Metaverse

The metaverse refers to the convergence of physical and virtual space accessed through computers and enabled by immersive technologies such as virtual reality, augmented reality and mixed reality. Described by proponents as the next iteration of the internet, this 3D virtual world is envisioned as a persistent, collective, shared space where digital facsimiles of ourselves, or avatars, move freely from one experience to another, taking our identities and monetary assets with us.

Visions of a parallel digital universe where humans can experience life in ways both akin to and not possible in the real world aren't new -- they predate the internet. But the concept of a blended physical and digital reality became more tangible in recent decades as technological advances -- from the near-universal adoption of mobile phones and rollout of high-speed internet to popular games such as Pokémon Go -- made the metaverse seem less far-fetched.

Why metaverse technology is still important for businesses?

Although the vision of a rapid gestation of fully-realized virtual worlds where humans work, shop and socialize from the comfort of their couches has dimmed, the metaverse isn't dead. Components of it are gaining traction as graphics and capabilities for virtual and augmented reality, bolstered by AI, rapidly improve. The development of new technology such as eye tracking, which uses sensors to monitor and record eye movements, promises to make visual experiences more engaging.

In the area known as the industrial metaverse, epitomized by the Nvidia Omniverse platform, companies are building digital twins to design and monitor physical objects. Businesses are also using virtual reality (VR) to train employees and applying augmented reality (AR) to overlay information on real-world objects, helping their employees work better.

In e-commerce, customers are clamoring for virtual products that "tie back to the physical world," according to a June 2023 McKinsey report, which stated that the market for metaverse commerce alone -- "from home and food to fitness and apparel" -- could drive "$5 trillion in value creation by 2030." A report from data-gathering company Statista pegs the metaverse market at  $74.4 billion in 2024 and predicts that by 2030, at an annual growth of rate of 38%, it will reach $507.8 billion with over 2.6 billion users.

A short history of the metaverse

The recent hype around the metaverse belies a history that dates back to the previous century when the name was introduced into the lexicon, albeit in a fictional setting.

Author Neal Stephenson coined the word metaverse in his 1992 dystopian sci-fi novel Snow Crash to describe a virtualized environment where people gained status based in part on the technical skill of their avatars. In addition to popularizing the concept of digital avatars, the novel's depiction of a networked 3D world is said to have influenced real-life web programs, including Google Earth and NASA World Wind.

Another novel that popularized the metaverse was Ernest Cline's Ready Player One, published in 2011 and later made into a movie by Steven Spielberg. It depicted a future where people escape real-world problems by entering The Oasis, a virtual world accessed using a VR headset and haptic gloves that provide tactile sensations. Such haptic feedback also became a key metaverse building block.

Fiction aside, the foundational technologies supporting an actual metaverse date back to the 1960s. The metaverse's legacy includes two other hype waves that are all but forgotten -- the first one in the early 2000s when use of the pioneering Second Life virtual community plateaued after initial growth, and the second in 2010 when the first VR headsets proved not to be the gateway to the metaverse that inventors anticipated. Both busts led to significant technological advances, though.

What does the metaverse consist of?

Today’s metaverse consists of ten layers, which fall into four categories: content and experiences, platforms, infrastructure and hardware, and enablers. Here are some examples of each:

Content and experiences

• content—developed by users, creators, and developers—enriches metaverse experiences
• applications tied to specific metaverse use cases, such as learning or events
• virtual worlds where groups can gather, interact, and create

Platforms

• platforms that facilitate access and discovery of content, experiences, and apps
• platforms designed for creators of 3-D experiences

Infrastructure and hardware

• people interface with the metaverse via devices, operating systems (OS), and accessories
• the metaverse is powered with underlying infrastructure such as cloud computing, semiconductors, networks, and more

Enablers

• security, privacy, and governance are critical for the metaverse to function well and fairly
• tools and apps that manage digital identity
• tools to access the metaverse economy via payments and monetization

Is the metaverse just a fad?

It’s not uncommon to hear the metaverse described as a flash in the pan, soon to burn out. While we don’t know how this technology will evolve, we do track great interest and involvement from customers—which indicates a fundamental change to the way people use the technology of the internet.

The change is already upon us. According to a recent McKinsey survey, more than 20 percent of the population, on a net basis, say they will spend more time exercising, working, reading, and shopping online in the future. And 10 percent of the population has already tried AR or metaverse dating, and a majority enjoyed it more than the real-life alternative.

Here are six reasons the metaverse is here to stay:

• Constant technological improvements—for instance, in computing power and large-data processes such as graphics rendering—allow ever-larger virtual worlds to exist. As discussed, the rapid adoption of 5G is enabling people to access these worlds via their mobile devices more easily. Finally, production costs of AR and VR hardware are declining, and new devices such as haptic gloves and bodysuits are increasingly coming on to the market.
• Tech companies have made huge investments to build the metaverse. Companies big and small are increasingly keen to participate.
• Gaming in the metaverse is already mainstream but expanding use cases are making the metaverse more accessible. Immersive retail, sports, and educational experiences are becoming available, as well as corporate applications like employee trainings and team collaboration. In South Korea, the city of Seoul even announced the creation of a virtual Mayor’s Office.
• Online commerce is already mainstream. Commerce in the metaverse is much the same as the buying and selling people are already used to doing—except it’s with cryptocurrency. And as cryptocurrencies grow more common, the barrier to entry will become lower and lower.
• Gen Z consumers are coming into financial maturity. They are more familiar and comfortable with virtual worlds, transactions, and goods than millennials or previous generations tend to be.
• A shift toward influencer marketing bodes well for the metaverse. A significant share of innovative and engaging experiences will probably come from these creator-users.