Interview on Metaverse & NFTs
Hello and welcome to MadeMeThink! Once a week I send out this newsletter with curated content, events and examples that have sparked my interest. It's a review of my last 7-days in Web3, NFTs and the Metaverse. Want to follow my thoughts on a daily basis? Then connect with me via Linkedin and Twitter. This article is also available in German.
About a week ago I had the pleasure to give a talk on "Crypto, NFTs & the Metaverse - the perfect storm!?" at an event in South Tyrol. Prior to the event, I gave an interview on the topics Metaverse & NFTs, which was published as cover story in the business section of the South Tyrolean "Dolomiten". The interview highlights some relevant points regarding the Metaverse & NFTs and might be worth reading for you as well. Enclosed (with permission of the Dolomiten) you find the article as a) self translated English version and b) as original German version from the newspaper.
Interviewer: After the conventional Internet 1.0 and the collaborative Internet (Facebook and so on), we are now facing the transition to the Metaverse. What might the future of the Internet in the Metaverse look like from the user's point of view, and indeed, what is the Metaverse in the first place?
Metzler: The Metaverse is a vision, it doesn't exist yet. In this respect, there are a variety of ideas about what the Metaverse will look like. When people talk about the Metaverse today, they often mean digital, three-dimensional worlds of experiences in which people immerse themselves via virtual glasses, for example. Such virtual environments can be part of the Metaverse, but they are not the Metaverse.
Interviewer: To better illustrate the Metaverse, let's try to transfer our current user behavior to that in the Metaverse: How might communication, work, consumption, even leisure activities proceed in the Metaverse?
Metzler: Let's stay with the virtual worlds mentioned. In the Metaverse, there will be many opportunities to exchange ideas with each other or to work together on different projects. Instead of attending a video call via a laptop, for example, a meeting will take place in a three-dimensional virtual space. There, the participants can sit together at a table, discuss content, and look at a screen together, just like in a real office. For an important meeting in a virtual room, I might not want to show up with an avatar, i.e. my virtual representation, in a speedo, but wear a suitable outfit. I might then go shopping for the right outfit in a virtual shopping center. Or my favorite fashion brand may have supplied me with a digital version of the outfit for my avatar the last time I bought an article in the real world.
After a long, hard day at the office, I want to relax a bit in the evening. Leisure experiences like concerts or sporting events will increasingly take place in the Metaverse. For example, every now and then I go fishing with a friend in a virtual world, because a fishing trip to the real Lake Constance never works out in terms of time. The virtual fishing trip is somewhat shorter than in real life, but otherwise comparable: It's more about good conversation than fishing.
Interviewer: With "Second Life," an attempt to create a digital parallel world failed big time. What is different about the Metaverse, or is the current situation simply different than it was more than 18 years ago?
Metzler: Sure, the huge success of Second Life failed to happen, but the company is still in business, interestingly enough. Second Life was founded in 2003, which is quite remarkable. By comparison, Facebook launched in 2004, and Apple's iPhone made its debut in 2007. The context has changed in the meantime. The technologies available have changed. Leading tech corporations are now also investing heavily in the development of the Metaverse. Facebook invested ten billion in this area last year. But Apple, Microsoft and Google are also investing massively. Of course, that alone is no guarantee of success, but the general conditions are certainly much different today than they were in 2003.
Interviewer: What are the actual advantages for us users of entering the Metaverse?
Metzler: That depends entirely on how users will use the Metaverse and ultimately how it will develop. We are in the very early stages of development here. Let's compare it with the development of smartphones. When Apple launched its iPhone in 2007, it triggered a veritable wave of innovation in mobile applications. Today, there are apps for a wide variety of purposes, from mediation to podcast apps. The situation will be similar in the Metaverse space. Here, for example, VR (virtual reality) and AR (augmented reality) glasses are being developed, which will enable numerous new applications and bring with them a wide range of innovative solutions. Instead of calling up the meditation app on my 2D smartphone screen, in the future I might visit a Buddhist monastery in virtual, three-dimensional space and be guided in mediation by a monk. Or the monk will appear as a hologram in my living room and help me find my center in my surroundings.
