The Metaverse is Dead.
The beginning of a new era with a problem-first approach.
The metaverse as we knew it in 2022 is most certainly dead. The name “metaverse” has begun its fast-paced downward trend and might in the near future be replaced with some new category-defining wording.
However, all these still lead to the core promise of the metaverse: immersiveness and ownership, and still solve the same problem that Web2 can’t.
In other words, 2023 is going to be an exciting year for the web3 industry as a whole, in which it is fair to expect to take users from being “innovators” into early adopters.
In the last 3 years, crypto has come full circle, from the boom of 2020 to the peak in 2021 to the crash of 2022.
As we rebuild and gather our learnings from the past years, a few factors are crystal clear:
The days of hype are over.
Easy-money speculations are done.
We know what not to do.
Based on my learning from the past years, I have laid out my Metaverse Outlook 2023 in this article.
As I have described in some articles in 2022, the market which awoke the metaverse and provided its first heartbeat will always remain the gaming industry.
Gamers and later crypto aficionados took the plunge to learn and experience a new digital environment before everyone else ( a common phenomenon in emerging industries where the innovators experiment with things before the early adopters join.)
Naturally, the focus to build the metaverse, both from a web2 and web3 perspective, started there. In the past years, we saw games getting introduced to the world of blockchain with features such as in-platform currencies, x-two-earn mechanics, and tokens in the form of NFTs.
Now, what if we provoke a thought in which the actual overall metaverse market, is made of additional market segments beyond gaming?
Is it possible that what we have already seen playing out for metaverse is just version 1.0 and other new, previously non-existing variations are emerging as we speak?
In other words, what if we extrapolate the core benefits and use the lessons learned from blockchain based-gaming and solve crucial problems for other audiences than gamers?
From what we have already seen, the core features of the metaverse are immersiveness and ownership. Bundling them provides a new engagement experience that is activating, and impacts all of our senses.
Meaning right out of the bat, the fight for the precious attention span has a new competitor now as users in immersive environments are 7-10x times more engaged than swiping through feeds on social media.
To put it into perspective, the average Instagram post attracts a viewer’s attention for less than 5 seconds.
But an average Netflix TV show gets significantly more attention than Instagram. Because it’s more immersive and less distracting.
It means that in the future we’ll no longer primarily watch or read things but experience products, places, and purposes that will be immersive enough to keep users hooked for longer periods of time!
The Metaverse Killer Experience: Augmented Reality (AR)
Augmented Reality is basically about adding a layer of augmentation on top of physical reality. In an AR environment, you can add things that aren’t there but can be seen and interacted with through a device (i.e. phones, AR glasses, etc.)
We are already seeing use cases of AR being rolled out in a wide range of businesses. From engaging shopping experiences to intense training simulations—AR has opened up a new window of use cases.
Companies such as Facebook, Google, Apple, Snapchat, and TikTok have been developing core AR systems.
Especially in South East Asia, in countries like China, South Korea, and Japan, a lot of progress has been made in AR.
Two of China’s biggest tech companies Alibaba and Tencent are driving the rapid adoption of AR. China is expected to cross $20B in expenses done through AR/VR/XR mediums.
Especially after the pandemic, sectors like retail, entertainment, and healthcare have seen high results from augmented reality.
South Korean beauty brands such as Amorepacific have been experimenting with AR for some time now with impressive results. They have installed AR mirrors in stores for users to try out cosmetics virtually.
Japan used XR technology (AR+VR+MR) during the Olympics to provide viewers with an immersive experience.
In our company Phygtl, we are partnering with FIFA to bring soccer fans around the world a new way to engage and be rewarded.
These are enough pieces of evidence showing a level of mature optimism that in 2023 AR will be a key factor in the expansion of the metaverse across industries.
User Engagement Being Rewarded in New Ways
For a long time, we have seen companies like American Airlines, DSW, Starbucks, etc try out loyalty programs. However, they were always two-dimensional and limited in features.
Buy Stuff>Get Rewards>Buy More Stuff (but you better do it now as the due date is approaching).
It’s a limited loop with a weak motivator for users.
The metaverse has the power to change it completely by introducing a transparent, traceable rich reward system that can go beyond the current restrictions.
Using in-platform currencies, tokens, and NFTs, users not only get rewarded for consumption but also for contribution.
