What is the Metaverse? Business Opportunities, Applications, and Challenges

Jemmy K Feb 15, 2023

In Nov 2021, since Mark Zuckerberg announced the renaming of Facebook to "Meta" to transform it into a metaverse company, the term "metaverse" has become hot.

Search volume of “what is metaverse” on Google Trends skyrocketed from Nov 2021.
Source:Google Trends

The concept of the metaverse seems cool but still somewhat illusory to most people.

So, what exactly is the metaverse and how will it change our lives?

This article will help you understand the meaning, business opportunities and, challenges of the metaverse.

What is the Metaverse?

Broadly speaking, the metaverse is a visually rich virtual space where people can work, play, shop, socialize, etc

You can imagine that you are "in" a virtual world and feeling the presence of others, plus you can customize your avatar and own digital assets. 

The concept of the metaverse is depicted in the movie Avatar released in 2009. 

In the movie, the protagonist Jake is paralyzed, but when he arrives on Pandora, he changes into a Na'vi body and he can walk and run. 

His consciousness, however, is still himself, which is a combination of virtuality (Na'vi's body) and reality (his own consciousness).

Source:BBC NEWS 

In fact, there is no clear definition of the "Metaverse" as the concept is still NEW and not fully developed yet, so opinions may vary. 

It's like when the concept of the "Internet" first came out, no one could define it clearly.

VR vs. AR

Virtual Reality (VR) and Augmented Reality (AR) can be explained better with two Chinese folk cultures.

VR means "virtual reality," which uses technology to create a 3D virtual world and allows users to experience it through sensory analogies.

If you still don't know what it means, you can imagine it as an observation of the Guan Luo Yin (觀落陰) ceremony.

It is a Chinese ritual whereby the living soul is brought to the nether world for a spiritual journey.

During this ceremony, participants must wear a red cloth strip with joss paper in front of their eyes. This is similar to the feeling of wearing a VR headset.

Source: HTC VIVE, The Storm Media

AR means "augmented reality," which refers to the use of image and image analysis technology so that the virtual world on the screen can be combined and interacted with the real world. 

If it is difficult to imagine, it can be compared to the Chinese term known as Yin-Yang Eyes (陰陽眼).

People with Yin-Yang eyes can not only see the scenes that ordinary people can see, but also see ghosts or supernatural things, and interact with them.

So what AR can do is like having Yin-Yang eyes, interacting with virtual characters in the real world.

Augmented Reality; Source: Forbes

A Short History of the Metaverse

The term “metaverse” first appeared in the 1992 science fiction novel "Snow Crash" written by Neal Stephenson.

The author created the term by abbreviating the words "meta" and "universe" to describe a virtual world, where everyone has a virtual projection of their real identity (Avatar). 

Why did it suddenly become popular in 2021, if the term appeared 30 years ago? 

There are 3 main reasons. 

  1. Some of the technologies related to the metaverse have gradually matured, such as HTC’s VR headsets.
  2. The concept of blockchain is becoming more and more popular.

Blockchain uses cryptographic and other technologies to create and store massive transaction data, which is difficult to tamper with.

Therefore, almost anything of value can be tracked and traded through blockchain, such as cryptocurrencies and NFTs, which will be discussed in more detail later.

The reason why blockchain drives the development of the metaverse is because of its "unhackability" and "immutability."

Because hacker attacks and data leakage are common in virtual environments, the security of the platform is important. 

The COVID-19 pandemic has accelerated the development of the metaverse.

Due to the pandemic, human life has changed significantly, and most people need to work remotely, resulting in a sharp increase in the need for interaction in the virtual world.

Below are the views of several celebrities on the metaverse.

Mark Zuckerberg: Metaverse is the Future of Facebook/Meta

Mark Zuckerberg, the founder of Facebook, has publicly stated that Facebook would eventually become a "metaverse company."

Regarding the definition of the metaverse, Facebook also states on its official website

The metaverse is a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you.

