Riding the metaverse wave – what brands need to know and do – Apparel Resources
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When it comes to ‘metaverse’, few business leaders consider themselves experts. Some may wonder if it even matters to their companies. The short answer: Yes, it does.
At present, many companies are investing in the space, aiming to deepen customer loyalty, engage in new ways with their communities and grow revenue. Yet there’s reason for wariness too. The metaverse is suddenly hot, even though the underlying technology trends have been underway for years.
As in the internet’s early days, this innovation likely contains pockets of speculation, overvaluation and unwise investment — especially since a true metaverse, as tech visionaries imagine it, is still years away. The good news is that it’s possible to separate the reality from hype: understand what the metaverse is really about and take practical, affordable steps to meet your company’s needs.
In its latest report, PwC has tried to demystify the assumptions surrounding the space. We aim to elaborate on them in this section.
What is ‘metaverse’?
The ‘metaverse’ promises a stunningly realistic 3D digital world where you can purchase and sell goods and services, sign and enforce contracts, recruit and train talent and interact with customers and communities. As some technology visionaries imagine the metaverse, this world won’t primarily run on platforms whose owners control data, governance and transactions. Instead, customers (and businesses) will be able to take their identities, currencies, experiences and assets anywhere they wish.
Also unlike today’s web experiences, much of this digital world will persist even when no one is in it.
With the metaverse you could, for example, put on a virtual reality (VR) headset and visit a factory on the other side of the world. It will allow you to see and touch its machines, shake hands with the local supervisor, and inspect its operations without leaving your desk. You could even send one digital version of yourself to that factory, while another meets with your board of directors.
Today, many younger consumers already try on virtual clothes at virtual retail stores or buy virtual merchandise for their virtual gaming environment.
Already, companies are looking to the metaverse to:
The metaverse is an evolution, not a revolution
The metaverse was first described and named almost 30 years ago — but we’re still in its early days. Computing power, headsets, software protocols and networking capacity just aren’t ready yet to support a truly immersive and shared metaverse. But this future is coming, as the culmination of a long-running trend: for innovative new technologies to blend into a greater whole.
Today, cloud technology is addressing the processing power and storage to support extended reality and immersive interfaces. Hyperconnected networks that leverage 5G are nearing maturity. AI is helping to create digital reflections that combine computer vision, speech and deep learning to offer users experiences that feel real.
The decentralisation of finance and economy, as supported by blockchain, is making partly automated financial systems possible. Finally, digital-native consumers and the pandemic’s impact on consumption habits are igniting demand for the virtual products and experiences that metaverse offers.
Still what is largely missing is the metaverse’s promised interoperability: a digital world where you and your customers can transition seamlessly among multiple experiences offered by various providers. This connectivity will require a new architecture for the internet, often called web 3.0.
Web 3.0, which internet innovators and investors are currently working on, is supposed to be a decentralised structure with countless interoperable platforms. Whether or not this vision ever arrives, enough components of the metaverse already exist to offer opportunities, along with risks, today.
What makes a metaverse: key concepts to master
One way to think of the metaverse is as a set of opportunities from which your company can select a few to focus on. Based on PwC’s years of work with the technology trends that are now converging to form the metaverse, they have identified six concepts that we believe will be its foundation. Most are not yet fully mature and hence the actual value of true convergence is still unrealised by most organisations.
Yet some of these concepts are already concrete enough, so that they can grow on the existing lines of business and create new ones. Companies in retail, real estate and entertainment are already investing and earning profits. For others, less mature metaverse components, getting in at the start will help your company be ready for however the metaverse may evolve into. Either way, these components require an attention to trust and values — without care, this new digital world could exacerbate socioeconomic disparities.
When assets, transactions and identities simultaneously exist in physical and digital worlds that billions of people and organisations share, the old ways of building and sustaining trust may no longer apply.
Cryptocurrencies, non-fungible tokens (NFTs) and other blockchain-based digital currencies, assets and exchanges will likely underpin value exchange across the metaverse. Further innovation will be needed as governments, companies and new, digital-only organisations work to build trusted digital monetary systems, offer new data monetisation propositions and conduct lending, payments, real estate investment and more in the metaverse. Decentralised autonomous organisations (DAOs) — with voluntarily agreed-upon rules enforced by a computer program that runs on a blockchain — will likely play important roles.
