The metaverse is a concept which has drawn increasing attention since it became the core brand identity of the aptly named Meta, which was previously Facebook Inc, back in 2021.
Its promise as a virtual world platform similar to that of fictional works like Lawnmower Man and Ready Player One ignited many an imagination during the initial announcement.
And now, after years of development, it stands as a prominent, albeit daunting, investment prospect for many entrepreneurs and investors. But just how safe a bet is the metaverse, and is it too early to consider it a real money-maker? Read on to find out more…
Avatars gather in a virtual house to socialise and watch television together.
What is the metaverse?
First things first, let’s establish exactly what the metaverse is, and what it will perhaps become one day. At its core, the metaverse is the next logical evolution of the internet as we currently know and utilise it.
Just as it was originally described in its first incarnation in Neal Stephenson’s seminal 1992 science-fiction novel Snow Crash, the metaverse is a platform which seeks to unify all the distinct digital functions of our lives, such as communication, work, entertainment and leisure.
Essentially, the metaverse provides an opportunity for users to engage with an interactive, virtual environment that, in many ways, mirrors our own. For example, users could decorate their virtual house, or visit a virtual shopping district and try on virtual clothes to suit their avatar.
Most, if not all, of these actions would likely revolve around a digital currency-based economy.
However, this definition could be considered somewhat reductive when taking into account the current possibilities which the metaverse presents. Its efficacy as a virtual social space, whereby family and friends can spend time together yet apart, is an aspect being promoted heavily by Mark Zuckerberg’s aforementioned Meta.
These virtual spaces have, in turn, taken on a life of their own with the emergence of the virtual real estate market or “digital land”. Already virtual properties and land are being created and sold for ludicrous sums, all scattered across different platforms.
The largest metaverse real estate transaction, for example, came in at a mind-boggling $5m (approx. £4.5m) purchase by Curzio Research for 19 commercial properties in TCG World, which is described as an online open world gaming experience with its own crypto-economy.
This is often the sticking point for many investors, as the metaverse’s fragmented nature creates confusion, with the lack of a central point or platform meaning potential investors have to know what’s what, or rather where’s where, in order to make their first move.
Moreover, research conducted by HubSpot suggests that 33 per cent of US consumers “didn’t quite get” the concept of the metaverse as a whole, whereas 30 per cent thought that brands ought to leverage its unique opportunities more.
The metaverse is thought to be most appealing to younger people (Gen Z).
Is the metaverse a sound investment?
So, with such impressive figures already under its belt, just how likely is one to make a profit from investing in the metaverse when taking into account the currently tumultuous economic landscape?
Morgan Davies, director at Prime Accountants Group, which has offices in Solihull, Coventry and Birmingham, has urged businesses to hold off investing in NFTs and the metaverse during the cost-of-living crisis as they are yet to prove they can survive the economic decline taking place across the UK.
The metaverse is still in its infancy, but it has already started making waves in relation to a world where users can interact with holographic images of their colleagues as if they were in the same room.
More and more people are investing, or using the metaverse and the subsequent growing phenomenon of cryptocurrencies and non-fungible tokens (NFTs) in their everyday lives.
Generation Z (people born between 1997 and 2012) make up around 60 per cent of users in the metaverse, spending approximately eight or more hours a day online, and are more immersed in digital culture than any other generation.
HubSpot asked those who had participated in metaverse-related activities (visited a metaverse, played online games, attended virtual events, or bought virtual items/NFTs) about how these intersect with their “real” lives, which produced the following results:
Morgan remarked: “As the first generation born a true digital native, ‘Gen Z’ has some of the most tech-adept individuals on the planet, who spend twice as much time socially interacting in the metaverse than they do in real life.
“As they enter the workplace and start their own businesses, having a presence within the metaverse will be key for networking and reaching this tech-savvy generation. Client work isn’t the only way I see accounting utilising the metaverse.
“It could play a key role in trade shows and even revolutionising the ‘working day’ by marrying together the benefits of in-person and remote communication, removing the issue of limited office resources and allowing each avatar access to tools that optimise what they are saying or presenting.”
