All We Need to Know About the Metaverse

Technology frequently produces unique surprises that nobody can predict. Recently, the term Metaverse has taken the digital world by storm. It has been a hot topic of conversation with both Facebook and Microsoft staking claims on the ‘next big thing’. Although tech enthusiasts have a vague sense of what things currently exist in the world of Metaverse and the companies that are investing in the idea, we still do not know what it actually is or could turn out to be in a real sense. In other words, the meaning of Metaverse differs for people who are exploring the space. There are numerous speculations and theories on the topic with some suggesting it as the next evolution of the internet known as ‘Web 3.0’ while others visualizing it as imagination that mimics the real world. Everyone now wants to know what it is, how it works, and what does the future hold for us??

What Does ‘Metaverse’ Mean?

The term Metaverse does not really refer to any one specific type of technology but rather a broad shift in how we interact with technology. It can be best described as a network of 3D virtual worlds focused on social connection and simulated digital environment that can include virtual reality (VR) - characterized by persistent virtual worlds that continue to exist even when you are not playing; augmented reality (AR) - that combines aspects of the digital and physical worlds; blockchain technology; 3D holographic avatars; video, and other means of communication. The metaverse is the convergence of two ideas - virtual reality and a digital second life. Through VR, AR, or on a screen, Metaverse allows an overlap of one’s digital and physical lives in gaming, wealth, socialization, productivity, shopping and entertainment. It focuses on the concept of presence as a defining factor - feeling like you are really there along with other people who are really there with you too.

Origination & Rise of the Hype

The term Metaverse was coined by Author Neal Stephenson in his 1992 science fiction novel Snow Crash, in which he envisioned lifelike avatars who met in realistic 3D buildings and other virtual reality environments. The novel Ready Player One by Ernest Cline, which was later made into a movie by Steven Spielberg, also helped popularize the idea of the Metaverse. The most common conceptions of the Metaverse stem from science fiction, similar to those visualized in movies like Ready Player One and The Matrix. Ever since, various developments have transpired and shaped the evolution of Metaverse, especially in online game universes such as Fortnite, Minecraft, and Roblox. In addition to gaming, it is likely to take many forms including online communities and business meetings/conferences. In the Metaverse, people can use digital avatars to represent themselves and communicate with each other. Users can virtually build communities, use digital currency to buy clothes, accessories, etc., and travel through the digital universe using a virtual reality headset and controllers.

COVID-19 has accentuated the use of digital platforms while also normalizing more persistent and multi-purpose online engagement and communication. It is the combination of technological, social, and economic drivers that have resulted in the significantly growing interest in the Metaverse. Interestingly, Metaverse did not become a buzzword until Facebook changed its name to Meta in October 2021. According to GlobalData, mentions of the term Metaverse increased by more than 135% in Q4 2021 earnings calls as Facebook went ahead with rebranding itself.

How Close Are We to the Metaverse?

The rise of the internet has catalyzed many services that are leading the way to the creation of the Metaverse. Recently, interest in digital ownership has increased significantly with the rise in usage of VR/AR-based online games, non-fungible tokens (NFTs), and cryptocurrencies. The concept of a Metaverse is not a new one but rather a linear progression. The idea of a centralized virtual universe, one that is parallel to the physical world, already exists in today’s world. The idea has traversed into the mainstream through popular online, multi-player, role-playing games such as The Sims, Second Life, Axie Infinity, Fortnite, Minecraft, and Roblox. Notably, in blockchain-based games, players can turn the time they spend into cryptocurrency. For instance, in Axie Infinity, players can buy, train and breed Pokemon-like creatures that are themselves NFTs, each one registered on the Ethereum blockchain. In the game, an active marketplace allows the players to sell the creatures for cryptocurrency. The game ‘World of Warcraft’ also offers a persistent virtual world where players can buy and sell goods. On the other hand, Roblox houses several user-generated role-playing games such as Bloxburg and Brookhaven, where users can build homes, work, and play out realistic scenarios. Founded in 2004, Roblox is now valued at more than US$ 45 billion after going public in 2021. ‘Second Life’, a game launched in 2003, is a virtual world where users can buy land and spend actual money on customizable clothing. Similarly, ‘Minecraft’ - a Microsoft-owned virtual universe equivalent of Legos - allows players to create their own digital characters and build whatever they desire. With more than 140 million monthly active users as of 2021 end, the game gained in popularity among the youth who had to rely more heavily on virtual connections during the pandemic. Some of the other popular Metaverse games include Horizon Worlds and Rec Room, Sandbox, Decantraland, Illuvium, etc. From a social perspective, the development of such immersive virtual experiences through games is helping people to build communities based on shared values, and express themselves in more authentic ways.