You’ll be able to hang out with friends, work, play, learn, shop, create, and more. 

The metaverse isn’t a single product one company can build alone.

Just like the internet, the metaverse exists whether Facebook is there or not.

And it won’t be built overnight.

Many of these products will only be fully realized in the next 10-15 years.“

Matthew Ball: The Full Vision of the Metaverse Will Take Decades to Develop

Matthew Ball is a former Global Head of Strategy for Amazon Studios.

His article about the metaverse, “What It Is, Where to Find It, and Who Will Build It,” was forged into an NFT and purchased by a collector for 100 ETH, equivalent to $460,000.

In the article, Matthew Ball mentions, 

“The Metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds and environments which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”

Matthew Ball also noted that the full vision of the Metaverse will take decades to develop, and its development revolves around 8 core elements.

Source: MatthewBall.vc

  1. Hardware: Hardware that supports various metaverse devices, including VR headsets, mobile phones, tactile gloves, and hardware used by enterprises such as industrial cameras, projectors, and tracking systems.

  2. Compute: The computing power that supports the metaverse, such as artificial intelligence, projection, motion capture, and translation.

  3. Networking: The provision of real-time connections, high bandwidth, and decentralized data transmission.

  4. Virtual Platforms: The development and operation of a virtual environment wherein users and businesses can explore, create, socialize, and participate in a wide variety of experiences (e.g., race a car, paint a painting, attend a class, listen to music).

  5. Interchange Tools and Standards: The tools, protocols, and engines which serve as standards for interoperability and enable the creation, operation, and ongoing improvements to the metaverse.

  6. Payments: Technology that supports digital payment processes, platforms, and operations, including cryptocurrencies and other blockchain technologies.

  7. Content, Services, and Assets: The design, creation, sale, re-sale, storage, secure protection, and financial management of digital assets, such as virtual goods and currencies, as connected to user data and identity.

Is the Metaverse like a Video Game?

Some might say that the metaverse is similar to a video game. 

This may be true. 

When Microsoft acquired U.S. gaming giant Activision Blizzard for $69 billion in January 2022, its CEO Satya Nadella said,

“As we think about our vision for the metaverse, we believe there won’t be just one single metaverse.

We need to support many metaverse platforms …

In gaming, we view the metaverse as a collective of social and individual identities based on a strong set of content and monetization rights that can be accessed through any device.”

Now, many companies refer to a single game or platform as a “Metaverse.”

With this definition, anything from a VR music concert to an online game can be seen as a metaverse.

In short, games can be seen as metaverses, but metaverses are not just games.

They can be MULTIPLE.

Metaverse vs. NFT

What is NFT?

NFT is the abbreviation of Non-Fungible Token.

Still a bit abstract, right? 

The so-called "fungible tokens" refers to tokens of the same value that can be divided.

For example, you can use two 50-dollar bills to change a 100-dollar bill because their values are the same. 

Digital cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) are all fungible tokens. 

“Non-fungible tokens” are also a type of digital cryptocurrency, but each token is unique, non-divisible, and irreplaceable.

Examples are any digital form of artwork such as pictures, audio files, video, etc.

These digital files were easily copied in the past but now they can be owned through NFTs.

The original creator of the artwork and the trading record will be recorded and be publicly available.

At the same time, it is VERY difficult to copy.

Therefore, whether it is an article, a meme, or a short film, it can be auctioned off like physical artwork.

In 2021, digital artist Beeple's work was auctioned off in the form of an NFT, selling for $69 million.

Beeple’s digital artwork: EVERYDAYS:  THE FIRST 5000 DAYS
Source: CHRISTIE‘S IMAGES LTD

In the same year, the first-ever tweet of Twitter’s founder Jack Dorsey was also made into an NFT and sold for $2.9 million, bought by an Iranian cryptocurrency entrepreneur.

The entrepreneur wanted to sell this NFT in April 2022. 

He opened the bidding at $48 million but ended with a top bid of just $280.

