Every industry will be impacted and transformed by the Metaverse, and the action has begun
The Metaverse is one of the hottest buzzwords in tech, and this far-reaching vision of a next-gen internet will rely upon an entire ecosystem of companies to make it a reality. An increasing number of companies are betting that consumers will soon be earning, spending, and investing their money in shared, highly immersive virtual spaces that both mimic and go beyond what’s possible in real life, according to the latest research from CB Insights.
Younger generations like Gen Z and Gen Alpha (those born after 2010) look particularly likely to embrace metaverse-style platforms, with surveys indicating that they are putting more and more value on their online identities. The metaverse vision of a next-gen internet would rely on technologies like virtual reality headsets, advanced haptic feedback, 3D modeling tools, and more to power immersive digital environments. And this tech is only getting better and more convenient – for instance, within just a few years, VR headsets have evolved from clunky setups requiring a wired connection to a spaced-out computer to user-friendly, self-contained devices.
Though a lot of things that will make the Metaverse realize the potential is still fuzzy or work in progress.The initial excitement could fade if technical hurdles prove too cumbersome or if mainstream consumers balk at investing in digital-only goods and experiences – but if it takes off then it could be a US$1 trillion+ market opportunity by the end of the decade, according to CB Insights’ Industry Analyst Consensus.
Retail lends best to the Metaverse
The retail industry is showing the maximum enthusiasm for the Metaverse. With global revenues of US$1.5 trillion, the fashion industry has the capital to experiment with virtual worlds. Beyond providing a new market to expand into, the big prize from building an early presence in the metaverse – be it virtual fashion shows or selling digital hats as NFTs – is that it could help luxury brands connect with the future big spenders in Gen Z and Gen Alpha.
Fashion brands lend themselves well to the metaverse. Already, consumers see the value of many fashion items less in the physical function they offer and more in how an item makes them feel and what it conveys about them – be it status, community, or something else. This value proposition translates directly to virtual spaces. The basic business model of designing items in-house, working with a manufacturing partner (or some form of virtualization in the metaverse’s case), and then selling to consumers through retailers doesn’t even have to change much.
The metaverse could also provide the ideal testing ground for brands to experiment with new products and suss out demand and receptiveness from consumers inhabiting virtual worlds. With virtual offerings, companies would benefit from avoiding manufacturing costs and saving time on bringing something to market. Designs that do well in the metaverse may make brands more confident about launching them in the real world. Virtual fashion and beauty trends might become so influential that even brands without a metaverse presence may find themselves incorporating some of these trends into their collections.
The lack of physical constraints in virtual worlds will even allow for new fashions that would be extremely difficult to offer in the real world. Offerings from start-ups like DressX, which sells high-res, virtual-only fashion items that can be overlayed onto buyers’ photos and videos, hint at what could emerge in the metaverse.
Haptics to sell real-world objects
The metaverse could be used to sell real-world items too. With advances in virtualization and haptics technology, consumers in the metaverse could browse items in virtual stores that very closely reflect the real-world size, shape, and even texture of a product – understanding these types of product details is currently a challenge for online shoppers often relying on just a handful of photos.
This would result in increased sales and reduce the number of returns a company has to deal with – a logistical headache that eats into margins – since shoppers could make purchases with a much better idea of what they were going to get. The metaverse could also disrupt the retail industry by opening doors to more experimentation. In the real world, designing, testing, and launching a new product or service demands a considerable investment. In virtual worlds, retailers could use low-cost digital versions of new products to test how they would be received and project the eventual real-world demand.
They could even hone plans for stores in the metaverse before implementing them in physical locations – using metaverse users as guinea pigs for store layouts, promotion placements, and more. The big opportunities for retail in the metaverse will require a substantial number of users spending lots of time (and money) in virtual worlds. This threshold hasn’t been passed yet, but early examples of stores are popping up.
The 3D virtual world Decentraland houses a digital copy of Samsung’s main New York City store. Launched in early 2022, the Samsung 837X experience allows users to earn NFT badges by engaging with Samsung products. Some visitors were even invited to take part in a virtual dance party. Though this project is mostly driven by brand positioning as opposed to driving retail sales, it hints at how future virtual stores could become active destinations for immersive, shared shopping experiences for brands.
Creating life-like sporting excitement
The global sports industry is a behemoth spanning not just live sporting events but also apparel, food, and sports equipment. However, the COVID-19 pandemic illustrated how much the industry’s dependence on live events could hurt revenue, with many professional sports leagues canceling their seasons in 2020. As a result, the sports industry began to explore virtual options for engaging with fans and replicating the excitement of real-life sports events. To promote the 2022 Australian Open, for instance, the tennis tournament partnered with Decentraland and Tennis Australia to design a replica of the tournament’s grounds and create challenges for fans to participate in.
In addition to changing how fans consume (and perhaps one day play) sports, the metaverse may open up new opportunities for sponsorships and ways to merchandise. Fans who purchase NFTs of virtual jerseys and other memorabilia could receive the items in real life, paving the way for exclusive collections available only through the metaverse. Other brands could pre-release their new collections virtually to create demand before the physical release. For instance, Adidas used the new EA Sports game FIFA Street to offer a preview of its new soccer boot, and companies could deploy the same marketing strategy in the metaverse.
This is just a snapshot of the possibilities. Every industry, from healthcare to education will be impacted and transformed by the Metaverse. The action has begun.
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