The metaverse is a virtual world that blends aspects of digital technologies including video-conferencing, games like Minecraft or Roblox, cryptocurrencies, email, virtual reality, social media and live-streaming. Quite how these pieces will fit together is a work in progress, but investors and executives including Facebook Inc. Chief Executive Officer Mark Zuckerberg are already interested in the commercial potential.
1. What is the metaverse?
It’s hard to describe because it doesn’t truly exist yet. It may be easier to grasp the concept by first saying what it isn’t: It’s not a single product, it’s not a game, and it’s not being created by one company. Rather, it’s akin to a 3D world wide web, where businesses, information and communication tools are immersive and interoperable. In a way it’s a digital facsimile of how we live in the physical world. Just as you might create a document in Microsoft Word and send it via Gmail to a colleague to read on an iPad, items in the metaverse should be able to move across an ecosystem of competing products, holding their value and function. A piece of virtual art bought as a “non-fungible token” from Company A, say, should be displayable on the digital wall of a house in a game made by Company B.
2. What would you do there?
Work and play. For example, “Jane” creates a 3D avatar within Facebook or Microsoft Teams and uses it in virtual meetings. After work, she attends a virtual music show with friends and their avatars appear among the hundreds of little heads in the audience. The music finishes and the band says “don’t forget to buy a T-shirt!” Jane browses the designs at a virtual stall just as she would on Amazon, Asos or Taobao today, pays for one with cryptocurrency and wears it at the next day’s virtual meeting. A colleague asks to borrow it for his daughter to use that evening inside a Roblox game, and she lends it to him easily. This simple scenario involves corporate communication tools, live-event streaming, e-commerce and sharing something of value. But it only works if each provider builds its system in a way that makes assets such as avatars and shirts compatible and transferable.
3. Who’s in the game?
Zuckerberg, for one, sees great promise in the metaverse, and it’s a factor behind his company’s investment in products such as the Oculus virtual-reality headset. Computer-graphics chipmaker Nvidia Corp. wants its Omniverse platform to power some of the underlying framework, as does software-maker Unity Software. Video-game developers such as Roblox Corp. and producers including Epic Games Inc. and Microsoft Corp. all want a piece of the pie. Roblox is also in China through a joint venture with Tencent Holdings Ltd., which launched a parallel platform that follows rules set by the Chinese government’s censors. Tencent also has registered a slew of metaverse-related trademarks for its own social app QQ. TikTok-owner ByteDance Ltd. has plowed money into VR headset maker Pico and mobile game maker Reworld. There are even specialist consultancies such as U.K.-based Dubit to help companies move into the metaverse. And don’t forget payment providers and cryptocurrencies — someone’s going to need to facilitate those cross-virtual-border transactions.
4. Can today’s smartphones handle it?
The metaverse won’t reach its full potential — millions of people accessing and living in the virtual world anywhere, at any time — without ultrafast, low-latency internet. Case in point is the online world Second Life, which came out before smartphones caught on and lost its appeal in part because it couldn’t provide real-time, on-the-go interactions. Today’s fourth-generation (4G) connections can just about support multiplayer apps like Fortnite, but can’t handle hundreds of concurrent streams of time-sensitive data. This is why mobile carriers around the world are spending billions of dollars to build 5G networks. They may need even 6G to take it further. The same is true at home and in the office, where bigger screens drain more bandwidth, favoring fiber optic connections wired directly into premises.
5. What’s at stake?
It could be a technological leap forward similar to the 1990s, when the web grew from static text and images on a page to a place to buy a book or watch a movie, and then into a way to attend college lectures and collaboratively design products. Over the next two decades, work on a metaverse will result in changes to how we perceive value and expect portability in our virtual life. Some mobile carriers are already creating their own metaverse platforms, seeing it as a “killer app” for monetizing 5G after losing out to giants such as Facebook and Apple Inc. in reaping profits fueled by social media in the 4G era. But a key challenge will be ensuring large corporations don’t build proprietary silos. Children might play Roblox but want to move their objects or purchases to another platform as they grow up.
6. Haven’t we seen this before?
The concept of a metaverse goes back decades in science-fiction novels, notably Neal Stephenson’s “Snow Crash.” Movies like “The Matrix” and “Ready Player One” incorporated key themes. Second Life used metaverse concepts — 3D worlds, an economy, live events, workplaces and so on — but they were locked within the walls of a proprietary ecosystem. Same with Minecraft today. All the components of a metaverse exist today. The missing piece of the puzzle is to join together all the building blocks used by thousands of competing businesses and creators. Achieve that, and you have your metaverse.
More tech coverage from Fortune:
- Europe wants one device charger to rule them all—and it doesn’t come from Apple
- Once an oddity of Japan’s digital culture, VTubers have become a global hit—and brands want in
- Facebook puts Instagram Kids on hold amid growing concerns
- Frustrated carmakers upend industry after chip shortage shatters their faith in suppliers
- Remitly CEO on his money-transfer company’s 10-year journey to an IPO
Fortune’s upcoming Brainstorm Design conference is going to dive into how businesses are building experiences in the metaverse. Apply to attend the event on May 23-24 in New York.