In short, NFTs are ownership certificates on the blockchain that will become the key to the economy in the virtual world

Each NFT is protected by an unchangeable, unduplicable, and undestroyable encryption key, which gives it the ability to authenticate a person's virtual identity and digital assets, which is essential for the metaverse.

The Role of NFT in the Metaverse

NFT and the metaverse are in a symbiotic relationship, where NFT enables real-world assets to generate economic value and ownership in the metaverse.

Its "non-fungible and unique" nature is also key to the operation of the metaverse.

Both concepts are relatively new, but a few companies have already found ways to apply these two concepts simultaneously, with great success.

Virtual Marketplace:

VRChat is a large-scale online VR game where players can interact and communicate with each other through virtual characters.

In such a space, it can be used as a marketplace for NFTs since sellers can easily provide links and previews for buyers, or even create assets directly in the VR environment, while buyers can decide whether to purchase.

The VR and NFT marketplace may attract brands from all walks of life to join, such as Nike.

Nike has already joined the virtual world through "Nikeland" and has acquired a studio called RTFKT, well-known for producing NFT products.

In the future, perhaps we can see sparks fly between these two concepts in Nike's virtual world.

Source: eon visual media

Museums

For art appreciation, VR may be the best platform as we can view the art piece closely from every detail and angle.

For example, many museums have placed NFT art pieces in the Cryptovoxels Metaverse, which is supported by the Ethereum blockchain.

According to The Art Newspaper, Cryptovoxels Metaverse has art galleries and museums, including the San Francisco Museum of Modern Art and the Museums in Austria.

Source: stealthoptional

Real Estate
In the real world, real estate is a lucrative industry and the same holds true in the virtual world.

This does not refer to the sale of real houses or land in a digital form, but rather to the sale of digital land in a virtual space.

For example, Decentraland is a decentralized platform based on the Ethereum blockchain, whose core asset is land.

The plots of land can be traded as NFTs.

At Decentraland's first auction in late 2017, a total of 34,356 pieces of land were auctioned off, representing a market value of more than $30 million at the time.

Land auction on Decentraland; Source: Atomic Wallet

Business Opportunities of the Metaverse

Facebook (Meta)

Of all the tech companies, Facebook has the greatest determination to develop the metaverse, as it changed its name to Meta at the end of October 2021.

So what kind of metaverse does Meta want to build? 

We all know that Facebook is a social media platform, and its core is "connections between people."

On current Facebook, we interact with family and friends in ways such as posting and liking, leaving comments on posts, chatting with Messenger, and interacting in live broadcasts, but such interactions are relatively passive and mostly text-based.

In Facebook's metaverse, "connections between people" remains the core, but the space becomes 3D, and interaction can be more diverse and realistic. 

For example, you can put on glasses to enter a virtual cafe and appear in your virtual avatar, then send a message through Messenger to invite your friends to come up. 

In this space, you can play cards, chat, and drink coffee, just like your friends are really beside you. 

During the process, you can also video call your family on your phone, and the virtual and reality are completely integrated.

Playing poker with friends in the metaverse while using video software to chat with family in the real world; Source: Meta

Remote working issues brought by the COVID-19 pandemic can be solved in a more efficient way in the metaverse.

During remote working, colleagues communicate through emails, messaging apps, or conference calls.

Though it saves commuting time, it lacks social interaction and the boss is unable to keep track of employees'  status.

Therefore, many bosses asked employees to return to the office after the pandemic.

In August 2021, Facebook released a service called "Workrooms" that uses VR technology to enable remote work.

Workrooms; Source: Meta

With Facebook's Workrooms, virtual offices can be built anywhere, including mountains and beaches, allowing colleagues to meet, chat, and even work as if they were in a real office. 

This will help businesses save expensive office rental fees and commuting time, thus increasing efficiency. 

In short, Facebook's Metaverse will make future socializing more realistic

Although the development is still in the early stages, this vision gives us a lot of room for imagination.

