What CEOs should do when Web3 meets metaverse

Ever since Mark Zuckerberg made his Meta announcement last October, insisting that the new identity of his company should be "metaverse-first" and "not Facebook-first," chief executives of companies around the globe have been a divided lot. While some chief executive officers (CEOs) appear keen on diving into the metaverse to get the first mover advantage, many others are struggling to wrap their heads around the concept while a sizeable number do not even see this as a business priority - at least not for now.

On May 18, a note by research and advisory firm Gartner revealed that 63% of the CEOs surveyed see the metaverse "as either not applicable or very unlikely to be a key technology for their business". This, even as 37% believe the metaverse is "very likely to be a key technology for the development of their businesses". Gartner's own prediction, made on February 8, is that 25% of all individuals will spend at least one hour on the metaverse by 2026, related to work, shopping, education, or entertainment. 

People and businesses are already getting their feet wet in the metaverse, which is not an entirely new concept. Hundreds of companies across sectors that have been using the foundational technologies of the metaverse such as augmented reality (AR), virtual reality (VR), mixed reality (MR) or extended reality (XR) and digital twins (virtual replicas of physical workplaces and machines) for more than a decade, are now experimenting with immersive 3D metaverses and Web3 technologies like blockchain and non-fungible tokens (NFTs) to enhance those experiences. Popular and established metaverses include Decentraland, The Sandbox, Roblox, Fortnite’s Epic games, and even Facebook’s own metaverse called Horizon Worlds. 

Immersive experiences

Punjabi singer Daler Mehndi held a metaverse concert on Republic Day through a customized platform called PartyNite where the avatars of users attended the concert. The avatars had to walk around, locate NFTs, save them and connect them to their Apna DAO wallet. Likewise, the Madras Maharani Concert was held in a metaverse by NFT marketplace Jupiter Meta in association with radio partner Hello FM on 15 April. Every member of the audience was given exclusive music NFTs that can be traded.

The fusion of the metaverse and Web3 technologies can also be seen in the edtech sector. On 28 February, for instance, Ronnie Screwvala-backed 21K School announced the launch of an NFT marketplace and said it was introducing the metaverse and Web 3.0 technologies as part of the curriculum for all its K12 students. Students of the Bengaluru-headquartered online-only school can earn reward points in the form of coins for all activities, timely submission of assignments, assessments and marks scored in examinations that could be redeemed for scholarships, etc. According to Santosh Kumar, co-founder and CEO of 21 K School, "The 21K School Metaverse is taking shape and we will soon be able to offer a glimpse into this new dimension of education. The metaverse and NFT marketplace will be unveiled to 21K School students in this academic year." 

Even marriages are taking place with a fusion of metaverse and Web3 technologies. Chennai-based Dinesh Kshatriyan, for instance, decided to host his wedding reception in the metaverse in early January even as the actual wedding ceremony was an intimate real-world affair at his fiance’s village. The guests appeared as virtual avatars. Kshatriyan partnered with cryptocurrency and blockchain startup Polygon and a Chennai-based mixed reality technology startup called TardiVerse, to make this happen. 

Abhijeet Goel and Sansrati who tied the knot a month later went a step further by getting married in a 3D Metaverse. The wedding, which took place on Yug Metaverse, was conceptualized, organized and executed by the media agency Wavemaker India for ITC Ltd. and Matrimony.com. The digital avatars of the couple had their ceremony hosted on a scenic beach side venue where the guests also joined in via their digital avatars even as the physical wedding was being celebrated in Bhopal. 

Real estate is another sector that is leveraging Web3 and metaverse technologies. Metamall, a metaverse for high-end real estate that was launched in 2021, claimed to have sold more than $1 million of land as NFTs in its virtual skyscraper shopping mall within seven days of its release. These NFTs can be used to build stores, experience centers, arenas, etc. for VR experiences which can further be rented or staked to earn revenue. The project is built on the Solana Blockchain network, featuring a native token to allow users to buy virtual real estate. 

On February 14, real estate company Hiranandani group said it plans to invest about ₹3,500 crore over the next 2-3 years to expand into the metaverse market. According to Darshan Hiranandani, CEO of the group, "the company will launch a new platform called Tez, with an initial investment of ₹1,000 crore in fiscal 2022 aimed at online gaming and entertainment sectors."

India's leading IT services providers, too, have announced their foray into the metaverse. Infosys, for instance, launched a metaverse foundry in February and claims to have developed over hundred "ready-to-apply use-cases and templates", which include an immersive retail experience for shoppers to explore a branded metaverse environment, buy products as NFTs, and connect to an online checkout counter to make purchases that are delivered in the physical world. 

For instance, Infosys helped enhance the shopping experience of Tennis Australia during the Australian Open by offering its fans "an extended reality store...to shop for all their favourite items including tees, beach towels, caps and racquets in this virtual world, and then carry these back to the real world", according to Korey Allchin, Director of Partnership and International Business of Tennis Australia who has provided a testimonial on the Infosys website. 

Likewise, Tech Mahindra has launched its metaverse called TechMVerse to help in areas of its car dealership, NFT marketplace, virtual bank, and gaming centre. Announcing this on 28 February, CP Gurnani, MD and CEO of Tech Mahindra, told the media that his company “would be training a workforce of 1,000 engineers” to cater to these opportunities. 