Morgan noted that having a trade show within the metaverse will not only enable businesses to speak with their target audience directly through their avatar, but also opens the opportunity for tours of factories and workplaces.
He added that it also can remove the “pot luck experience” many businesses have at trade shows, wondering whether they are speaking to the right people.
“However, due to the sensitivity surrounding money, the relationship between accountant and client cannot solely exist online. Accounting relies heavily on trust, a feeling which is best built through face-to-face meetings,” he added.
“When working for a client, accountants gain full access to their financials and, whether personal or business-related, it is a private part of someone’s life. Very few will be comfortable passing on this information unless the person’s identity can be confirmed and verified; an area still in its infancy for many metaverses.
“The unpredictability of these markets indicates why curious investors should pause before investment, and why they should think twice before handing over their financial statements and money/NFTs to accountants they meet exclusively in the metaverse.”
Dominik Angerer, CEO & co-founder of Storyblok
What about the world of e-commerce?
New research by enterprise CMS company Storyblok has revealed that retailers and e-commerce professionals are taking full advantage of the opportunities which are becoming available via the metaverse.
The study suggests that more than 20 per cent are already extending their content management systems (CMS) to display content into Metaverse environments to showcase their branded images and products.
Storyblok surveyed 208 retail and e-commerce professionals who directly manage enterprise CMS systems. As well as making way for the Metaverse, the survey found that enterprises are reporting that their CMS currently delivers content into alternative digital channels.
These survey findings speak to the curiosity among consumers to try out “interesting new digital environments”, and the need for retailers and e-commerce sites to keep pace.
A headless CMS architecture is by far the easiest way to deploy content to new channels as quickly as they arise, via simple APIs,“ said Thomas Peham, Storyblok’s vice president of marketing.
Amongst the other key results, the survey also revealed a huge leaning towards multiple CMS systems to facilitate omnichannel customer touchpoints. 76 per cent of enterprises have already deployed more than one CMS and just over 10 per cent have deployed five or more CMSs.
Dominik Angerer, CEO & co-founder of Storyblok, added: “Because of the increasing variety of channels that customers now use to interact with brands, retailers are having trouble delivering the experience that customers expect.
“Managing multiple CMSs adds another layer of management burden. Moving to a headless CMS architecture can help streamline channel management by replacing custom integrations with standard APIs.”
Amid growing cybersecurity concerns, the Storyblok survey also found that one in five enterprises (20.6 per cent) are seeing an increased number of attacks coming in via their CMS.
This activity comes as Storyblok today announced it received ISO 27001 certification from TÜV Rheinland, an independent third party. This certification verifies that all Storyblok’s products, operations, support processes, and data storage protocols meet the highest international security standards.
Why should we wait?
In closing, it seems as though now is too soon to invest. As the economic state of the UK continues on its downward trajectory, Morgan reminds us that we don’t know how these platforms or digital tokens like NFTs or cryptocurrencies work alongside inflation, interest rate rises and a possible recession.
None of these things have been stress tested against these digital tokens. Thus, it would be wise to ride the recession wave before investing in something that is yet to prove its success and longevity.
Morgan added: “Not only do we need to find out if these virtual worlds and currencies can survive the next 10 years, but laws and regulations within the virtual worlds must undergo further development before it is wise to invest.
“It’s easy for people to forget that individuals and businesses will still be taxed in the metaverse, a situation which could be chaotic and complex as nations across the globe come together into one virtual world where tax, law and regulations will differ from avatar to avatar.”
“While it is exciting that the world is changing and developing, we would always recommend businesses invest using a regulated financial advisor, whose identity can be verified and who can help them navigate the precarious and often risky areas of investments.”
Thus, it would be wise to exercise caution when dipping your toe into the untamed waters of the Metaverse, at least until the technology has become more consumer-ready and the economy has settled to the point where we can observe how crypto-based and digital economies will cope under real conditions.
By Matthew Neville, Correspondent, Bdaily
