Sirwin
Sirwin

Metaverse - All Good Things Take Time

By Harry Maximillian | HarryMaximillian | 27 Nov 2022


What a difference a few months make. Rewind the clock six months and the common thread was, the metaverse is the next big thing. The same commentators have now jumped ship, they occupy the good ship Doom and Gloom. What a fickle misguided bunch they are…

That doom and gloom is largely a result of the challenges facing Meta (Facebook), Walmart, Sandbox and Decentraland.

It is abundantly clear that Meta’s own metaverse as well as the key players in the blockchain metaverse space have painfully few users. Take Meta’s Horizon World’s for example. Meta initially hoped to build a community of 500,000 monthly users by the end of 2022. The monthly count is less than 200,000 with only a trickle of users returning. Moreover only 9 percent of virtual worlds are ever visited by 50 or more people, most never receive any visitors.

Walmart decided to build its virtual world on the Roblox platform with offerings around music, fashion and toys. Many users complained about the corporateness of the experience and how the virtual world was soleless.

Then there is Decentraland and Sandbox. A report by analytics firm DappRadar dropped a bombshell into the metaverse space revealing that The Sandbox has only ever hit a maximum number of daily active users of 4,503 whilst Decentraland has yet to exceed 675. Decentraland disputes these figures, publishing monthly active users of over 50,000. DappRadar’s figures didn’t count people who log in and interact with other users or pop in for an event.

Investing in virtual land may therefore be considered a leap of faith. And of course it is. Tim Cook CEO of Apple believes the potential is in augmented reality, others see the metaverse as something that is only ever going to be popular with gamers.

This slow adoption isn’t surprising. It was the same with the internet during its early stages when building a website was prohibitively expensive, there was no faith in the security of paying for goods and services online and websites were slow and clunky. And of course like the .coms before the internet bubble burst valuations were based solely on potential. After the boom expectations were adjusted down however when winners started to emerge valuations began to be based on tangibles such as sales and god forbid, earnings. Investors took a leap of faith investing in the internet. They do whenever there is an emerging technology, clean tech for example or biotech.

As with the internet it will take a few killer apps for people to start wanting to visit metaverses regularly. That will require cheaper hardware, easier to navigate metaverses, designed for the masses rather than the tech savvy gamer, and low latency i.e. the speed at which a command is translated to action on screen.

Blockchain metaverses have a bad reputation for being difficult to navigate. Take Axie Infinity for example, the co-founder acknowledges that the game’s learning curve is “really hard” for crypto newbies. Whilst it is the most popular blockchain game played in its own metaverse, hundreds of thousands of people are deterred by the many hurdles required to jump over in order to participate in the game. And whilst gaming is a massive part of all metaverses right now that probably isn’t the future to achieve mass adoption. Non-millennials and non-Gen Zs are unlikely to shop for their clothes or undertake other core activities on a platform designed for a one dimensional game.

Also bear in mind that the average age of a metaverse user is 27, and the majority of visitors to meteverses play games. The Sandbox is referred to as a game. For the metaverse to take off it must transform itself beyond gaming. Virtual shopping malls, stores of leading brands, gyms, bars, casinos all positioned in one easy to access and simple to navigate metaverse. By offering a diverse range of experiences this will also attract a broader cross section of users. It is noticeable that the majority of Meta’s metaverse users don’t return. This is crucial to understanding what it is going to take to attract repeat users.

If a user wishes to gamble he or she has their favored online casino, the same applies for shopping for clothes, groceries and online fitness. The question is, what is it going to take to make it attractive for users to visit a metaverse where all their favorite activities are under one roof? There is clearly a big appetite to purchase items in virtual stores with 70 percent of people visiting a virtual store making a purchase (Source: Obsess). As with a bricks and mortar shopping mall, in order to attract shoppers the key is signing a few key anchor tenants. This traffic then spills over into other secondary retailers in the mall. Take a cinema as an example of a key tenant, as a result of the traffic from the cinema, fast food joints open along with apparel retailers, a candy store, a health club and a dry cleaners.

The same model will be required in order to attract users to the metaverse and crucially keep them coming back. Maybe the anchor tenant will be a casino or a popular streaming service. The question we must consider is why visit the metaverse at all? Is it going to be an immersive experience, which is still some way off, monetary incentives through cryptocurrency or something else which we haven’t grasped or fully appreciated yet? Or is the game that provides the backbone of the metaverse going to be the hook? That last possibility is what is happening right now with Walmart for example opening their virtual store on Roblox. Arguably this approach will restrict that metaverse to a smaller market segment than a metaverse that is multi-purpose and non-game focused.

Glaringly obvious or not, what is apparent is that until that batch of non-gaming anchor tenants have emerged then the metaverse will remain a desert of users. Few people return to the desert for a second look. This leads us back to why we are here in the first place, virtual real estate.

Google and Facebook figured out how to monetize the web, something many of the experts at the time thought impossible. It is reasonable to assume that companies will figure out how to attract loyal users to their chosen metaverse. It could take five years, maybe ten. At that point virtual real estate will become a revenue generating asset for its owner as operators look to rent or buy and develop their plots. Until that time virtual land should be purchased with speculation in mind. Personally I would be focusing on multi-purpose metaverses that don’t have gaming at its core.

Hold your virtual real estate and forget about it. Add to it if prices weaken. Remember to ignore the crypto journalist who claims that virtual land is less risky than its tangible cousin, the opposite is true. Never invest more than you can afford to lose.

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Harry Maximillian
Harry Maximillian

I am an author, freelance writer, coach and entrepreneur. I write on a wide range of subjects from self-help tips to personal finance, from handling death to cryptocurrency, from combating aging to exercise. My aim is to inspire and inform.


HarryMaximillian
HarryMaximillian

What a difference a few months make. Rewind the clock six months and the common thread was, the metaverse is the next big thing. The same commentators have now jumped ship occupying the good ship Doom and Gloom. That doom and gloom is largely a result of the challenges facing Meta (Facebook), Walmart, Sandbox and Decentraland. Don't let the negativity distract you from the bigger picture. The metaverse is a technology in its infancy and is only going to grow in popularity and relevance. Stay in the game.

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