ ongoing embracement of technology, the experience economy, increased role of remote work and remote service delivery, and finally the security of blockchain transactions.

According to Joe Millward, General Manager of APAC at Talespin, “Late mover legacy companies with bureaucratic paralysis will move slowly, which could impact their businesses down the road. The technology itself is mature, and every major tech giant is invested. How users and companies engage with the Metaverse will continue to evolve – but it is already here!”. Millward stresses the importance of large organisations taking advantage of being early adopters, as start-ups and more agile organisations can rapidly adopt and integrate new technologies.

Taking a step back, we can see that gaming such as Fortnite/Epic games and Roblox provided a template for immersive worlds that could be adapted to marketing initiatives. Gaming involves undertaking actions in a virtual world which could often involve role-playing as an avatar working in conjunction with other players. However, online gaming often has a more restricted focus with a particular goal or outcome driving the players. The Metaverse is more a new lifestyle than an activity with a narrow defined game objective. (i.e. save the hostage)In addition, the company owning the online game has a degree of control, making it less attractive to marketers who see more opportunity in an interconnected metaverse than in lots of small Metaverses like gated communities.

Kath Blackham makes the link between gaming and the Metaverse “More frequently than ever, we recommend that brands build online experiences that mimic a brick-and-mortar store as the future of retail. Unreal Engine, (the same developers as Fortnite) offers an online experience that truly mimics the human experience. A Metaverse store offering low-cost access to a much larger customer base.” Kath suggestions as to mimicking brick-and-mortar stores as most humans do not like to change the way they have been seeing and doing things for years on end. Additionally, it would be worth noting that many people still prefer walking into stores, seeing, feeling, and trialling products over shopping online. Whether people see AR/VR shopping through the Metaverse as an equal or better alternative is yet to be seen. 

Just as the effects of the pandemic played out differently in different states of Australia, the Metaverse’s potential benefits and/or applications will play out differently according to the industry sector. According to Millward, “each sector will benefit differently as we move into a spatial computing (VR) environment. Companies embracing a digital twin strategy will see dramatic advances in how they create products, showcase features, and functionality to customers, both B2B and B2C. It will fundamentally change how advertising, POS marketing, and customer service is delivered”. While it is still in its early stages, there is significant potential for the Metaverse to change the way we market today, organisations would be foolish not to prepare for what seems to be the next big thing.  

While the future of technology seems to be extremely bright and exciting, it is still unknown how well this will sit with the general public, given the barriers to entry – access to hardware, cost of hardware, concerns over data privacy and risks. Given that the Metaverse is unregulated in its current stage, we feel that companies investing early on in the Metaverse should start anticipating what regulations could come in if the Metaverse really takes off and start preparing for them from the very beginning.   

In summary, it’s really the first-mover dilemma playing out again. By being first, you build relationships with key suppliers. You might get to own the category (e.g. iPad, Hoover), and your learnings should be superior to later entrants. But on the other hand, the first mover makes expensive mistakes later entrants can avoid. Later entrants can come in when customers are ready. Maybe the Metaverse is just really an online game after all and a battle