How The Metaverse Will Make Money and How to be Prepared
Something is happening right now.
New technologies are skyrocketing almost out of control, and huge amounts of money are changing hands. Artists and startup companies are being crowned as pioneers of a new era.
You’d be forgiven for not knowing about it all, though. The phenomenon I’m describing is occurring in an alternate reality.
The “metaverse” is a convergence of our physical and digital lives that is being brought on by advancements in internet connectivity, AR/VR, and blockchain. It’s just the culmination of all our science fiction fantasies—what ‘Tron’ and ‘Ready Player One’ imagined, but starting to happen right now.
If that sounds exciting to you, then perhaps you won’t be entirely surprised that people are investing heavily in the space. That over 400 million dollars have been dropped on the metaverse’s chosen currency, the non-fungible token (or NFT). That 40 million dollars are moving every month now, and that all of the most expensive NFT transactions in history have occurred only within the last couple of months. Just last week, Christie’s auctioned off a piece of digital art by Beeple via NFT that sold for more than $69 million.
Or maybe you still are surprised. After all, that is a lot of capital in a market that probably 99 percent of people on earth don’t even know exists.
To make sense of how this niche is attracting so much attention, we can look to leading startups in the space—what they have to offer—and entrepreneurs—what they have to say. These folks were in head-first before the boom, with insights that the rest of us are only starting to discover now.
Why the Metaverse is Skyrocketing
By any conventional measure, Upland does not make sense to many. More than a virtual game, it is a social experience, but why are thousands of people dropping good money on this app? One reason may be that it’s simply so unique.
Upland is a decentralized application (dApp) for buying, selling and trading virtual real estate linked to real maps. So, for example, you can visit New York City in Upland to check out who owns the Empire State Building or The New York Stock Exchange. You might even bid for them yourself, if you have in-game currency to do so.
This idea, on its own, is kind of nifty. But what makes Upland more than just a toy is how its in-game economy works. Players begin by purchasing its native token, UPX, with fiat money, in order to begin buying their first properties. As Upland becomes more and more popular over time, market prices for these properties organically rise. Virtual landlords can hodl, or cash out for fiat again.
So while Upland properties may be virtual, they are nonetheless very real investment assets.
For proof, consider the NYSE. You’d imagine that, relative to most properties in Upland, the Stock Exchange could fetch a fair bit of UPX. But would you guess it to be worth a full $23,000? That’s how much it sold for last December. Today it’s valued even higher.
Yet even this financial component doesn’t fully capture the appeal of Upland. For the entire picture, we interviewed one of the platform’s co-founders, Dirk Lueth, for this article. We asked him not just what players can earn on his platform, but what they enjoy about being there. He whittled it down to five reasons:
Fun to find properties that have a special meaning, value or emotional attachment
Thrill to flip properties
Enjoying the community, making friends
Finding like-minded people
Excited about the perspective to rebuild the world and eventually make a living in it
In the coming months and years, Upland’s dev team plans to build out its universe by adding 3D property development features, and allowing players to run businesses in-game. They’re even planning a feature where players can import NFT artwork into their virtual properties, thereby increasing their value much the same way physical art does for physical properties.
“I am very much excited to get more real-world brands into Upland,” Lueth said, “and finally to introduce some location-based services and features to start blurring the real world with the Upland metaverse.”
Why Established Brands are Jumping In
The metaverse is still under-the-radar—outside the view of all but the most forward-thinking technologists. Exactly how long will it remain this way? According to Lueth, more traditional game vendors getting their feet wet with blockchain. However, it is most difficult for them not to disrupt their own business model.
We’ll see much much more NFTs for everything (lots of consumer goods will be NFTied and appear in metaverses) because brands understand that there is a marketing and direct revenue opportunity. When other industries are getting into the space, some of them will start to experiment with new types of products and business models using their brand.
You can sense Lueth’s enthusiasm for the future of the metaverse, but also some caution with predicting how long it’ll take to reach mainstream adoption. He’s probably right in both regards. High ceiling, long timeline.
That said, a few household names have at least started to dip their toes into the metaverse. Take Sotheby’s, which just auctioned off an NFT artwork for a truly eye-watering sum.
And there’s Atari, the company we all associate with the early era of gaming. In a move few would’ve anticipated, the company just leapfrogged the entire current generation of gaming by launching its own cryptocurrency: Atari Token. I spoke with the company’s CEO, Fred Chesnais, whose vision for the project was bold.
