WTF is the Metaverse?

The lead image shows an illustration of a person playing computer games.

This article is a WTF explainer, in which we break down media and marketing’s most confusing terms. More from the series →

The successor to the internet might be rooted in the gaming industry.

The term “Metaverse” was coined by science fiction writer Neal Stephenson in his 1992 novel “Snow Crash.” In “Snow Crash,” the Metaverse is a massively popular virtual world experienced in the first person by users equipped with augmented reality technology.

Over the past year, executives and creatives in the gaming and tech industries have breathed new life into the Metaverse concept, framing massively multiplayer games such as “Fortnite: Battle Royale,” “Roblox” and “Minecraft” as precursors to an expansive digital world that combines Stephenson’s fictional Metaverse with a real world that has become increasingly digitized during the COVID-19 pandemic.

In an interview with The Verge last week, Mark Zuckerberg turned heads by opining that Facebook would transition from being a social media company to “a Metaverse company” within the next five years.

“It’s probably fair to say that what we have today is not quite the Metaverse yet,” said Moritz Baier-Lentz, a partner at Metaverse-minded venture capital fund BITKRAFT Ventures. “But when you ask people to describe the Metaverse, most would converge on something that is the stuff of ‘Ready Player One’: a persistent bridge between the physical and digital worlds with unprecedented scale, interactivity and interoperability.”

With so many different interpretations of the Metaverse going around, here’s a primer on what it is in its purest form — and why it has everyone excited, from Roblox to AB InBev.

What is the Metaverse?

The Metaverse is a “successor state” to the modern internet, with all the same content but fewer limitations as to where and how that content can be accessed. Current online platforms allow users to move about somewhat freely within the confines of specific services, but limit interoperability between platforms: you can build anything in “Minecraft,” but you can’t transfer your creations into a “Fortnite” map. The Metaverse will allow users to generate their own content and distribute it freely throughout a widely accessible digital world.

Unlike the modern internet, Metaverse users will experience changes in real-time by all users. If a user makes any kind of change to the Metaverse, that change will be permanent and immediately visible to everyone else. The persistence and interoperability of the Metaverse will afford users increased continuity of identity and experience compared to the modern internet. In the Metaverse, users won’t need to have separate Twitter profiles, “Fortnite” characters and Reddit accounts — they’ll simply be themselves across all channels. This continuity of identity will be a core factor behind how users purchase and consume content in the Metaverse.

“The brands that are progressive in this area are the ones that understand the fact that self-expression is such an important component of why people spend so much time online,” said Christina Wootton, vp of brand partnerships at Roblox. “They can be who they want to be.”

Why are video games viewed as precursors to the Metaverse?

BITKRAFT, a venture capital fund that invests in game developers and Metaverse-focused technologies, describes the Metaverse as the product of a growing “synthetic reality” — the increased convergence of the physical and digital worlds that only accelerated during the COVID-19 pandemic. But gamers had already been socializing and creating content primarily on the web. “What excites us about investing in gaming, esports and interactive media is that games are essentially a spearhead of that broader trend,” Baier-Lentz said. “There are many examples in which innovations that were originally developed for gaming use cases have triggered far-reaching innovations, not just across the media ecosystem, but really across technology as a whole.” He pointed to graphics cards as an example — once developed for 3D calculations in games before becoming a backbone for artificial intelligence, among other technologies.

Video games such as “Fortnite” and “Roblox” showcase a kind of cultural interoperability that would be widespread in the Metaverse. For example, in a single game, players dressed up as Lebron James can battle against others using the guise of comic book characters like Deadpool or the Joker. Furthermore, the multiplayer experience of these games suggests the real-time continuity of experience offered by the Metaverse. Last year’s “Fortnite” Travis Scott concert allowed over 12 million players across the world to attend the same concert in real-time, though they were limited to interacting with up to only 49 other users in any given “room” of the experience. This successful event sparked a trend in “Fortnite” and, thus, the Metaverse. Last month, marketers took the concept a step further by recreating London’s O2 Arena in-game ahead of a concert featuring British band easy life.

How close are we to a true Metaverse?

There are still quite a few hurdles on the pathway toward a bona fide Metaverse. The biggest roadblocks are hardware limitations: at the moment, worldwide networking and computing capabilities are not yet capable of supporting a persistent digital world that can be experienced in real-time by millions of concurrent users. Even if this level of networking and computing power was available, the energy consumption of such an endeavor would create problems for both national power grids and the environment.

In cases where the technology is sufficient, broad cultural changes are necessary to spur the development of a true Metaverse. Relatively high-quality virtual reality and augmented reality technologies are already available to consumers, but less than 20 percent of Americans have taken VR headsets for a whirl, according to a 2020 report by Thrive Analytics and ARtillery Intelligence.

Though that’s likely to change: Baier-Lentz predicted VR and AR head-mounted devices have “a good shot” at surpassing gaming consoles as early as 2025.

Aside from technological limitations, what is the biggest challenge to the Metaverse?

Interoperability. Right now, even so-called Metaverse precursors such as “Fortnite” do not allow players to recreate their own user-generated content (UGC) on other platforms. To allow for true interoperability between platforms, the corporations that own these platforms must relinquish some control over their player bases’ content and user experience. This process is already underway. Sony, a notorious holdout against cross-platform play, recently moved to allow PlayStation users to more frequently interact with players on other consoles.

Shahar Sorek, CMO of Overwolf, an all-in-one UGC platform, believes that this relinquishing of control is inevitable because UGC (as opposed to developer-created content) is rapidly becoming a central aspect of the modern gaming experience. “Unlike the banks or any other centralized system, there is an experience that is shared with a community, and how the community reacts to that experience is at the core of what drives engagement,” Sorek said. “So a game maker, if they see their community is all about creating content, they have to change, because they understand that if they don’t, a competitor will come along.”

Why is blockchain technology important for the Metaverse?

“I’m hopeful that the future, as we lay it out, will be one that is truly decentralized and in the hands of the users as its citizens,” Baier-Lentz said. “By far the best, and maybe the only solution that we have for something like that today is blockchain technology and applications built on the Web3.”

Without the oversight of a Metaversal government or other regulatory body, blockchain technology would ensure that transactions and identities in the Metaverse are safe and public. Furthermore, non-fungible tokens (NFTs) would allow users in the Metaverse to own unique and bespoke items, much like in the real world, and cryptocurrencies provide a roadmap for how a Metaversal economy might take shape. The creation of this Metaversal economy is already underway: some companies, such as AB InBev, have already begun auctioning off limited-edition branded NFTs for hundreds of thousands of dollars.

According to Sorek, the currency of the Metaverse will likely be something between modern cryptocurrencies such as Bitcoin and Ethereum and the V-Bucks of “Fortnite.” “Perhaps each game maker would offer a token that you buy just like V-Bucks,” Sorek said. “They would have their own exchange, and you could cash out from one to the other.”

Is the Metaverse inevitable?

Probably, though its future users might simply know it as the internet. At no point will a flip be switched to turn on the Metaverse — rather, the Metaverse will come about gradually, as cultural changes and technological upgrades give internet users the ability to move increasingly freely and more easily create and share bespoke content on the web. Just as no formal change marked the transition from Web 1.0 to Web 2.0, the development of the Metaverse will occur naturally as people spend more time online and tie more of their identities to their digital lives.

Though “Fortnite” and “Roblox” are often described as precursors to the Metaverse, the most significant precursor to the Metaverse is the internet itself. But if the internet is a video tour of the apartment, giving brief glimpses into each room in a defined sequence, the Metaverse would be the apartment itself. We might not be living there yet, but we’ve already signed the lease.

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