NFTs, a digital asset based on the same blockchain technology used by cryptocurrency, plays a big role in the popularity of the Metaverse. While most of the NFTs are a part of the Ethereum blockchain, other blockchains such as FLOW and Bitcoin Cash have started to support them as well. This helps in making NFTs unique in the sense that the blockchain makes it easy to verify its ownership by giving exclusive rights to the owner. The owner/creator can also store specific information inside them, including their signature in an NFT’s metadata. Instead of currency, an NFT can also represent a piece of art, a song or digital real estate. Thus, an NFT gives the owner a kind of digital deed or proof of ownership that can be bought or sold in the Metaverse. NFTs can be bought on a variety of platforms such as OpenSea, SuperRare, Nifty Gateway, Foundation and Rarible.

Companies Invested in the Idea

Below are some of the several companies who have already made their Metaverse visions a reality:

Facebook: Mark Zuckerberg believes that Metaverse could replace the internet with the next platform and medium of communication becoming even more immersive as it might involve one’s digital avatars. Facebook’s purchase of Oculus in 2014 was an early indication of where Zuckerberg’s vision of Metaverse. During the Meta announcement, Zuckerberg noted that Facebook aims to accelerate the development of the fundamental technologies, including social platforms and creative tools, required to bring the Metaverse to life. The company now plans to spend US$ 10 billion over the next year on technologies to build out its vision of the Metaverse.?Facebook launched ‘Horizon Worlds’, a VR space that users can navigate as an avatar, and tools for developers to create additional virtual worlds. Meta also announced new tools to help people build for the Metaverse, including ‘Presence Platform’, which will enable new mixed reality (MR) experiences on Oculus Quest 2, and a US$ 150 million investment in immersive learning to train the next generation of creators.

Microsoft: Going beyond using holograms and offerings such as Xbox Live, which already connects millions of video game players across the globe, the company is developing mixed and extended reality (XR) applications. The software giant's online meetings platform Microsoft Teams is working on building a Metaverse called ‘Mesh’ for Microsoft Teams that is expected to be launched this year. The new service lets users in different locations join collaborative and shared holographic experiences during virtual meetings. This builds on the Mesh for Microsoft platform built for developers that include a suite of AI-powered tools for avatars, session management, and holoportation - a 3D capture technology that lets users reconstruct and transmit high-quality 3D models of people in real-time – among other uses. Microsoft has already been working with Accenture to create Mesh-enabled immersive spaces and digital avatars. The company is also working on explorable 3D virtual connected spaces for retail and workplaces. The US Army is currently working with Microsoft on an AR Hololens 2 headset for its soldiers. Recently, Microsoft cited the Metaverse as a reason for acquiring game developer Activision Blizzard, which would provide building blocks for the futuristic idea.

EPIC Games: Epic Games, makers of the online game Fortnite that has more than 350 million users, and the Unreal Engine software for game developers, planned to stake a claim in the Metaverse following a US$ 1 billion round of funding in 2021 with participation from the Sony Group worth US$ 200 million. The company has held immersive concerts by the likes of Ariana Grande and Travis Scott, movie trailers, and music debuts. It is also developing photorealistic digital humans with its MetaHuman Creator, which could be how one customizes their digital doppelganger in future open-world games. Epic Games aims to provide a virtual communal space for users to interact with each other.

