A Year in the Metaverse
First published in Digital Nation on 17 May 2022
Despite spectacular crashes in the crypto markets in the last two weeks, and the retreat of day traders and, frankly grifters from the NFT secondary markets, the internet as we know it is changing, and executives should pay attention to the opportunities in this transformation.
Web3 — the third iteration of the internet — is seeing the rise of blockchain adoption, non-fungible tokens (NFTs), smart contracts, virtual and augmented reality, and yes, cryptocurrencies, and many businesses are already investing in Web3 technologies.
Over the next 12 months, Digital Nation Australia will be examining the emerging technologies, use cases and business models organisations will need to understand as the next great wave of innovation washes over the market – welcome to our year in the metaverse.
Some of the technologies such as digital twins, augmentated reality and even blockchain are already familiar to executive leaders, but the discussion of others like DeFi and DAO are limited to the cutting edge. That will change quickly.
Web1, Web2 and Web3: The transforming internet
Lachlan Feeney, CEO of blockchain implementation consultancy Labrys told Digital Nation Australia that the transformations that have occurred in the three iterations of the internet can be summarised in three words: read, write and own.
“If you go back to Web1.0 all you could really do was read. You think of the early days of the internet, you could go to websites and you could read information on those websites. You couldn’t post anything. You couldn’t add comments, upload photos, these sorts of things. They were purely informational,” he said.
“Then we had the Web2 revolution where things like social media platforms and YouTube, and all of these sorts of types of platforms where users could actually upload their content to the web.”
According to Feeney the key difference between Web2 and Web3 revolves around ownership, where individuals will actually own the data that they upload to the internet.
“So Web1.0 is read, Web2.0 is read and write, and then Web3.0 is read, write and own.”
Feeney said that in the past, discussing Web3 at an executive level would leave you “laughed out of the room.” But these days, executives are beginning to pay attention.
“Now that the executive level realises that blockchain and Web3 is going to be important to their business over the next decade, but they have really no idea where to start.”
Web3 and the metaverse: What’s the difference?
Matt Coates, Accenture ANZ cloud-first lead told Digital Nation Australia that the difference between Web3 and the metaverse is about visibility.
“Web3 is less visible and relates to how we move and register data through the internet. While today’s data movement is controlled and centralised by a few players on the internet, with Web3, the process is decentralised, allowing users to control their online identities and digital assets via a decentralised approach on public, open blockchain technology,” said Coates.
The metaverse, however, is how we experience the internet, and is highly visible, he said.
“Today, we navigate the internet mainly via separated 2D websites and applications. The Metaverse will re-platform our digital experiences. Instead of viewing the internet as a disparate collection of sites and apps, Metaverse’s efforts envision a persistent 3D environment, with its sense of place and where moving from work to a social platform is as simple as walking across the street.”
Coates named Meta (formerly Facebook), Microsoft and Google as some of the big tech players involved in the infrastructure around building metaverses and virtual worlds.
“For many of these companies, like big tech and gaming, the metaverse will represent a totally new business model. Other companies are looking, many times helped by service providers, for innovative commercial models to monetise the metaverse or use it as a way to develop products or save costs,” he said.
Lendlease — Planet A
Global construction giant Lendlease is one business that has invested in Web3, by creating their own metaverse, called Planet A.
According to Michelle Zamora, global head of marketing, communications and corporate affairs at Lendlease Digital, “The definition of a metaverse, it needs really two components. One is that the digital environment represents the physical environment, and two, it creates a way that people can experience that place in both the real world and the digital world.”
Planet A is a metaverse where users can virtually and remotely experience placemaking, starting with the Milano Innovation District (MIND) in Italy.
Using a virtual reality headset, users will be able to interact in MIND, and play sustainability-focused games that allow them to understand the climate impacts of an urban environment.
“The first game is Waste Ninja, and it’s kind of like Fruit Ninja where you go in there and all this rubbish gets thrown at you, and you’ve got to use your breadstick to throw it into the right bin and in doing so, it’ll tell you how much carbon you’ve saved,” said Zamora.