“With the Atari Token, we are creating a framework in which other legacy players can follow. We are taking a step other legacy gaming companies have not. We are actively pursuing the most bleeding-edge blockchain technology that will truly merge blockchain and gaming for a next generation virtual experience,” said Chenais.
The goal for Atari Token is to become the cryptocurrency token of reference for the video game and entertainment industries. By creating a market for quick and easy token transfers, backed by the assurances of smart contract technology, it will allow developers and gamers to effectively monetize their digital assets.
One case study in how it works is Atari’s recent partnership with Enjin, perhaps the biggest cryptocurrency startup in the blockchain gaming sphere. Together, the companies have created an NFT fashion line where people can buy Atari-branded clothing with their crypto.
Moving forward, Atari is planning to expand their reach to new markets like Africa, where mobile game development is soaring. And they’re in the early stages of building immersive and robust virtual and augmented reality gaming. Chesnais is particularly bullish on that prospect.
“It’s a desire to create multiple digital realities (as many as possible) in addition to the real world. Now more than ever, people can see the true value that virtual worlds bring. People have been drawn to the digital interactive experiences ever since Atari gave birth to the industry with PONG,” highlighted the Atari CEO. “This coupled with NFTs, which allow for users to truly own their in-game assets while empowering creators, is driving even more interest. And this trend will continue to go up. We’re only in the first few innings.”
Beyond Just Visual Business Models
Another CEO we spoke to about the new metaverse business models that are having success, was Jason Fox, CEO of EarBuds. Fox, a former NFL player, got the idea for the company after being on the field and wondering what Cam Newton was listening to inside his headphones. That’s how he came up with the idea of making a social music app came about. While his company is not on the visual side of the metaverse, the rise of audio and voice is equally important.
“Audio is becoming a big part of how we interact virtually as Clubhouse and other social voice apps have taken off. But this is bigger than voice — music is such a big part of our identity in the real world and we know it’s key for how people express themselves in the virtual world as well. Listening to and discovering new music has always been a social activity but with streaming, it has become more of a personal experience often driven by an algorithm. With EarBuds, we are making music a social experience again,” added Fox.
Future of the Metaverse Economy
Among some the pioneers we’ve spoken with, some of the most insightful perspectives on the metaverse economy came from the team behind IMVU.
IMVU, for background, is considered one of the world’s largest 3D avatar social platforms, with seven million monthly active users. They’ve got a marketplace of over 50 million items, supported by a native cryptocurrency (VCOIN) that has already brought in millions in revenue, and just recently attracted 35 million dollars in funding. All that places it in the upper tier of metaverse companies, gaming or otherwise.
When we spoke with their CEO, Daren Tsui, he was quick to point out the wider context and the environment that allowed for IMVU to thrive.
The term “metaverse” first appeared in Neal Stephenson’s 1992 book Snow Crash, but the idea of a virtual simulation where people can interact with each other already existed before (Tron in 1982 as an example.) As related technology progresses over time, the realism and capabilities of virtual experiences have improved dramatically drawing more users to connect in the virtual world,” said Tsui.
For Tsui, there is no doubt, the pandemic has driven many more people around the world to search for a safe and better way to socialize online. Now they are finding this highly enjoyable and entertaining way to connect in authentic ways and interact and engage with new friends.
It certainly makes sense that COVID-19-induced social distancing has driven interest in virtual social platforms. But Tsui’s focus is decidedly longer-term. Notice the precise phrasing of his answer: the pandemic, in his view, is driving more people to “search for” something like the metaverse, but the reason they’re staying—coming back, spending money—is the “dramatically” improved “realism and capabilities of virtual experiences.” That won’t go away when the pandemic is over.
Between Upland, Atari, EarBuds and IMVU, we can see what he’s talking about. Upland is already providing an unparalleled kind of investment-platform-slash-gaming-experience which, if they end up implementing all the features they’re playing with now, will end up being near-unrecognizable just a few years down the road. Atari is applying their classic gaming expertise in a new, cutting edge approach to in-game items trading. IMVU has built the kind of virtual world people want to exist in. They may be drawn in because of the pandemic, but they’re attending virtual events and buying gear for their avatars because it’s fun and immersive.
Tsui summed it up succinctly. When asked when our physical reality will converge with the metaverse to create something even bigger, better, and more unforgettable than what’s out there now, he put it simply, it’s not if, but when.
SOURCE: Forbes – This part of an ongoing series that Cathy Hackl is hosting on Clubhouse called CEOs of the metaverse.