What is the Metaverse?
The term “metaverse” originally appeared in Neal Stephenson’s science-fiction novel Snow Crash. Three decades later, the term metaverse is losing its association with science fiction and becoming a reality now. Google Analytics shows interest in the metaverse has accelerated at a rapid rate with the number of searches for the word increasing more than tenfold from 2020 to 2021. Vogue Business states the metaverse is “the next stage of how we use technology—the successor of the internet age”.
With all the heightened interest in the metaverse, there have been differing definitions of the term. The Wunderman Thompson Intelligence Report “Into the Metaverse” highlights the ambiguity around the term, “Some call it the new internet, others a democratized virtual society, yet others the convergence of virtual and physical realities, persistent virtual spaces, or a digital twin of our own world.” Matthew Ball, a Venture Capitalist, Managing Partner at early-stage venture fund EpyllionCo, tries to create clarity around the term commenting, “The best way to understand the metaverse is to think about the idea that we will spend an ever-increasing amount of our lives connected to persistent virtual simulations.”
“The Metaverse is the New Mall” defines the metaverse “as a connected, 3D virtual world where consumers, through their individual avatars, are able to interact in real time with the digital environment and everything and everyone in it. In this virtual universe, users participate in activities like shopping, gaming, learning, working, and attending concerts and events—but they also use the space to just hang out and socialize with one another.”
According to Vogue Business, the metaverse comprises “digital fashion, social media, augmented reality, virtual stores, video games, and non-fungible tokens (NFTs)”. Many brands and retailers had already begun exploring these areas of the metaverse before interest in the term started to peak after the advent of Facebook’s Meta.
Brands will have an unprecedented opportunity to create in the metaverse. In the metaverse, brands can design their own environments devoted to shopping that will allow consumers to go beyond the simple transaction of searching and filtering. Shoppers will be able to interact with one another and with brands and their products. The metaverse will empower consumers to design, clothe and accessorize their digital avatars, attend fashion shows, and participate in other activities and events. According to a Wunderman Thompson Intelligence Report Into the Metaverse, “Digital engagement is moving from passive consumption to active creation–shifting creative power to the user.” Brands need to begin defining how they will represent themselves in the metaverse because shoppers, especially younger demographics, will expect to seamlessly engage with every aspect of their online lives through the virtual world we will inhabit.
Why is Interest in the Metaverse at an All-Time High?
There are a handful of reasons why retailers and brands should begin positioning themselves for the metaverse, a market opportunity that Bloomberg Intelligence estimates will reach nearly $800 billion by 2024.
Facebook’s rebrand as Meta underscores how timely it is for brands to start building metaverse strategies into their business plans in order to establish a distinctive presence in this new digital sphere. Another reason why there is heightened interest in the metaverse is technology has evolved to the point that it is possible to represent digital interfaces in immersive 3D graphics that mirror the real world, as opposed to the 2D “page” interface that is still typical on most e-commerce sites. These advances in computer hardware and software enable the metaverse.
Additionally, the pandemic accelerated consumer adoption of immersive technologies and the metaverse. The study from Wunderman Thompson reveals “As COVID-19 restrictions ease, the acceleration of tech and its prominence in many lives will continue, with 76% of people saying their everyday lives depend on it and over half saying their happiness depends on it.” People are spending a considerable amount of time and placing a high value on their digital self to the point that their in-person lives are merging with their digital lives. The metaverse can be viewed as a natural progression of the convergence of people’s physical and digital lives. With the metaverse, people will spend their daily activities from socializing to working in virtual environments.
Studies have shown that people already are spending more time interacting with their friends on social media and gaming platforms than in real life. According to the US Bureau of Labor Statistics (July 2021), people in the US spent on average 6.5 hours per day online. People are only spending around 65 minutes per day seeing friends in person. Post-pandemic this ratio will increase further in favor of people spending more time on virtual interactions. The Wunderman Thompson Intelligence Report Into the Metaverse states “As COVID-19 restrictions ease, the acceleration of tech and its prominence in many lives will continue” and sites that “93% of global consumers agree that technology is our future and over half (52%) say their happiness depends on it.”
How Brands are Already Leveraging Gaming, NFTs, and Virtual Stores
Gaming, one of the core components of the metaverse, has become an increasingly popular way for younger generations to connect and socialize virtually. The Wunderman Thompson Intelligence Report notes that 59% of the US population classified themselves as gamers, including 90% of Gen Zers. This statistic is highly relevant to brands and retailers since the younger generations are gravitating towards gaming as means of entertainment and socializing. Luxury brands are already taking note of the younger consumers’ interest in gaming and are selling their products on gaming platforms.
A Morgan Stanley report “Luxury in the Metaverse” states “metaverse gaming and NFTs will constitute 10% of the luxury goods market by 2030—a $56 billion revenue opportunity.” Brands are finding success in consumer engagement with virtual goods and NFTs. The Metaverse Mindset: Consumer Shopping Insights survey finds that 74% of Gen Zers have purchased a digital item, such as an accessory, skin, or garment for their avatar, within an online video game. The NFT market has had exponential growth. Morgan Stanley predicts that the NFT market will grow to $236.71bn by 2030 and forecasts that luxury digital/hybrid collectibles will be a $19.17bn market.
Many brands and retailers are leveraging virtual stores as an entry point into the metaverse. Consumers who are shopping in these 3D immersive virtual stores are finding them highly engaging. In fact, 70% have made a purchase in a virtual store. Brands are viewing virtual stores as a means to take their first step into the metaverse, create high customer engagement, and generate ROI. Learn how your brand can sell physical and digital products in the metaverse with a virtual store.
