The Metaverse and the Future of Business

It has been a little over two years since Mark Zuckerberg, the CEO of Facebook, announced that the company would change its name to Meta and shift its focus to the “metaverse,” an immersive, extended-reality digital environment in which people could work, shop, socialize and play games. While the concept has faced roadblocks in the form of high cost and low levels of understanding in the general public, large corporations and the U.S. government are racing to lay the groundwork for what proponents say may be the next technological revolution. Like any emerging technology, the metaverse boasts significant opportunities for companies in every industry, but also new risks inherent to adoption.

What Is the Metaverse?

As commonly understood, the metaverse refers to a three-dimensional, computer-generated environment with which users interact via extended reality (XR) technologies like virtual headsets. At present, the metaverse is not a single entity or place – any company could create a metaverse. In fact, many are currently in existence, mostly operated by long-standing online games.

Meta is not the only entity leading the charge to develop the metaverse for the masses. Lesser-known tech giant Nvidia is developing the Omniverse platform, which allows engineers and designers to create metaverse structures and applications and has worked with creative companies to establish a platform for artists and designers to access the metaverse. Nvidia's CEO estimates that the virtual environment will eventually be twice the size of New York City, and its economy larger than that of the physical world. Microsoft has focused on creating work-based metaverse environments, most notably Microsoft Mesh, “a mixed-reality overlay” that facilitates collaboration in virtual spaces. While Google’s early XR wearable, Google Glass, failed, the company is wading once again into the metaverse: Last year, Alphabet established a $39.5 billion private equity firm with the sole focus of funding metaverse projects.

Online games are perhaps the sphere where most people access a metaverse today. Games such as Fortnite, AxieInfinity, Battle Infinity and Bloktopia are all popular online games set in decentralized metaverse environments, accessible through traditional computers, as well as XR technologies like VR headsets and wearables. Epic Games, the company behind Fortnite, invented the “Unreal engine,” a popular 3D graphic engine, while MetaHuman, a digital twin-rendering software that is currently used to generate avatars, raised $2 billion last year to increase investment in the metaverse. Online game Roblox, a Gen Z and Gen Alpha favorite, pioneered its own metaverse environment complete with avatars exploring a virtual world filled with games and commerce and, most recently, a videoconferencing option that its own corporate employees used. Ethereum-based online environments Decentraland and The Sandbox are two of the most classic examples of a metaverse, where users can interact in virtual worlds, purchase virtual land, and conduct business – in crypto, of course. In 2021, a plot of virtual real estate in Decentraland sold for $2.4 million, a virtual real estate record.

The Business Case for the Metaverse

If successful, the metaverse touts many potential benefits for businesses of all kinds. A more immersive e-commerce experience is a key offering of the metaverse, with pitches from proponents often boasting benefits from virtual shops and malls. Companies like Nike and Walmart have already created virtual shopping environments within Roblox – Nikeland and Walmartland, respectively – that have driven new purchases and engagements; Nikeland drew 21 million visitors by September 2022. On a lower level, many brands have already begun to implement extended reality tech – a kind of metaverse-lite experience – into shopping experiences. Virtual try-ons are common, from Walmart allowing shoppers to visualize clothing on their bodies to glasses company Warby Parker projecting images of glasses onto shoppers’ faces. “Omnichannel” shoppers also tend to make purchases 70% more often and spend about 34% more than those who only shop in-store, according to McKinsey studies.

Education and training are additional new frontiers for the metaverse. Metaverse company Prisms VR has implemented virtual lessons, accessible on headsets, in 130+ school systems across 30 states in the U.S., as well as in Romania, Singapore and China. In VR lessons, students are immersed, for example, in a rice field to mix pesticide chemicals in a chemistry lesson, or in the air traffic control tower of the O’Hare Airport to plot flight paths and spot potential collision points in math class. Several companies are also implementing metaverse technologies for corporate training, such as Accenture’s “Nth floor” virtual environment that is used for onboarding, training sessions, and meetings. Walmart, which has been using Oculus Rift VR headsets for employee skills trainings at Walmart Academies since as early as 2017, has reported improvements in the test scores of employees who use VR headsets.

Construction and industrial manufacturing are also areas that may make heavy use of the metaverse. Some companies have already begun to use the metaverse to create “digital twins” of industrial products ranging from entire neighborhoods to a single manufacturing part, allowing designers and fabricators a more immersive design and construction process through which to spot failure points and hone designs. 

Risks and Outlook

While business excitement for the metaverse is high, consumer interest is not as clear: A PwC survey found that while 23% of business leaders have a detailed understanding of the technology, only 8% of consumers could correctly define “metaverse” in 2022. An Ipsos poll in the same year found that while there was some optimism around the new technology (despite a low level of understanding), equal numbers of people held negative sentiments: 25% of those surveyed felt “suspicious” of the metaverse, and 23% felt that the technology is “tech companies trying to figure out new ways to make money.” While the metaverse remains an abstract concept to many, a certain level of confusion and apprehension is to be expected – if metaverse companies succeed in bringing the technology to the mainstream, acceptance and understanding will likely follow.

Many of the benefits of the metaverse, however, require the technology to be adopted at scale. Technologies to access the metaverse are, at present, expensive for the average consumer (Meta’s newest headset is $1,000, while Apple’s Vision Pro headset markets for a whopping $3,499), and for many the benefits are unclear or not worth it at this stage – metaverse shopping opportunities, for example, are not widespread, nor are workplace metaverse meetings. Consumers are unlikely to spend time or money accessing these spaces until the rewards – whether in attending mandatory meetings or exploring a shopping mall with a high concentration of desirable brands or virtual-only experiences – are clear. While gaming environments are clearly a sufficient draw for many, metaverse benefits must be made clearer and more accessible to potential users who will never be drawn to open-world online gaming.

Finally, XR technologies used to access the metaverse, like VR headsets, collect extensive data that can be collected by bad actors and used to engineer cyberattacks or steal sensitive information. Many of these risks are common to any internet-enabled device; metaverse environments are capable of being infected with malware or ransomware, for example, undermining security and potentially leading to theft of money or data. Further, many XR devices collect movement tracking and eye tracking data, all of which are extremely difficult to anonymize. Sensitive data like this, paired with recordings of audio, in the hands of bad actors could be used to create AI-enabled deepfakes for impersonation scams. While XR can be a potent tool to improve user experiences and bolster business strategy, those who implement it must be scrupulous about vetting the privacy and security practices of their own platforms and third-party apps to safeguard their own data and that of their users.

Like any emerging technology, the metaverse presents potent opportunities for companies willing to invest time and money utilizing it, but risks in the form of cyberattacks, low consumer adoption, and high costs very much remain.