“The second game is one where you go into one of the real buildings at MIND and you’ve got to make decisions on how to use data sensors and which data sensors to use to improve, not only the greenness of that building, but the comfort levels of people.
“There will be an avatar that is looking awfully cold. How do you make sure that they’re a little bit warmer whilst also saving on the carbon?”
Ciarán Hennessy, chief software architect at Lendlease Digital told Digital Nation Australia that gamification was crucial to this strategy.
“One of the things in the metaverse, even though it can look a little bit playful, that’s actually quite purposeful because what we want to be able to do is empower people to be able to play and explore and understand how this complex environment works, rather than just using it as another tool or another engineering outcome,” said Hennessy.
“These types of innovations, and these changes we can test and we can look at the impact and we can also understand whether people find them meaningful before we build them into the physical fabric, because that could take 10, 15, 20 years until they get into the real place,” he said.
Cryptocurrencies and NFTs
According to Nick Abrahams, global co-leader of digital transformation at Norton Rose Fulbright, board and c-suite interest in Web3 and particularly cryptocurrencies has skyrocketed in the last year.
“I would have a conversation a year ago about crypto and the response would be, ‘If we want to buy some drugs on the dark web, we’ll give you a call about crypto’, but now they’ve moved significantly,” he said.
Business leaders are now asking if they should start accepting crypto transactions, like Gucci and Starbucks, or if they should hold crypto on the balance sheet as a diversified corporate treasury strategy, like Tesla, Block (formally Square) and KPMG.
“A lot more focus on that diversification proposition,” he said.
According to Abrahams, the NFT spectrum is also quickly gaining corporate interest.
“Obviously there’s the wacky end of the NFT spectrum, but there’s a real end of it,” he said.
In the collectibles space, sporting organisations including the NBA have seen huge success with their Top Shot NFTs, with USD$700 million spent on these last year.
At home, Tennis Australia, Cricket Australia, the AFL and Australia Zoo have all recently dropped their own NFT collectibles.
Expanding on the traditional loyalty program, NFTs have been picked up in high-end fashion world by Dolce and Gabbana, Prada and Zara, as well as in consumer facing retail with drops from Coke and Budweiser to name a few.
Web3 business models: The creative economy
Digital Nation Australia spoke to to Joan Westenberg, founder of the venture capital fund for NFT investments Metapunk, founder of the creative agency Studio Self, and head of marketing at decentralised technology network and community MODA DAO.
According to Westenberg, the biggest opportunities that Web3 offers are for the creative economy.
She describes the current, Web2 economy for creatives as “an exploiter economy”.
“It’s money that goes through to large corporations and tech companies like Facebook and so on where they profit from work of creatives while very rarely actually supporting them.”
Westenberg believes that NFTs create a business model for musicians to profit from their music. “There is a huge opportunity for creators to start building profitable careers in this space where before they would have had to rely on advertising revenue, and pennies and scraps from the table from all the billion dollar corporations,” said Westenberg.
Membership and access passes for exclusive content are another NFT usecase that is emerging in this space.
“We’ve seen shifting business models around media where people have tried to use payment gateways and paywalls and so on, and that hasn’t quite worked. But in a world where you can have subscribers owning a token that has value that can give you access to media, that’s an interesting business model,” she said.
According to Colina Demirdjian, co-founder of one of the world’s largest emoji applications, Moji Edit, there is also profitable opportunities in the Web3 rental market.
“If you build a property and you spend a lot of time in it, and you make it lavish and luxurious, what we aim for is high quality builds. You can make good revenue by hiring and leasing it out for specific events or hosting it for different entertainment opportunities,” she said.
Demirdjian told Digital Nation Australia that the metaverse will change how we interact as a society.
“Businesses will now be able to connect with their users one-to-one in a most meaningful way and have a place for them to have some sort of home for their user base.
“You’re not just creating a following that just is a number, but in reality, you get to see and meet people and you get to have that interaction that you might not necessarily have with locals in different regions, because you might not be able to reach them,” she said.
“It’s all a work in progress, but hopefully all of us as companies building the metaverse are working towards social good.”