Meet Metanomics: The Next Evolution of Metaverse
- By Lachlan Colquhoun
- March 28, 2023
One of the most revealing ways of describing the economic opportunities in the much-hyped metaverse was in a recent report from the banking group JPMorgan, which talked about the “ownership economy.”
Ownership, of course, has always been a source of wealth. Still, it is a concept that has only recently been extended to the emerging digital world of the metaverse, and it is this concept which is set to turn a cool idea into the next big thing for business.
“If you want to personalize a virtual home, you can purchase an original piece of art, tokenized as a digital asset,” the report says.
“You can even own the land the house is built on. Ethereum-based platforms like Decentraland, for example, are already selling virtual plots that people can develop. Virtual real estate is a growing market. The average price of a parcel of land doubled in a six-month window in 2021. It jumped from USD6,000 in June to USD12,000 in December across the four main Web 3.0 metaverses.”
Partly this growth has been because brands have been buying up space to create virtual stores and other experiences. These are venues for monetizing content creation, whether virtual NFT art or gaming experiences.
Gaming, up until now, has been the main action in the metaverse, and there are communities of gamers who will spend much of their time there already.
But taking it to the next step and creating what has been called “metanomics” requires something else, and according to JP Morgan, it is ownership.
And the advantage of creating in the metaverse is that digital products are cheaper and more repeatable.
Time is money
U.S. economics consultancy Analysis Group estimates that by 2030 humans will spend around a third of their time in the Metaverse.
Where humans go, commerce follows, so this behavioral transition will inevitably have an economic impact.
The JPMorgan report notes that, already, USD54 billion is transacted on virtual goods, double the amount spent on music, and that 2021 GDP for Second Life — perhaps the first mover in creating a digital world in 2003 — was about US$650 million with nearly USD80 million going to content creators.
“We believe Metaverse will be a bigger theme like digital transformation, which would be resilient to economic downturn”
“In time, the virtual real estate market could start seeing services much like in the physical world, including credit, mortgages and rental agreements,” the report says.
“However, with the emergence of decentralized finance (DeFi), collateralized lending primitives and the composability of blockchain token-based digital assets, a next-generation financing company could potentially leverage digital clothing as collateral to underwrite virtual land and property mortgages. In fact, the financing company may not be a company at all, but instead, a self-organizing, mission-based community of people (who may not have met at all in person), also known as a decentralized autonomous organization (DAO).”
Getting ready to deploy
IT consultancy Frost & Sullivan sees a USD750 billion market opportunity by 2030.
Frost & Sullivan surveyed more than 1,700 companies globally in the last quarter of 2022 and 89% of the respondents said they believed the Metaverse held “moderate to significant” potential for their brands. 58% of these organizations are already conducting trials and proof of concepts, while 23% are moving to large-scale commercial deployment.
Kiran Kumar, the author of a 2022 study on Global Metaverse Growth Opportunities at Frost & Sullivan, says the opportunities are primarily in consumer sectors.
“Play-to-earn models are hugely popular, and especially now, a growing portion of the revenues are also being generated now through non-gaming experiences, including social events and e-commerce,” Kumar said.
He says other industries, such as the AEC sector — or architecture, engineering and construction — and the industrial and healthcare industries are in the early stages of adoption. Still, there are “many emerging use cases” where they can capitalize on the potential of the Metaverse.
“We observed that more than two-thirds of the enterprises globally are looking to increase their investments in the immersive technologies over the next two years,” said Kumar.
“We believe Metaverse will be a bigger theme like digital transformation, which would be resilient to the economic downturn and reflect high secular growth in the foreseeable future.”
Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and the NextGenConnectivity editor. He remains fascinated with how businesses reinvent themselves through digital technology to solve existing issues and change their entire business models. You can reach him at [email protected].
Image credit: iStockphoto/AnuStudio