Defining the Metaverse

The Metaverse is already here

The relationship between humanity and technology is undergoing radical and irreversible change, and it is doing so at an accelerating pace. At the forefront of this progress, we are all witnessing the ‘Metaverse’ emerge as the next candidate version of the Internet, but a working definition of this transition remains elusive. For now, the generally accepted vision for this Metaverse depicts a highly immersive shared digital experience, but we will argue that the scope of disruption far exceeds the technology itself. A more comprehensive definition for this paradigm shift must encompass the technological, social, and economic drivers to properly contextualize the anticipated magnitude of impact to society.?Product and Business leaders can use this evolving definition to make strategic choices about where they would like to play, and how to capitalize on the new business models that will emerge from it.

Many analysts state that the Metaverse is still on its way, but we believe that it is already here. Each day our physical selves have social interactions that are confined to a handful of people, however, in a post-covid world our digital presence on social and work platforms such as Instagram, Twitter, TikTok, and Zoom, have blurred all traditional geographical and spatial barriers. We have become omnipresent in an increasingly persistent digital world offering more than just shared spatial awareness. These new experiences allow us to also craft a unique social identity, empower a strong sense of individual agency, and to participate in nascent digital marketplaces (DeFi and NFTs).

This is the first in a series of articles that will attempt to formalize this definition and provide the reader with a timeline to forecast the scale and market cap of this disruptive technology. Following this, we will classify the 7 layers of the Metaverse value chain currently being innovated.

Defining the Metaverse

The 'Metaverse' was coined by Neal Stephenson in his Science Fiction novel Snow Crash (1992). In this book, people used avatars of themselves to explore the online world, often as a way of escaping their present dystopian reality. The textbook definition courtesy of Wikipedia explains it as

"… a collective virtual shared space, created by the convergence of virtually enhanced physical reality and physically persistent virtual space, including the sum of all virtual worlds, augmented reality, and the Internet."

A more comprehensive definition of the Metaverse must go beyond the technology that enables it, and incorporate the socioeconomic incentives that are propelling it forward. If the current internet (web2) is mostly about transactions and access to information, the next Internet (web3), or Metaverse, places the focus on activities instead. The following 5 properties broadens the definition to illustrate the Metaverse at the center of a paradigm shift that will have irrevocable impacts on how societies evolve.

1. Activities: Making immersive experiences mainstream, whether it is online shopping, hosting a work meeting, teaching a class, playing games, or creating content experiences like a concert. The Metaverse provides a location for us to share experiences that cannot be easily held in their physical equivalent.
2. Immersive places:?The activity is conducted in a shared digital place with us at the center. Technology wearables will blur the distinction between the real and the virtual.
3. Creator-driven: Both the tools to create your own activities, as well as creator economies that enable users to add and trade assets, will remove adoption friction and allow the Metaverse to scale quickly. The absence of intermediaries to gate content or extract rent, removed by decentralization and self-sovereign ownership, adds further momentum to the creator economy.
4. Link and embed emergent content: The current internet is navigated via hyperlinks that presents us with user embedded content. The future internet will possess the connective tissue to link and embed immersive and emergent content. From information to activities. From static data to emergent data. A google search equivalent will have to now accommodate 3 or 4 orders of magnitude in scale of emergent data in the physical and digital realms, as well a new discoverability mechanism for quickly finding the activities you are interested in.
5. Next Gen Technology: The scaled connectivity of the Metaverse will reveal a seamless and real-time convergence of physical and digital data with the innovations of Edge Computing, 6G latency free networks, Internet of Things, and haptic hardware that untethers the user experience from the old keyboard and mouse interface.

Stages of Adoption

A 2022 study by Gartner concluded that maturity won't occur before 2030. It is estimated that by 2026, 25% of people will spend at least one hour a day in the metaverse for work, shopping, education, social media and entertainment. According to analysis from Emergen Research, the Metaverse was valued at $48 billion in 2020 and would reach $829 billion by 2028. Recently, Mark Zuckerberg's stunning pivot from Facebook to Meta represents the significance and the amount of capital currently positioned to place a large bet on this paradigm shift.

The disruption to existing business models represented by the Metaverse requires every organization to evaluate its competitive position in the evolving landscape. It is expected that some incumbent and highly centralized tech corporates will be replaced throughout the next decade by a new breed of Metaverse Digital Organizations (DOs), and product leaders must begin thinking about where and when they want to enter.