Interviewer: Is there one Metaverse or could there be several and with which "devices" will we move in these spaces?
Metzler: Opinions differ as to whether there will be one Metaverse or several Metaverses. Some assume that there will be different Metaverses, perhaps comparable to the ecosystems that large tech companies like Apple or Google are building for their customers. Others argue that there will be only one Metaverse, just as there is only one World Wide Web. We will be able to visit this Metaverse or these Metaverses with various devices, including classic laptops or smartphones, so we won't necessarily need AR or VR glasses.
Interviewer: How well advanced are we in development at the moment, and how long is it likely to be before the niche phenomenon becomes mass adoption? After all, Bloomberg reckons that the market volume could reach 800 billion US dollars as early as 2024?
Metzler: At the moment, we are certainly still in a niche market. We are at the beginning of an evolution. How long it will take for the masses to turn their attention to this topic depends on a number of variables. Rumor has it that Apple will launch an AR/VR headset in the next 12 months. In the past, we have seen that Apple's loyal customer base can be a strong driver for the spread of new technologies. However, in general, when we talk about the development of a Metaverse, I think in terms of a time horizon of a decade, not a few years or months.
Interviewer: How do these enormous valuations result?
Metzler: Market volume forecasts attempt to extrapolate existing developments into the future, assuming certain scenarios. In the publication in question, Bloomberg talks about a market volume of 800 billion dollars in 2024. Interested readers should always look at the details of such projections and their methodology. If this is done, it quickly becomes apparent that the Bloomberg forecast includes a large part of the gaming market volume in this 800 billion. And the gaming market is huge. To put it in perspective: The market volume of the gaming market was estimated at about $180 billion last year. Bloomberg has been very generous in its definition of what all is included in the Metaverse market volume and has outlined a very optimistic scenario. Market volume forecasts should be viewed critically. There is also a large variance in such forecasts depending on the study. A current BCG study assumes a Metaverse market volume of 400 billion in 2025.
Interviewer: Do you see the danger that the Metaverse could become a huge flop because the majority don't want to move around like in a video game or in a hybrid digital-analog world, or do you think the comparison is rather inappropriate?
Metzler: A giant flop arises from a difference between expectation and reality. Expectations of the Metaverse are certainly huge at the moment, but they can hardly be met in the short term. Disappointment is inevitable. The American futurist Roy Amara once said that we tend to overestimate the impact of a technology in the short term and underestimate it in the long term. For me, this thought is also coherent in the field of the Metaverse.
A Metaverse is built on a set of new technologies, protocols, and standards. There will be many new hardware devices (e.g., VR/AR) that will see increasing adoption. There are a variety of possible experiences that can be built on this foundation. How these experiences will be designed remains to be seen. Whether it is virtual worlds in which we immerse ourselves and/or whether our real world is enriched with digital content, numerous variants are imaginable here. In any case, the underlying technologies that are being developed to create a Metaverse provide the basis for a wave of innovations. I see lasting changes coming our way here. Along the way, of course, many players in this environment will fail, realign themselves, or succeed. That is part of it.
Interviewer: What drives companies like Nike or Apple to invest millions in companies that are operating in the Metaverse?
Metzler: The motivation of the companies can differ. On the one hand, it can be about gaining early learning experience and building competencies in this area. On the other hand, it may be to develop and sell new services in the Metaverse. Also, this domain offers a chance to connect with existing or potential customers in a new way.
Nike is currently looking for a "Principal Innovation Engineer - Metaverse." I looked at the job posting for research purposes. Nike's self-image caught my interest: "NIKE is a technology company (...) We invest in technologies and develop them further." With this in mind and the self-conception as a technology company, it is not surprising that Nike bought the virtual fashion producer RTFKT.