And what’s more? You will have the option to redeem or transfer your rewards across multiple brands and causes.
Imagine getting a cappuccino from Starbucks using your reward points from Allbirds, while then donating the reward points to a non-profit you support!
You can use such a tokenized reward program for giveaways, swapping, donations, the list goes on.
One of the first companies to jump into this web3 reward program is Starbucks.
Their reward program Starbucks Odyssey granted a selected group of people got access to the beta launch and can now actively take part in this web3 experience.
To engage with the experience, Starbucks members will log in to the web app using their existing loyalty program credentials.
They'll be able to engage in various activities called “journeys” — like playing games or taking on challenges to deepen their knowledge of the Starbucks brand or coffee in general.
I expect to see more such programs from big brands in 2023 and beyond.
Don’t call it Metaverse and NFTs
I started in the late 90s my tech carrier at an ASP, Application Service Provider business, which then matured and became MSP, Managed Service Provider in the 2000s.
Then it shifted to Software as a Service (SaaS) for years, before ultimately, after 12 to 15 years of maturity became finally, what we know today broadly as Cloud Computing.
The value proposition was the common ground throughout all categorizations, a more flexible way of accessing and delivering data, but the way the industries coined it changed over time.
I see a similar evolution for the metaverse as a whole. We’re still very focused on the core features rather than the problem it is really solving. For example, the term NFT literally means Non-Fungible Token. We’re describing the core feature of the object.
It’s like naming cars as “moving vehicles”. Yes, that’s the core function but it’s not what we call them.
That’s why in 2023, I expect a shift towards renaming the metaverse and NFTs will take place. The metaverse, NFTs, and cryptocurrencies will start transitioning to more colloquial terms instead of mechanical ones.
Why is it important though?
It’s always a sign of mass adoption when people move on from mechanical nomenclature to cultural nomenclature. While the core features of the product remain the same, people’s perception of it changes.
SaaS moved into mass adoption when Steve Jobs, back in June 2011, introduced iCloud at which point SaaS became truly Cloud Computing.
Problem-Solving Approach / Industry-led Business Models Based on Blockchain
The last thing I believe 2023 will start kicking off more and more and probably the most fundamental on my list is companies and users taking a less speculative, but more problem-focused approach when it comes to metaverse and Web3.
We have been in this innovator’s phase since 2017 now. The launch of the Ethereum blockchain gave birth to projects like CryptoKitties and Aave, showing us the power of the blockchain.
Since then a lot of experiments have been done, and quite naturally we have been met with a lot of learnings (I consciously did not use the term “failures”).
Two crypto winters in, I believe we have learned all the lessons we needed to start the next phase.
The lessons on what NOT TO DO are long and comprehensive. Now it’s time to roll out conclusive use cases in which blockchain can truly solve problems.
The first question we all should be asking today when considering any blockchain-related product is “what problem is it solving?”
It doesn’t matter whether you’re looking at NFTs, metaverse, DAOs, DeFi, dApps, or Layer 1, it is mature to ask what problem it is solving, in order to understand if it is just another thing leveraging new technology for the sake of riding a wave?
And because of that, starting with 2023 I foresee a growing amount of businesses building new immersive and rewarding business models.
The metaverse isn’t going to be about companies buying digital land in one of the virtual worlds (this approach belongs to the last learning cycle), but more about companies, IP holders, and brands tackling business unit challenges such as customer service, sales or optimizing ads ROAS just to mention a few.
Closing Thoughts
No one holds the magic key to the metaverse—we all learn through experiments. In the past two years, we have learned a lot from our experiences.
One of those learning was “hype can’t create a sustainable market”. Parcels of virtual lands being sold for millions of dollars was a hype that couldn’t weather the storm because there was no use case.
The same goes for NFTs.
What makes a project sustainable is the problems it solves.
Bitcoin solved the problem of centralized currency and cross-border transactions. A solution so powerful that it created an entire industry.
Ethereum made it possible to host dApps over a blockchain creating potentially game-changing solutions like DeFi, NFTs, and the metaverse.
Now we need projects that make use of these technologies to create solutions for problems that web2 can’t solve.
Creating another hype-train or expecting another moonshot isn’t going to cover it this time. I am optimistic that 2023 is going to be the year of solutions for web3.