7 layers of value chain

The following 7 layers (modeled by Jon Radoff) provide the reader with a guided tour through the individual components that add up to the Metaverse's value chain, encompassing tech infrastructure, content, and the activities it will enable.

Experience

The Metaverse is often thought of as a 3D space that will surround us, as depicted by movies such as 'Ready Player One'. A better way to understand 'experience' is through the dematerialization of physical space, distance, and objects. An increasingly expanding digital world that is not constrained by physical limits, allows formerly scarce experiences to become abundant. Be a Jedi and rid the Universe of the oppressive Empire - Old Republic steam game on your PC. Attend a concert held by a well known jazz artist and always have front row seating - on your Oculus in Sandbox. Create an engaging game and monetize it on a multiplayer platform - Roblox on your Console. Brainstorm with your work peers in an open boardroom situated on a tropical island - Frame on your PC.

The dematerialization of space in the Metaverse provides us with the opportunity to create infinite digital experiences, digital economies and social networks. Further developments into the Metaverse will be driven by these experiences, and the empowerment they offer to individuals and social groups to solve the problem of physical scarcity with digital assets and marketplaces.

Discovery

Discovery represents a vast ecosystem of inbound (the person is seeking information) and outbound (marketing not specifically requested) services. Typical inbound services include app stores and search engines. Outbound is defined by display advertising, promotions across all media, and notifications on your phone. These are the traditional forms of discovery, but how will they change in the Metaverse?

It is anticipated that community-driven content will become a far more cost-effective means of discovery than most forms of marketing. Online social hubs that cater to a specific domain of interest become the replacement for an internet-wide search engine that indexes all digital content. An emergent example of this is non-fungible tokens. The NFT, as owned and tradeable content, becomes the marketing asset. Membership in a specific domain or community of interest is also gated by the ownership of the associated NFT. In this manner, content marketplaces will become an alternative to application marketplaces as a means of discovery.

Technology that incorporates real-time presence as a discoverable form of content will also benefit. This is increasingly important in a Metaverse where more of the value will be derived from their interaction with friends through shared experience, than the ability to search for and find information. Existing walled gardens such as Steam, Xbox and PlayStation, allow you to see what your friends are playing right now, and joinable with a simple button click. Clubhouse offers a similar opportunity for social interaction on topics a curated list of people find mutually interesting. Roblox allows a circle of friends to quickly jump into a game and share an engaging experience.

Tooling that gives community leaders and content creators frictionless apps to launch activities that people want to join is essential. On the consumer end, real-time presence detection that searches the entire span of activities in the Metaverse is the greatest opportunity today for innovation in the Discovery layer.

Creator Economy

The Metaverse is not solely the virtualization and digitization of the real world. It is also the emergence of a new socioeconomic shift towards the democratization of value, and the content creator sits at the center of it. The prior Internet was defined by media 'stickiness' around a few monolithic organizations, where customers were the consumers of content. In the Metaverse this relationship is blurred, because everyone is a content creator and a content amplifier. Where content once represented curated static data uploaded to a website, it now represents an ongoing stream of real-time experiences, conversations, art, and the flow of value between anonymous peers on a blockchain. The seamless absorption of concurrent experiences digitized in real-time into the Metaverse, and immediately discoverable, creates a content flywheel allowing participants to search, find, and teleport to desired venue as easily as thumbing through a table of contents.

This layer contains all the technologies that creators use to craft experiences that people want to engage in. Prior content economies followed a predictable path from a start in Pioneering tools and bespoke implementations, to Engineering automated workflows that shift the focus away from technology and towards crafting content. The final step removes technology altogether, and allows for a Cambrian explosion of Content creators to focus on the creative process. Today you can launch an e-commerce website in Shopify within minutes without implementing a single line of code. Future Metaverse tooling for the creator economy will evolve a similar removal of dependencies on technology.

Spatial Computing

Spatial computing represents a set of technologies that incorporates real and virtual computation, eroding the barriers between physical and digital worlds. Simon Greenwald (Spatial Computing) describes it as "wherever possible the machine in space and space in the machine should be allowed to bleed into each other… human interaction with a machine in which the machine retains and manipulates referents to real objects and spaces." You may visualize this as the removal of the traditional boundaries represented by the screen and keyboard as a window into the Metaverse experience, and where the computer blends into the environment.