A true metaverse requires seamless interoperability among users and platforms, based on web 3.0 and still-to-be-determined standards. While this interoperability will offer new possibilities to reach and understand customers, it will also raise new challenges for gathering and protecting data, and for cybersecurity and privacy. It may also undermine business strategies built around keeping users and their data in a given platform. Competitive advantage may shift to those companies that offer (through hardware or software) trusted ways for users to enter the metaverse.
The metaverse will need rules of engagement for users, rules for how the metaverse itself can change over time and enforcement mechanisms, including for tax collection, data governance and regulatory compliance. Early movers may be able to help set these rules. Security will be paramount, as a new, decentralised digital world may offer malicious actors a new world of entry points for attack. Authenticity — and trust more broadly — should also be front and centre to reduce the disinformation that has often plagued the internet.
In the internet today, identity is often linked to platforms. It may be true, pseudonymous or anonymous. The metaverse, decentralised and interconnected, will need trusted digital identities — for people, assets and organisations — that port across platforms. Companies active in digital identity now may both help set the metaverse’s standards and be able to offer a necessary service. Digital identities may also be central to permitted data collection and data governance in a decentralised environment.
A shared, persistent and immersive 3D digital world will offer unique experiences, based on its own aesthetics — beliefs, ideals and tastes as expressed in individual choices. Some trends for user experience are already becoming clear in games and VR / AR environments. Companies that create trusted metaverse experiences and protect privacy rights may win consumer loyalty, while those that stay on top of metaverse trends may be well placed to forecast consumer preferences and behaviour.
A true metaverse should reflect in real time the changes made in it by different participants, entering and leaving it in different ways, in different places, at different times. When you take your metaverse headset off, the metaverse and other participants will continue their activities uninterrupted, with (for example) smart contracts enforcing agreements and trading assets. This persistence will likely require a new approach to digital assets and activities, including services and applications that are portable, dynamically configurable and extensible.
Since no true metaverse exists yet, but many of its concepts are already business-relevant, many companies would benefit from taking six measured actions. The first three focus on opportunities and use cases available today. The next three will help build the capabilities that will help support metaverse success tomorrow.
Get up to speed – Most companies — even many technology companies — lack institutional familiarity with the metaverse’s concepts, which are evolving quickly. Many may also lack the skills and processes to truly understand and trust their digital transactions and investments. Assign at least one resource or source of knowledge (such as a group) to understand key concepts such as cryptocurrencies and decentralised autonomous organisations and their relevance to your company, and to follow the metaverse as it evolves.
Develop a strategy – Identify gaps to close and long-term opportunities to build from the metaverse and its key concepts, then work on foundational measures. Many companies, for example, will likely benefit from recruiting digital native employees already at home with the metaverse’s key concepts, as well as technical measures such as making services extensible, developing plans for security and identity, and publishing application programming interfaces (APIs) to core systems so that others can connect.
Test the waters – Select a few opportunities available within the metaverse’s underlying trends today. Lower-risk use cases include selling digital versions of physical goods, offering virtual tours of virtual products or facilities, and launching NFTs to enhance brand awareness and connections to customers. Companies may also wish to consider buying or leasing digital real estate for sales, advertising and customer support. Digital real estate is likely a higher-risk option, since no individual digital worlds have yet proved that they will have lasting relevance, but it may be a reasonable choice for some companies to consider.
Focus on trust – The metaverse and its currently existing components offer new challenges for cybersecurity, privacy rights, regulatory compliance, brand reputation and anti-fraud efforts. Companies should, for example, consider security at the services level, so that no matter where your asset goes, security is maintained. To foster trust among consumers, shareholders, regulators and other stakeholders, communicate early what to expect from your metaverse initiatives and how you will mitigate the potential risks. Blockchain and AI, for example, can in some cases automate the authentication of identity, assets, transactions and contracts.
Rethink core competencies – What offers competitive advantage in a shared, decentralised digital environment may be different from what you have today. You may need upskilling and recruiting to close skills gaps, as well as new approaches to data and business relationships. If, for example, your digital strategy is based on owning a digital platform, you will likely need to accelerate your services and security infrastructure. If you are working with a platform, assess how ready they are — and make sure that you can take your data with you if you switch providers.
Align physical and digital – If you have added or plan on adding digital services and/or assets to your portfolio, drive for a consistent brand experience across both the physical and digital constructs. Just as your web presence needs to match your physical location experience — so must your metaverse experience.
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