Microsoft

Unlike Facebook, which mainly focuses on social functions, Microsoft focuses on its original strengths, services related to "work."

It provides a more interesting and personalized experience for remote work and virtual meetings.

Microsoft's metaverse strategy focuses on the company's collaboration platform Teams, especially Mesh for Microsoft Teams.

On the Mesh for Microsoft Teams space, you can not only join virtual meetings, send chats, share files and documents, but also hold large seminars.

Its biggest feature is to create personalized avatars, which means your digital avatar can look like you, and it can even mimic your facial expressions and movements.

Mesh for Microsoft Teams; Source: Microsoft

HTC

HTC developed the world's first smartphone using Microsoft’s operating system in 2002, five years ahead of Apple's first iPhone.

But it has transformed into a metaverse company in recent years and launched the first VR glasses HTC VIVE in 2016.

According to the Co-founder of HTC, Cher Wang, the following five technologies are key to the development of the metaverse: VR, AR, AI (artificial intelligence), blockchain, and 5G.

  • VR and AR: Virtual and augmented reality technology has enabled people to experience the vast virtual space in a natural way.
    With the development of the semiconductor industry and cloud computing technology, wearable devices can become more comfortable and light.

  • AI: AI has many applications in the metaverse.
    AI tracking systems can make our avatars more natural and realistic, as it can track and mimic our movements and expressions.

  • Blockchain: Blockchain provides a secure platform for creators in the metaverse, as all creations have copyright protection and cannot be easily tampered with.

  • 5G: Higher bandwidth and internet speed make the overall metaverse experience more seamless.

HTC's former CEO, Peter Chang, has publicly stated,

"The metaverse is the future of the internet. I'm one thousand percent sure that the metaverse will have a great impact on people's lives and work, far beyond smartphones."

HTC’s Metaverse Strategy

HTC's metaverse strategy mainly focuses on hardware, software, platforms, and services.

In addition to the development of VR devices, it also announced a metaverse platform called "VIVERSE" at the 2022 World Mobile Communications Conference. 

On this open platform, manufacturers can place their developed applications. 

The goal is to combine with global telecom operators to create a connected metaverse world.

NVIDIA

NVIDIA is an American semiconductor company that designs and sells graphics processors and is a leader in artificial intelligence.

Its main products include game display cards and chips for tablets and smartphones. 

NVIDIA's idea of the metaverse is mainly to connect the 3D world into a shared virtual universe through the NVIDIA Omniverse platform.

Omniverse launched its public test version in December 2020 and its business version Omniverse Enterprise in April 2021.

It is a platform that allows industries to simulate physical environments such as factories or buildings and collaborate on design or manufacturing. 

For example, Foster+Partners architectural firm collaborated with designers from 14 countries to design a project on Omniverse. 

In addition, it enables humans and robots to work together.

After training the robotic brains on the Omniverse, robotic experts can install these brains into NVIDIA chips and connect them to real robots. 

Famous car brand BMW has started to realize this idea, building a future factory completely digitally using NVIDIA Omniverse to create a “twin virtual factory” that is just as real as the physical factory. 

BMW can train and test robots in the virtual factory and then deploy them to work in the physical factory, which can significantly improve efficiency.

BMW’s digital factory; Source: NVIDIA blog

Applications of the Metaverse

Games

The concept of the metaverse and video games is similar because both use virtual avatars to interact with others in a virtual space. 

Roblox is a game company based on the concept of the metaverse.

On the platform, users can not only use the Roblox Studio engine to create their own games but also play other people's games.

In addition, the virtual currency Robux can be used on the platform for trading.

Roblox successfully went public in the United States in March 2021.

According to the statistics released by Influencer MarketingHub in March 2022, there are: 

  • More than 8 million game developers

  • More than 18 million games

  • More than 32.6 million active users on Roblox

Source: Roblox

Education

One of the important areas where metaverse can be applied is education

The gaming company Roblox has also ventured into the field of education, creating a 3D interactive educational space with the aim of having more than 100 million students by 2030. 

