You might have heard that, in the future, we're all going to live in the "metaverse". It may be in the headlines almost daily, but for most of us, the metaverse is very abstract. So, what is it exactly?
Combining various technologies, including virtual reality (VR), the metaverse is a parallel, virtual world. It copies the real world in some ways — you can go to work, meet friends, etc. Over the next few years, more and more people will spend time in the metaverse, and organizations will offer products and services there.
The four big metaverse platforms are currently Decentraland, The Sandbox, Cryptovoxels and Somnium Space. According to McKinsey, more than $120 billion was invested in the metaverse in the first five months of 2022 alone, and 79 per cent of consumers who use it have spent money there. Interestingly, while the metaverse isn't in the physical world, one of its biggest markets is real estate, which has been growing despite cryptocurrency's instability.
Like a social media account, your home in the metaverse is somewhere you can present who you are and connect with others. From a business perspective, it's potentially very lucrative, particularly for e-commerce. Many hope the metaverse will offer a new way to interact with consumers.
Sarah Mittiga, a management consultant at KPMG, advises clients on the impact of the metaverse on real-estate businesses. She told Business Spotlight that "due to globalization, but also the Covid-19 pandemic, the wish to meet virtually has grown exponentially." Companies and organizations are also looking at virtual real estate. Mittiga says: "I believe that we are currently experiencing the same situation as with the dawn of the internet and the questions surrounding the need for companies to have a website."
Who's buying and building?
US rapper Snoop Dogg was one of the early metaverse property owners. In January 2022, global consultancy PwC announced it had bought some land on The Sandbox. A month later, JPMorgan Chase became the first bank to announce it was opening a metaverse branch.
It's not just for companies and music stars, however. Barbados is planning an embassy in the metaverse, where people can attend real embassy appointments remotely. Sotheby's has a virtual gallery, a replica of its London home, and Manchester City Football Club partnered with Sony to recreate its stadium.
For architects and designers, the barrier between the physical and virtual worlds has largely disappeared. Pallavi Dean, founder of Dubai-based design studio Roar, told Business Spotlight: "Designing with AR and VR is second nature. Traditionally, we would hand the designs to engineers and builders to create a physical space — the metaverse simply cuts out that part of the process."
Virtual designs can also be more innovative than in the real world. VICE Media Group has a new metaverse office, called VICEverse. The company's global executive creative director, Morten Grubak, described it as a large cube with a tunnel inside, through which people reach different levels and rooms — a virtual meeting place, designed to serve the needs of a global team. "It's a unique structure. Clients, collaborators and journalists can meet for briefings, presentations and in-situ demonstrations of recent projects," Grubak explains.
Despite this activity, however, the metaverse is still new, with much uncertainty about how it will develop. One of the many unanswered questions is about scarcity. In the real world, land is limited, while the metaverse creates scarcity artificially, but there's no guarantee that will always be the case. There's also the fear of market volatility. Metaverse real estate depends on crypto, and buyers could lose a lot if the value of crypto were to fall suddenly — which has happened from time to time.