Every day, millions of people use spatial computing without realizing it. Whether they are using GPS to map themselves to a destination, or speech recognition at home to set a reminder, or a smart phone scanned QR code to visit an art auction page. Natural language processing and deep neural networks are required for humans to interact with technology that grows increasingly invisible, by integrating their user interfaces into the physical environment.

Current innovators in Spatial Computing include Unity and 3D engines to display geometry and animation in Virtual, Augmented, and Mixed reality software. Niantic incorporates Mixed reality technology to integrate mapping and geo-spatial data on a mobile devices to allow players to capture Pokemon in the outside world. Voice and gesture recognition from Google, Apple and others, allowing users to interface with the internet without the use of hardware. Products like Apple Watch and other biometric devices fill the category of Internet of Things, and are used to provide data integration between the user's activity and the Spatial computing layer that interprets it in real-time.

Decentralization

The initial design of the Metaverse decentralizes access for all participants, guaranteeing them permissionless use without the counterparty risk of a centralized host. However, existing Big Tech corporates will pursue this design space by creating walled gardens to gate and monetize access (example: Meta). If the growth trajectory of the Metaverse will provide exponential benefits to society, this will only be possible if the rate of experimentation and innovation can match it. Systems that are built on the principles of open-source contributions, designed for interoperability and decentralized access, provides the greatest freedom for creators to build tomorrow’s applications and services. ?In this economy, self-sovereignty, or the right to create, own, and trade your digital assets without intermediaries collecting fees, accelerates this creator economy flywheel. ?The resulting widespread democratization?of value, allows more creators to participate in the market, boosting the power-law distribution of economic opportunity for everyone. This can only occur if the Metaverse remains decentralized.

Distributed computing with blockchain technology enables the exchange of value between smart contracts and self-sovereign identities, and provides the technical foundation for secure decentralization. This area of innovation is central to the Web3 narrative, and is partially defined as the removal of centralized control and custody from all markets - decentralized financial (DeFi), assets (NFTs), media content, gaming, etc.

Human Interface

Human Interfaces are the front-end of Spatial Computing (above) and are identified as devices that are getting closer to our bodies, transforming us into cybernetic beings. Whether for good or ill, the next phase in human sociotechnical development is remarkable for the complete immersion this 'connectivity' will soon provide. Most of us can no longer function effectively in an increasingly interconnected world without our smart phone - highly portable and always connected.

Further miniaturization, more powerful sensors, embedded edge computing devices that remain persistently connected (IoT), AI, and zero-latency access, will only increase in power and scope. A world where we are seamlessly connected to the Metaverse, immersed without the friction of existing HI devices, and sharing digital experiences without the burden of latency, is fast approaching. Soon we will have smart glasses that can perform all the functions of a smartphone along with AR and VR applications.

Next generation user interfaces will seamlessly blend physical and digital realities, create full immersion through haptics that provide input to all of our body's senses, and offer us immediate and ubiquitous access to available experiences and knowledge with a simple gesture. Beyond smart glasses, the industry continues to innovate with 3D printing for wearables integrated into clothing, miniaturized biosensors that can be printed on your skin, and neural interfaces that can interpret and enhance cognitive functions (Neuralink).

Infrastructure

Enabling untethered functionality, zero latency, miniaturization of wearables, better batteries, and more powerful semiconductors, are all required at the infrastructure layer of the future Metaverse. Persistently connected and interoperable networks among a growing array of IoT devices, take Edge Computing further away from traditional cloud services and closer to the Human Interfaces that depend on them. Although 5G gets us closer to this watershed level of technology capability, the anticipated 6G network stack represents a necessary increase in speed by an order of magnitude.

6G innovation is now being pioneered by Apple, Ericsson, Huawei, Nokia, and many more. Ongoing semiconductor research continues to be led by Intel, Samsung, IBM and others.

Metaverse Market Map

The following Market Map demonstrates the existing interest and investment in each of the 7 Metaverse layers introduced above. Recent estimates highlight that Trillions more USD of private equity has already been invested into the Metaverse, and this is forecasted to grow exponentially over the next decade.

References

• https://www.verses.io/blogs/what-is-spatial-computing-and-how-is-it-revolutionizing-our-world
• https://medium.com/building-the-metaverse/the-metaverse-value-chain-afcf9e09e3a7
• https://www.gartner.com/en/articles/what-is-a-metaverse
• https://www.emergenresearch.com/industry-report/metaverse-market