✨Metaverse✨. . . it’s got to mean something more than various iterations of Mark Zuckerberg’s avatar, right?
As part of INSEAD’s SSUP, we – Chelcie Poole, Nikita Bokil and Cameron Smith – formed a team with the mission of cutting through the hype and exploring how the metaverse and extended reality (XR) ecosystem is developing in Europe. Across 4 weeks, 7 countries, and 27 thought-provoking interviews with startups, venture capitalists and industry experts, here are our top findings.
1. The metaverse is not an all or nothing
Media often hypes the tussle of 2 tribes: those who fully subscribe to the metaverse and every element imaginable that it could entail, and those who baulk at the idea of using a VR headset for fear of it replacing childhood experiences of the great outdoors. The truth is the concept of the metaverse is a spectrum, with varying degrees, moments, and modes of engagement. In some cases, such as gaming, an all-in multi-sensory virtual experience is desired. In others, a more blended situation is required, such as augmented reality to overlay digital information into the physical world and enhance your ‘real life’ experience.
From our discussions, both would be considered metaverse experiences. While exact definitions varied, the consistently overlapping phrases used to describe metaverse included “evolution of the internet”, “transition from 2-dimensional to 3-dimensional”, and “immersive experiences.” Accordingly, our derived perspective is that the word “metaverse” describes a range of enhanced digital experiences, made possible predominantly by spatial computing, augmented reality, and virtual reality. Yes, it’s vague – but it reflects the current opinion of those building and investing in it.
No one we spoke to dreamt of a future where we would all be hooked up to a metaverse matrix; each person described metaverse experiences as having a time and place, and users can choose to engage as much or as little as they prefer at different moments. We recommend against buying into the black-or-white thinking when there’s so much value to be gained in the grey.
2. What are the biggest hurdles to adoption?
What needs to happen for metaverse to become mainstream? Here were the top suggestions:
- It needs to add value: slapping a 3-D store onto your existing e-commerce site without much modification does not make for a quality metaverse experience. Companies need to steer away from the gimmicks towards value-added experiences that are better achieved through the use of immersive digital technologies. Great examples we have come across lie in entertainment, education, training and assisted processes (such as Proximie’s AR surgery), however we foresee there to be many more in the future. The big question to ask yourself when developing a quality metaverse solution is “Is this the best way to do this? Is this not better delivered in any other way?”
- UX needs to be drastically improved: why do people keep coming back to Apple? It’s not because we enjoy writing an ever-growing cheque for a smartphone every couple of years; it’s more often than not down to their quality and reliable UX. High-quality UX is irresistible, and it’s also a key competitive differentiator. The UX of metaverse experiences is still on its way, and consumers will pressure it to get where it needs to be fast. As soon as we have high-resolution, quality experiences which are easy and seamless to access, we predict many more people will have fewer mental obstacles when it comes to using it regularly.
- It needs to be accessible: partaking in metaverse experiences is currently prohibited by a variety of factors, from the high cost of VR headsets, to unfamiliar user controls, to lack of knowledge on where to even go. We’ve also seen that using the word metaverse can be polarizing. For mass adoption, both access to the technologies and acceptance of their usage will be required.
3. So, when will we get there?
For simplicity, we defined ‘there’ as the timeline for metaverse experiences to achieve mainstream consumer adoption. As you can imagine, the answers varied a lot, especially between software and hardware professionals.
Software professionals predicted a range of 3 to 10 years. While it seems there is no consensus, what they did agree upon is that early adoption would predominantly come from enterprise and Gen Z users. Many also believed adoption would take place in a phased approach, with AR reaching the masses first as the hardware for VR and haptic technology progresses.
On the other hand, hardware professionals predicted a much longer range of 10 to 15 years. The key reasons cited include high costs and timelines of R&D, less availability of funding for hardware startups, development required across the technology ecosystem – from infrastructure to streaming to graphics processing to headset size –, and ultimately ability to provide an affordable cost to mass consumers.
With all that being said, we’re well on our way.
4. Blockchain is polarizing.
Going into our trek, we had a couple of assumptions, and one big one was that blockchain would be considered an essential building block of the metaverse. And we were surprised to find that this was not the general consensus! In fact, opinions on blockchain varied strongly about its necessity for metaverse experiences, from enabling transactions to digital ownership. Differences of opinion stemmed from varied definitions of the metaverse – interoperable, decentralized entities, or a mix of centralized and decentralized worlds. For those who view decentralization as integral, it won’t be achieved without interoperability, and blockchain may indeed have a valuable part to play in that.
Additional differences of opinion stemmed from the understanding of blockchain technology. With its almost synonymous ties to cryptocurrency, the perception of blockchain’s value proposition has taken a hit with the scandals, volatility and hype surrounding the likes of Bitcoin and Ethereum. We would do well to de-couple the two in our mind’s eye to objectively assess its place in tech and the future economy.
5. Do we need Big Tech?
The answer is yes – but perhaps not in the way you’d expect. While competition is high in software and winners are yet to emerge, it’s in hardware and compute infrastructure where Amazon, Apple, Google, Meta and Microsoft will really flex their muscles, and have to, if the metaverse is to have a future.
Hardware development is a long and costly game, requiring deep pockets and a lot of patience. The success of every software-focused startup we interviewed depended on the success of hardware, yet none of them had resource nor fiscal capacity to build expertise in this space. With venture capital investment in AI and Deep Tech demonstrating a steady downward trend in the past few years, it’s uncertain whether the road is too bright there.
Enter Big Tech: with Meta weighing in on acquiring eye-tracking startup AdHawk, Google acquiring display tech startup Raxium, Microsoft’s $22 billion US Army Hololens 2 AR Deal, and Apple tipped to launch their first AR/VR headset in the new year, these companies have the funds, risk appetite and track record to invest in, develop and distribute products that consumers trust, which take the next big leap forward for virtual experiences, and do so at a more accessible price.
We hope these have been insightful! If you have comments or questions please feel free to leave them below or reach out to us. Continue on for Part 2!
Written By: Nikita Bokil & Chelcie Poole