The application of the metaverse in education will make it more vivid and interesting. 

For example, in the past when studying ancient Egyptian culture, students could only see the pyramid picture in the history textbook. 

With the metaverse, students can directly enter the pyramid and even see the mummy through VR technology to explore the world of ancient Egypt. 

In addition, students can also jointly produce rockets and explore space stations through the metaverse platform, which are experiences that books cannot provide.

According to a report titled "Education Meets the Metaverse" released by the Brookings Institution in 2022, the educational model under the metaverse will become more vivid and diverse, giving students more opportunities to experience and shift them from a passive to an active and exploratory role.

Source: Brookings Institution, edited by the author

Virtual Events

The new trend of the metaverse is large-scale virtual events

Currently, when we participate in physical activities such as concerts, sports competitions, and large exhibitions, we need to queue up to enter at a specific time.

But in the metaverse, various activities can be held, and you can enjoy the immersive experience without leaving your home.

In many countries, large-scale events have also started to use the concept of the metaverse.

For example, the 2022 Taipei Computer Expo (COMPUTEX) was presented as a hybrid of a virtual and physical event.

The professional event platform EventX integrated offline activities with online ones so that more people from all over the world can participate.

2022 Taipei Computex; Source: EventX

Medical Care

In medical care, the metaverse can also bring many revolutionary changes.

Here are some examples.

Remote medical care

In the past, we went to the clinic or hospital to see a doctor when we were sick.

After the outbreak of COVID-19, more people have been exposed to remote medical care.

For some simple diseases, telephones or video calls can be used to complete the consultation.

In the metaverse, VR technology can make remote medical care even more in-depth, and it is no longer necessary to go to the hospital for treatment.

For example, if you are in Hong Kong but the best expert for your condition is in the United States, then you can wear a VR device and enter the doctor's office.

You can have scans and examinations at local medical facilities, the data will be transmitted to the United States in real-time, and the doctor in the US can help you with remote consultation.

Blockchain technology

As mentioned earlier, blockchain can store large amounts of transaction data and has the characteristic of being difficult to tamper with.

This feature is particularly secure when used to manage medical records and personal health data.

Digital Twins

Digital Twins mean creating a "virtual twin" for any object, process, or system.

Applied to medical care in the metaverse, it means duplicating a virtual patient to test the patient's response to specific medications after surgery recovery, etc.

This is SAFER for the real patient.

Sports

The application of metaverse technology to sports can make sports more diverse and interesting.

For example, when you are riding a bicycle at home and wearing VR glasses, you can immediately feel like you are participating in a triathlon and running on an endless road.

Meta's "Virtual Gym" has also opened, allowing users to do aerobic exercises and fitness at home without buying treadmills or flywheels.

Mark Zuckerberg also shared a video of his fencing with Olympic gold medalist Lee Kiefer in the metaverse.

Source: Youtube

Digital Factory

As digital twin technology matures, it will bring revolutionary changes to the manufacturing and supply chain industries. 

For example, as mentioned earlier, BMW can create a digital factory that is identical to the real factory through NVIDIA's Omniverse platform.

In the virtual factory, processes can be simulated and robots can be trained.

The purpose of the digital factory is to reduce the trial and error cost of the physical factory and improve production efficiency.

BMW’s digital factory; Source: BMW

Consumer Products and Luxury Goods

According to Morgan Stanley’s research, the market of luxury goods in the metaverse will reach $50 billion by 2030.

For example, luxury brand, Gucci, launched a digital version of its iconic Dionysus bag on the gaming platform Roblox, priced at 350,000 Robux, equivalent to approximately $4,115 in US dollars, which is even more expensive than the actual bag.

Gucci’s Dionysus; Source: HYPEBEAST

Critiques of the Metaverse

Security

Crimes such as sexual harassment and fraud also exist in the virtual world.

Nina Jane Pately, a woman from London, wrote in an article and said that within 60 seconds of entering the virtual world, she was verbally and sexually harassed.

