Unless you are a gaming enthusiast, the virtual world may seem less relevant to your daily life, but that could change. Since Facebook became Meta Platforms Inc. in October 2021, the focus has turned toward the metaverse, a virtual reality that could become a $13 trillion economy by 2030, with enormous implications for businesses.
What started as an interactive VR space populated with online gamers is morphing into a future web version where virtual universes meet social networks, collaborative spaces and e-markets.
While some elements of its concept are not new, the metaverse is evolving from a fragmented space, where users frequent as they please, into a sophisticated economy, where opting out could prove disastrous for businesses.
The metaverse is expected to be worth $800 billion within two years. Therefore operating inside it could become nothing short of mandatory over the coming decade, with as much as 25 percent of the economy potentially residing in the virtual realm.
These assertions may seem outlandish, but some industries’ biggest names have already entered VR territory. For example, luxury powerhouse Gucci opened a “garden” on the Roblox gaming platform last year and released virtual bags that sold for more than $4,000 each.
Global brands such as Nike and Coca-Cola have also sold digital assets and offered virtual trials, auctions and factory tours, all on the metaverse.
Besides retail, sectors such as aviation, automotive and healthcare have been capitalizing on advances in VR, with Boeing, Rolls-Royce, and Pfizer using the technology to train and create digital twins.
Then there is real estate. In the metaverse, an interested buyer can tour a unit before purchasing. It may even become mandatory for parties to sign legally binding contracts in the virtual world.
Whatever the sector, the metaverse brings clear opportunities in an age where purchase and business decisions are increasingly occurring in the digital world. The available data suggests that Generation C spends more time as digital personas than as their physical selves. As the metaverse grows, consumers may soon refuse to buy products that are not present or tested within it.
Against this emerging backdrop, prime among the opportunities is the chance for companies to build direct and immersive relationships with their consumers, test products in the virtual world and even produce customer-designed items.
What’s more, there are financial savings to be had. In short, by eliminating the middleman and reducing unsold products, the metaverse will enable businesses to generate more value, stimulate better quality creations and cut costs.
For example, the vast sums associated with setting up trade shows can be reduced, with virtual shows costing less than 5 percent of the money required to stage physical events.
The metaverse also promises to level the playing field for businesses and communities. With real-world barriers to entry removed, smaller companies will find themselves on an equal footing with corporate heavyweights.
In the virtual sphere, they can reach out directly to consumers and compete on the global stage. Meanwhile, healthcare providers can deliver services to disadvantaged and remote communities at a lower cost, democratizing access and care for citizens worldwide.
There is a security advantage too. Transactions in the metaverse will be 100 percent traceable, thanks to blockchain technology and non-fungible tokens, increasing consumer and business confidence in digital transactions.
Many of these benefits are in the making. Still, from regulations to user acceptance, the metaverse is maturing fast, and companies that act now stand to gain the first-mover advantage.
By contrast, those without a presence in the metaverse will miss out on sizable business opportunities and may be eliminated as competitors steal their share in the digital marketplace. It is a scenario reminiscent of the risk run by businesses today that fail to engage with the internet.
Fortunately, forward-thinking governments are laying the groundwork for the virtual economy to thrive. For instance, Dubai has developed a strategy that could see the metaverse contribute $4 billion to its economy by 2030. Already, the government has put regulations in place, and transactions are underway across the emirate.
With the ecosystem beginning to take shape, research points to a healthy future for the metaverse, with annual growth estimated to reach 44 percent by 2028 and more than 10,000 related jobs expected to be created over the next five years.
However, realizing the wealth of potential will not be without a challenge.
As a priority, weaknesses in network infrastructure and reliability must be overcome. In addition, the current lack of regulations relating to the metaverse will need to be addressed to defend intellectual property and protect against criminal activity. Finally, enabling interoperability and agreeing on standards between the various parties in the metaverse will be challenging, while competition for talent will be stiff.
Adding to the list of obstacles, established physical brands will need to learn how to operate in the virtual world and counter the threat from digital native competitors. Meanwhile, consumer behavior will be hard to predict. There have been examples of consumers paying a premium for virtual products based on artificial scarcity, but once the metaverse is more established, will such behaviors continue?
Many questions remain unanswered, and exactly how the metaverse evolves is yet to be seen. Still, two things are for sure: the implications for businesses will be profound and early adopters will reap the greatest rewards. Of course, seizing the opportunities will not be without challenge or even a measure of risk, but with a $13 trillion economy in the making, ignoring them could be the greatest danger of all.
source: Arab News
