Why companies (but not only them) waste money in the metaverse

How many times in the last few months have you read of any companies announcing their entry into the metaverse? From a certain point of view, it is normal: brands, large chains, service providers and not only that, they have always aimed to ride the various technological trends that follow one another (from social networks to artificial intelligence, up to the blockchain), partly to show themselves innovative and partly to obtain concrete benefits.

In this case, however, the announcements of entrances into the metaverse, which even in Italy they follow each other at an almost daily pace, raise several questions. First of all, which metaverse are we talking about? Although it is often told (in the mass media, in press releases, in company presentations) how a single digital and immersive environment where anyone can transfer an increasing part of their life, things are actually very different.

In place of this imaginary and unique metaverse, today there are a lot of single platforms, one different from the other and all absolutely not communicating with each other. Some are in virtual reality (such as Horizon Worlds by Meta) and others instead exploit a normal computer (such as Zepeto), some are based on blockchain (such as Decentraland) and others are instead owned by some giants of Silicon Valley, some are born from the world of video games (such as Fortnite ) And others are designed for work (like Spatial).

According to some analyses, there are more than 40 metaverses currently existing. When a company announces its entry into the metaverse, which one are they referring to? If that weren’t enough, companies often don’t exploit these realities, but design their own proprietary platform (often in virtual reality) to be used, for example, for professional training purposes. Or to sell cars, like Fiat does. Once upon a time perhaps we would have trivially talked about simulation (for pilots or surgeons), today even in these cases we prefer to use the term metaverse.

But if any platform, using the most diverse technologies and with the most varied purposes (sociality, work, commerce, games, training), falls under the metaverse label, this term becomes so vague as to lose any meaning, generating only a great confusion about what the metaverse is (or is not) and for what purposes it can be use.

And so, over the months, we have witnessed some unlikely Heineken happenings on Decentraland (especially mocked by the foreign press)to architectural firms that presented houses for the metaverse complete with beds and bathrooms (without anyone wondering what a bath in the metaverse could be used for), to immersive projects of society whose raison d’être, however, is precisely in the relationships experienced in the physical world (it is the case of Tinder’s metaverse projectquickly abandoned) and more.

Not only are there an exorbitant number of very different platforms cataloged under the same label, but companies (fearful of missing out on the technological trend of the moment) are diving into the metaverse before they even understand if their investment can really be worthwhile.

Recently, for example, an Italian law firm has announced the landing in the metaverse, through which it offers the possibility to meet lawyers in a virtual reality office. But what is really the added value of such an offer? We are sure that it is more comfortable to communicate with the avatar of a lawyer by wearing a virtual reality viewer for a long time (which isolates us and excludes us from everything around us) instead of exploiting the convenience of a videoconference on Zoom or Teams? Is this just a publicity stunt to impress?

Even more bizarre was Norway’s announcement that it was opening, with the advice of Ernst&Young, a Tax Office within Decentraland (an environment not in virtual reality, but in which we maneuver an avatar using the computer keyboard). Instead of using the digital to eliminate the frictions of the physical world, through these metaverse surrogates we are paradoxically replicating the physical frictions in the digital world. It’s more comfortable fill out the tax return (or look for tax-related information) within a well-made site or app or move around with our avatar in a digital environment, enter the virtual tax building and then look for the office of our interest?

However, the culmination of these oddities is probably the statement with which Interpol (the international organization of law enforcement) last October he also announced his landing in the metaverse: “Crime is increasingly moving online as the pace of digitization continues to grow. How can law enforcement continue to protect communities and ensure respect for the law?” Interpol asked in the statement.

The answer, according to Interpol, is the creation of one virtual reality platform that reproduces its headquarters and that anyone can visit by wearing the appropriate viewer. If it is true that more and more crimes take place in the digital world (just think of cyber attacks or privacy violations), it is not clear how an isolated virtual reality reproduction of the Interpol headquarters may be of some use.

If Interpol wants to practice the metaverse challenges and avoid harassment, scams, bullying, identity theft and more (risks that are actually present and mostly dealt with by the moderators), it makes much more sense for your staff to actively and regularly participate in the many already existing metaverses, instead of building a private and uninhabited one. How all this could serve to foil a scam on Decentraland or a harassment on Horizon Worlds is not at all clear.

The metaverse will be the Web3 interface

by Pier Luca Santoro

05 December 2022

But why is all this happening? Because this haste, apparently irrational, to jump on the metaverse train before having figured out what it actually is and where it leads? One reason can always be identified in the Interpol communiqué, which explains that (according to Gartner, another of the many consulting firms that we always find involved in these operations) in 2026 one in 4 people will spend at least one hour a day in the metaverse. Can such an opportunity be missed?

First of all, however, we should understand what it means to spend an hour a day in the metaverse: playing at Provide or doing business meetings on Spatial? By investing in cryptocurrencies on The Sandbox or practicing in a surgeon simulation? As long as the term metaverse is so sui generis that it indicates everything and its opposite, it is impossible to say how much time we will spend in the metaverse, what is the value of the metaverse and also for what purpose companies should invest in it.

There is only one sector (fashion) which, thanks to its historical links with the world of entertainment, has understood right from the start how to take advantage of the widespread diffusion of social gaming (more limited term than metaverse, but partially overlapping, which indicates online video games in which social interactions play an important role). Without giving too much weight to the labels of the moment, Balenciaga, Gucci, Burberry, Nike and many other fashion houses have invested in the main social gaming realities (Fortnite, Roblox, Animal Crossing, Minecraft) taking advantage of willingness of users to customize avatars with branded accessories. Clear investments, with precise objectives and which respond to an effective request from users, as demonstrated by the fact that the skin market (the aesthetic additions that customize the look of the characters) is worth around 40 billion dollars a year.

Moreover, the most widespread social gaming platforms can count on hundreds of millions of monthly users, while the various metaverses of which up to now there has been a lot of talk they are actually semi-desert: Horizon Worlds counts on 200 thousand users (decreasing)The Sandbox is also around 200 thousand and the most talked about Decentraland does not exceed 60 thousand (and who knows how many Norwegians will be interested in the virtual tax office?). Microscopic numbers, which show how media attention is enormously higher than the effective interest of users.

Between vagueness of the term, dubious investments and very little effective participation, before diving into the metaverse we should ask ourselves who really has to gain from risky commercial operations, which seem to play into the hands of manufacturing companies and consultancy firms only. As has peremptorily wrote video game expert James Whatley on The Drum, “anyone who tells you they’re doing something in the metaverse either has no idea what they’re talking about or is willfully misleading you.”