Amongst some lesser-known companies that have launched their own online worlds include ‘Second Life’, which is in its second decade as an alternate reality, being founded in 2003. ‘Metaverse Properties’, the world's first virtual real estate company, acts as an agent to facilitate the purchase or rental of property or land in several Metaverse virtual worlds including Decentraland, Sandbox, Somnium, and Upland. Its offerings include conference and commercial spaces, art galleries, family homes, and hangout zones. Other notable mentions include Nowhere which offers temporary virtual spaces to hold concerts, festivals, reunions, and conferences. The Windmill Factory, the New York production company which began developing the platform more than a year ago, has done projects for Lady Gaga and Nine Inch Nails. Recently, the Sensorium Galaxy opened the first two of its planned galaxy of various connected online worlds. Another company called Prism offers musical activities and events such as concerts, virtual DJs, and bands playing in futuristic landscapes.

Dubai's VARA Becomes the First Regulator to Enter the Metaverse

Dubai's Virtual Assets Regulatory Authority (VARA) has become the world's first regulatory authority to enter the metaverse with the establishment of its MetaHQ.

VARA's MetaHQ will utilize The Sandbox, an Ethereum blockchain-based application, that will allow its users to create, sell, and purchase digital assets. With MetaHQ, VARA aims to make the digital space more accessible to industry leaders, other regulatory authorities, and virtual assets providers that can help shape the future of Dubai's digital economy.

With these regulations and more, Dubai maintains its position at the forefront of the digital race. By making the metaverse more accessible to society, at large, Dubai's VARA will continue to create opportunities for companies in the future.

What Can We Expect in the Future?

Metaverse has not only created opportunities for new companies to offer services to its users in the parallel universe, it is now witnessing established brick and mortar players also jumping into the space. While productivity platforms are growing with Facebook and Microsoft announcing new ways to collaborate in the simulated world, brands such as Nike is preparing to sell virtual sneakers in the near future. In December 2021, Nike acquired RTFKT - a start-up that makes virtual sneakers and digital artifacts using NFTs, blockchain authentication and augmented reality. Earlier, Nike teamed up with Roblox to create a virtual world called ‘Nikeland’ - a digital world where Nike admirers can play games, connect and dress their avatars in virtual apparel. Skateboarding shoe company Vans has teamed up with Roblox to create the ‘Vans World’ - a virtual skateboarding park where players can dress up in fresh Vans gear. Roblox has also opened a limited ‘Gucci Garden’, where users can try and buy clothing and accessories for one’s virtual self.

Metaverse could also translate to a digital economy, where users can create, buy, and sell goods. In idealistic visions of the metaverse, it is likely to be interoperable, allowing users to travel and even take virtual inventories and items from one platform to another. As more consumer spending shifts to virtual goods, services, and experiences, we might also see further shifts in where we live and the infrastructure built. It is widely speculated that even governments are actively exploring the space and may extend their reach into the Metaverse. For example, Barbados plans to open a diplomatic embassy in the Metaverse, called ‘Decentraland’ in the online world. As the Metaverse expands, the space will offer a hyper-real alternative world in which people to coexist.

Back to the Reality

While the idea of being able to engage in a virtual world has been around for decades, a Metaverse where lifelike interactions and truly immersive experiences are possible is still a distant reality. Despite the current obsession with the idea, Metaverse still needs a lot of work, especially if it really is to become ‘the next internet’ as envisioned by Mark Zuckerberg. It will take some years for companies like Microsoft and Facebook to accurately capture user expression, body language and voice quality since very few users have access to VR specs and motion capture gloves. With technologies such as VR and AR being present for a few years now, they have not yet become seamless enough to be as common as smartphones and computers. The biggest obstacle to Metaverse becoming a reality could be interoperability. There are technical challenges such as bringing an asset from one graphics engine to another, and legal and commercial challenges too such as intellectual property rights. Beyond that, people have to be persuaded that this is something they want. While the science-fiction appeal of such a virtual universe might be appealing but does it have enough to keep up the desire to spend time in the parallel space. Although the future of Metaverse is fascinating in more than ways that enthusiasts can imagine, there's no guarantee that people will want to get as involved in a virtual event, gathering, conference, and office or even represent themselves through digital avatars in platforms such as Microsoft Teams or Zoom calls.