Startups have joined the chorus too. A Chennai-headquartered startup Imaginate is providing Reliance Industries Ltd (RIL) with software to enable a 3D metaverse for its employees working on a rig somewhere in the high seas near Kakinada along the coast of the Bay of Bengal. Likewise, Bengaluru-based NextMeet is an avatar-based immersive metaverse platform that enables remote working, collaboration, meetings, and networking for business, education, and events. 

Understanding the two worlds

The two worlds--Web3 and metaverse--are often used interchangeably, acknowledges Praphul Chandra, founder of blockchain development firm KoineArth. "There’s been no agreed upon way on where one starts and the other ends. But in my mind, when you talk about web3, you’re basically talking about blockchain and its derivative technologies like DeFi (decentralized finance), DAOs (decentralized autonomous organization), crypto, and more. On the other hand, in the metaverse you’re broadly talking about AR, VR, video games, and how virtual environments will connect with each other,” he elaborates. 

Another distinction, according to Chandra, is that most of the development on metaverses is "actually happening outside India", but "that statement is less true for web3, and there are more people working on DAOs, etc. (in India)”. For instance, if you want to enable commerce inside the metaverse, you will need Web3 technology. Yet another difference is that Web3 technologies are already being used by companies, whereas it's still very early for the metaverse. "The virtual environments have been ready for two-three years now, but the interconnection between them is a huge problem,” says Chandra. 

“This revolution is going to require a ton of developers to build infra and apps on top of that infra. India already has the engineering talent, and they need to be encouraged,” corroborates Pareen Lathia, founder of Buidlers Tribe - a startup incubator that focuses specifically on blockchain-based startups. “You can sit at home and work for a web3 project anywhere in the world, which means more money for Indian developers,” he added. According to Lathia, his incubator has received 400 pitches from India in the last seven months alone. 

The third difference is that of interoperability standards. Chandra mentioned that the de facto standards in web3 are emerging on their own, instead of a body like the Industry of Electrical and Electronics Engineers (IEEE) setting them. On the other hand, standards will take time to evolve in the metaverse. 

Other concerns

While both these technologies are very exciting and offer a huge potential, the major challenges with Web3 and metaverse technologies revolve around unfavourable government regulations, lack of privacy frameworks, long gestation period, lack of interoperability standards, and lack of good business models. 

Meta (formerly Facebook) itself has admitted that “many products for the metaverse may only be fully realized in the next 10-15 years and we believe privacy and safety, as well as open standards and interoperability, need to be built into the metaverse”. Mark Zuckerberg told shareholders last month that creating the metaverse will bleed money for three to five years. Meta has spent $10 billion on the idea of an immersive virtual world in 2021 alone. 

Also consider the case of Bengaluru-based edtech startup Invact Metaversity, operated by Invact School Pvt. Ltd., which began by offering a 16-week metaMBA programme, costing Rs.2 lakh, to be delivered in the metaversity (a metaverse campus) where students could learn from industry experts and peers using AR and VR technologies. The startup’s first batch of 60 students was to begin on 12 May but the course had to be cancelled due to the internal differences on the company's roadmap, and the students had to be refunded their money.

"The metaverse is definitely a superior medium as compared to Zoom and Google Meet just as these technologies are better than a plain vanilla phone call. It does add a spatial dimension in 3D mode," Tanay Pratap told Mint in a recent interview. But he was also insistent that the "metaverse will not solve a business problem--it's simply a technological tool. Having a 3D world to interact with helps but not many have used it, so the benefits are yet to be seen".

There is also potential for misuse of these technologies. For instance, even as major brands such as Miller Lite, Wendy’s, Estée Lauder and JPMorgan Chase & Co. have experimented with using digital worlds for marketing, cannabis marketers too are using the metaverse to set up shops, promote their core product, and sell real-world merchandise and NFTs, according to a 4 June article in the Wall Street Journal.

And this May, a SumofUs researcher along with her colleagues entered the metaverse with the aim of studying the behaviour of users on Meta's social networking platform Horizon World. But within an hour after she donned her Oculus virtual-reality headset, she alleged that her avatar was raped in the virtual space.

According to Paul Daugherty, Accenture's group chief executive for technology and chief technology officer, another challenge lies in making these technologies inclusive. "The technology will get better. But not all eight billion people in the world can afford this. So, our ability to create 2D experiences that allow access to some of these 3D worlds is critical. The good news is that technology is moving in that direction," he told Mint in a recent interview. Invact, for instance, plans to use the "MetaLite version that will have a 2D (instead of 3D) experience of audio and video" to address poor bandwidth issues.

The adoption of metaverse technologies is nascent and fragmented, acknowledges Gartner. “It is still too early to know which investments will be viable in the long term, but product managers should take the time to learn, explore and prepare for a metaverse in order to position themselves competitively,” says Marty Resnick, research vice president at Gartner. Daugherty advises companies to first "build an architecture that can scale fast because you will need to move your business fast. So, think big, start small, scale fast".

"How the metaverse eventually pans out is uncertain--excitement could fade if technical hurdles prove too cumbersome or if mainstream consumers balk at investing in digital-only goods and experiences. But if it takes off then it could be an over $1 trillion market opportunity by the end of the decade," according to an April 13 note by CB Insights’ Industry Analyst Consensus. "Businesses are right to pay attention," it concludes.

(Prasid Banerjee contributed to the article)