Interviewer: Where do you see the biggest opportunities for local companies?
Metzler: The opportunities can differ depending on the company. It's a matter of exploring what's possible, what makes sense. While many people think of customer experiences when they think of the Metaverse, for many companies it will be more relevant to develop experiences for employees. Everywhere I go, people are talking about a talent scarcity. Here we now have technology that allows globally distributed teams to work together in virtual spaces. I often wonder why this is not being used more to solve the shortage of skilled employees. Personally, I meet weekly with people spread across several continents in virtual spaces and collaborate on ideas. It's surprising how well this works and how good the experiences already are nowadays. Today, it may still be a competitive differentiator as an employer if I offer my employees the opportunity to collaborate remotely in virtual spaces. In a few years, this will be expected of employees.
Interviewer: When people talk about the Metaverse, it's hard to avoid another hype topic: NFTs, or non-fungible tokens. Why are NFTs needed in the Metaverse?
Metzler: NFTs can be a kind of glue between different virtual worlds in the Metaverse. A few weeks ago, I attended the Metaverse Fashion Week on Decentraland. That's where the latest virtual fashion was presented. Let's imagine that at this event I would have bought a unique outfit from an up-and-coming virtual fashion designer and paid for it in Decentraland's own virtual cryptocurrency - MANA. In return, I would have been transferred an NFT identifying me as the owner of this unique outfit. Now that I own such a unique (and probably expensive) fashion outfit, I would like to wear it in all virtual worlds, not only in the virtual world of Decentraland. And that's exactly what NFTs enable. I can take my property, in this case my fashion outfit, from one world to the next.
Interviewer: Can you name some other specific areas of application for NFTs?
Metzler: The areas of application for NFTs are many and varied. As described in the fashion example, NFTs are crucial when it comes to representing ownership or other rights in the (virtual) world. But NFTs can also provide other benefits besides pure proof of ownership and can be used for a wide variety of applications. An example: On MadeMeThink.xyz I publish one thought per week in the field of the Metaverse, NFTs and Web3. The publication is young. The readership is relatively small, but close to my heart. These readers are my early supporters. As a token of gratitude, my readers will receive a free NFT in the coming months, which in turn will have additional benefits in the future. For example, I am planning virtual meetups in which I will discuss current topics with my readers or explore virtual worlds. However, only those people who are in possession of the NFT I have issued can participate. The NFT therefore functions as a kind of key, as a membership. The NFT as a key can open many different doors over the years, to experiences, to content, to a community, to other NFTs. Membership in some of these NFT communities can be so attractive that it also comes with a high financial value, as happened, for example, in the case of the Bored Ape Yacht Club. To become a member of the Bored Ape Yacht Club (BAYC), a BAYC NFT is required. The entry price into this exclusive club is currently around 350,000 euros.
Interviewer: Why do you think the NFT bubble will not burst?
Metzler: NFTs and the underlying blockchain technology offer a basis for new business models, new applications, new experiences. The blockchain / NFTs are simply technologically better than existing solutions. NFTs in general will therefore prevail in many areas, in my opinion. NFTs will be so normal in the future that many people will not even realize they have an NFT when they have bought a ticket to a concert, for example.
If the question about the bursting of the NFT bubble refers to the financial valuation of some NFT projects, then I would answer yes. There will be a lot of consolidation in the market for NFT projects, many will implode in terms of their financial values and cease operations. On the other hand, however, the Metaverse and NFTs will also see the emergence of major brands, strong communities, and the tech corporations of the future.
Disclaimer: The thoughts published in this publication are my personal opinions and should not be viewed as investment advice. I am not a financial expert. My specialty is entrepreneurship, innovation & marketing. Readers should always do their own research. I own various cryptocurrencies and NFTs, however in many cases it is for the sake of researching the field and gaining a deeper understanding of Web3, NFTs and the Metaverse and not for investment purposes.