The Speed of Change Is Not That Fast
Lots of things have been changing since the beginning of the 21st century. Technology, people, focal points of companies… Change is continuous, as always, but faster now than ever before. Even though the change is fast, a quote is still applicable: “We overestimate short-term change, we find it hard to imagine long-term change.”
Let’s dive into some real-life examples to explain the above quote. Blockchain was abuzz because of the hype built around it. A couple of months ago, one Bitcoin was worth around 70k USD, some meme coins were hitting abnormal market caps, and people were taking out loans to immediately buy some dog tokens or ape NFTs. But Bitcoin currently sits at around 16k USD. It is not dead, it is still improving behind the scenes. Blockchain will have a deeper impact on our lives with lots of different use cases, but not necessarily right now, it will take a while.
Second Life in the early 2000s was another example, an example of an earlier metaverse wave. Companies opened stores there. We still talk about metaverse and digital transformation after all these years because such changes take time. So nothing will be fast-paced. Nothing will happen in the blink of an eye. Changes like these take lots of time.
In another instance, Facebook changed its parent company name to Meta, indicating its interest in building the metaverse. Now, even after quest pro is launched and sold below cost to increase its adoption, most of us are still not actively spending time in the metaverse. They even reached a $400 valuation per stock, but now it is lower than $100. They are focusing on the long term, on 2030.
Another story, this one may be a bit different but it still teaches a valuable lesson. Microsoft envisioned computers on every desk, whereas Thomas Watson, ex-CEO of IBM said “there is a world market for maybe 5 computers”. So, it is hard to imagine how everything will evolve in the long term, and distinguish the hype from reality in the short term.
But, What About the Change of Metaverse?
You can see the active number of users of so-called metaverse platforms in the image below. These are mostly gaming platforms, including the top 3: Roblox, Minecraft, Fortnite, etc. Millennials were born into these platforms and many are spending time there. Playing around, meeting and competing with their friends, purchasing some skins, or wearing real clothes featuring these platforms and games… These skins are sometimes from the companies that we know of. Or the time spent here is on the things that we know of from real life. For example, Roblox has lands, in collaboration with Nike and Spotify. People can spend their time in Nike Land. They have a partnership with Gucci as well. Another example is Minecraft. They launched merchandise with Lacoste earlier this year, and they have recently announced a partnership with Burberry. Fortnite is also ramping up its activities. They hosted live concerts by Travis Scott and Ariana Grande. People joined there with their avatars and spent some time in those events.
But at the end of the day, the most active platform among these examples only has 200 million active users. I use the word “only” because this figure is nothing in comparison with the active users of other platforms, such as Social Media.
Social Media platforms have reached billions of users, you can see the numbers below. They are accessible through both mobile devices and desktops. Even though we talk about the user numbers of metaverse platforms not being that high, it does not necessarily mean people are not ready. One of the most important signals that will tell if it is the right time is how people act. Digital is a part of our lives now more than ever, especially after the pandemic. These numbers are increasing every day, as does the average screen times of these people. The most preferred social media has 3 billion users. The amount of data is progressively increasing. That data helps recommendation engines to improve. Improved recommendation engines do their job better so that you spend more time there because the content is more related to your interests. So, people are becoming more ready and adapting to digital even more, and the infrastructure is improving every day. This is what has changed since the early 2000s. People are ready, and technology improves. But all of this should not create FOMO (fear of missing out). You do not necessarily have to be the first mover. The first mover does not always win, the rules of natural selection are unpredictable. There are lots of real-life examples of that.
Currently, the most buzzing real-life example is Spotify, Whether you watched the Netflix show or not, let’s focus on Spotify. As mentioned in the TV series, there were recording companies. But then came pirate websites that allowed you to download music for free. Spotify was not the first to make music accessible through digital platforms, nor is it the only one, but it controls the music industry. It has a 32% market share, more than its two closest rivals, Amazon and Apple Music combined. Another example may be music devices. The iPod was not the first music player, but thanks to the great design by the Apple team, Tony Fadell, and those guys, it was a huge success. In a different industry, other examples are Fortnite, Minecraft, Roblox; or rather more related platforms such as VR Chat or Rec Room, all have more active users than Second Life. But Second Life was first to the party.
Why will metaverse work out this time?
There are 2 different aspects to evaluate the changes from 2002 to 2022. The first aspect is based on the behavioral tendencies of people. We use social media daily, there are billions of social media users. People play online games, and billions spend their time and money on these games. And unlike 2002, we currently have smartphones in our pockets. Billions of computers are not only in our houses, not only on desks, they are now even in our pockets. This makes everything more accessible and shows that people are actively using digital a lot more than before.
The second aspect is what companies do.
- First of all, cloud capacity and data collection have improved. It was very limited back then when sharing files online was not that common. Now, companies provide around 15GB of capacity for free to everyone, so it is basically mainstream. The capacity has improved to a point that makes building online platforms available.
- GPUs are in our lives now. They provide better analysis, performance, and rendering for the building of the alternative worlds that we will be spending our time on.
- Blockchain, NFTs, DeFi, and all the new approaches in finance are here to support the monetary infrastructure in the metaverse.
- AR/VR/MR/XR technologies have improved. Although still not enough and current platforms look like games with low graphics, the improvements are obvious and we are talking about the implementation of haptic technologies.
- There are trillion-dollar tech giants that are continuing to grow. One of the most important business models is based on data. Metaverse allows data that the companies cannot collect with the current platforms. New AR/VR glasses collect eye-tracking data, they want to know where we look first, and where we visit within the platforms that allow us to do our daily activities.
The data collection and growth model makes the biggest companies of today what they are. Google, Meta, Amazon, Apple, Tencent, Ali Baba, Microsoft… These are the biggest companies and they are the biggest because of the data that they have. Spotify, Netflix, and TikTok are all big because of the detailed recommendation engine that they have, fed by data. So, Venture Capitals are, not surprisingly, investing billions of dollars in potential big companies in the metaverse. The estimated potential market value is between 6 to 13 Trillion dollars.
Long story short, there are lots of different factors that have changed since 2002. And now there are a number of reasons for this to be the right time. Yet, there is no need to hurry. You should be ready to embrace it in a way that could create real value for your business. We are here to help you with that. You can check out our Metaverse Readiness Index, which measures your readiness score, and helps you to transform your company with a roadmap and create real impact.