Three or four male avatars had actually raped her avatar and taken pictures, and it was like a nightmare.

In 2003, the game "Second Life" also reported news about users using game coins for Ponzi schemes.

In the virtual world, who will be in charge of controlling criminal behavior and maintaining order remains an important issue.

Privacy

Just like the privacy disputes of Facebook, many people have a distrustful attitude toward Meta's privacy protection.

If there is no privacy law in the virtual world, then human beings will be more and more likely to be tracked. 

Just like Facebook can now track users' preferences and interests through their behavior, in the future, Meta could even track users' eyes and facial expressions, and personal privacy will be almost gone in the virtual world.

Therefore, the protection of privacy is an issue that all metaverse platforms need to pay attention to.

Health

The physical and mental problems brought on by virtual worlds are also important issues.

In terms of physical health, long-term use of wearable devices may cause discomfort, such as the feeling of nausea or discomfort in the neck and ears.

Mentally, studies have shown a relationship between virtual worlds and mental illnesses, especially fantasy and hallucinations.

In one study, Internet Use Problems (PIU) such as depression, anxiety, and schizophrenia features were measured among 100 users aged 20 to 30, in which about 30% of people showed signs of PIU problems

In addition, internet addiction is also a headache for many parents and teachers.

Challenges of the Metaverse

By 2030, a large proportion of people will be in the metaverse in some way,” 

predicts Melanie Subin, a director at The Future Today Institute in New York City.

Even though many experts and tech giants are optimistic about the development of the metaverse, it is still in its early stages of development.

Its challenges include hardware, technology, regulations, user acceptance, etc.

Hardware

To enter the virtual world, we need to wear some devices such as VR glasses or headsets.

These devices are still expensive, so whether they can be as popular as mobile phones will be key to the metaverse’s success.

Technology

Interoperability and uniformity between various metaverse platforms are currently one of the biggest challenges in terms of technology. 

"HTML" is the "standard language" for creating web pages. Pages created using HTML can be successfully read in different browsers such as IE and Chrome.

Also, even if we use an Apple iOS phone or a Google Android phone, we can still exchange messages with each other. 

However, there is still a lack of such interoperability between the various metaverse platforms.

For example, you cannot bring virtual clothes or cars from one platform to another.

This is one of the biggest obstacles to be overcome in the development of the metaverse.

Regulations

The metaverse is a new concept, so current regulations still can’t follow.

In addition to the security and privacy issues mentioned earlier that require new regulations, another important issue is intellectual property rights, that is, how creators in the virtual world can own copyrights and be protected by intellectual property rights.

User Acceptance

Although the virtual world may be cool and beautiful, its acceptance is still questioned.

For example, the online New Year's Eve event held by Zuckerberg in the metaverse ended in failure.

Is it because the concept is too advanced or because people still prefer the feeling of physicality? 

TIME will tell. 

During the pandemic, many people were stuck at home for a long time and began to miss being able to go to the office or go to the countryside. 

But there are also people who have become accustomed to remote work and no longer want to go back to the office. 

Technology will gradually change human behavior, but there are also some needs that technology cannot meet. 

User acceptance will be key to the success of the metaverse.

The Future

The metaverse is still in its early stages of development, and it is expected to take 10-15 years to mature. 

There is still a lot of uncertainty. 

However, many tech giants have seen the potential of the metaverse and invested heavily in related facilities and platforms, such as Facebook, Microsoft, NVIDIA, and HTC. 

The concept of metaverse has also been gradually applied to various fields, including games, education, medical care, manufacturing, events, etc.

Business opportunities are limitless.

The challenges faced by the metaverse in the future include hardware, technology, regulations, etc., but the ultimate test is whether it can be accepted by users. 

For the metaverse, we can maintain a cautious and optimistic attitude, continue to follow its development, and try it out by ourselves to grasp the business opportunities. 

After all, it may really revolutionize the way we live in the future.

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