What is the future of the metaverse? Well, if I’m being perfectly honest, I don’t know. What I do know is that there is a framework you can use to think about the future of the metaverse — or any technological shift — and determine where we are, where we might be going, and what you ought to do to be ready.
This framework includes thinking about:
- How do you define "the metaverse" — or, really, any other technological innovation?
- How do you define "success" for that innovation?
- What timeframe are you looking at to achieve that success?
- How confident are you in your answers?
The future of the metaverse will reveal itself to all of us over time. Its opportunities, benefits, and limitations will become increasingly clear. But thinking about how we get there and what you can do to prepare for the metaverse, whatever it ends up being, is the subject of this episode of Thinks Out Loud.
Want to know more? Here are the show notes for you.
The Future of the Metaverse? — Headlines and Show Notes
Show Notes and Links
Here are this week’s show notes for Thinks Out Loud with links and news related to this week’s episode. Be sure to check out all the links that matter for your business once you’ve given the episode a listen.
- Is It Time for Digital Marketers to Move On to The Next Big Thing? (Thinks Out Loud Episode 360)
- Sequoia’s Sonya Huang: Generative AI hype “absolutely justified” – Protocol
- History of Yahoo! – Wikipedia
- Excite (web portal) – Wikipedia
- MSN – Wikipedia
- Company Documents Show Meta’s Flagship Metaverse Falling Short – WSJ
- Killer application – Wikipedia
- Videotape format war – Wikipedia
- The Sky is Falling for Digital… or Is It? Big Tech’s Earnings Q2 2022 (Thinks Out Loud Episode 357)
- What’s Going on With AI in Marketing? (Thinks Out Loud Episode 351)
- A Far Too Quick Look at the Metaverse, web3, and the Future of Digital (Thinks Out Loud Episode 349)
- The Future Digital Trends You Must Think About Today (Thinks Out Loud Episode 342)
- How Much Will 2022’s Top Tech Trends Shape Your Digital Strategy This Year? Not Much (Thinks Out Loud Episode 334) – Tim Peter & Associates
- What 2022 Trends Should Marketers Care About? (Thinks Out Loud Episode 335) – Tim Peter & Associates
- The Metaverse in Hospitality Marketing: Loren Gray Interview (Thinks Out Loud Episode 366)
- The Future is Already Here (Thinks Out Loud Episode 370)
- The Most Important Trends in Marketing 2023 (Thinks Out Loud Episode 369)
- Big Trends: Does Marketing Have a Future? (Thinks Out Loud Episode 375)
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- Customer Focus
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- A Brief Introduction to Thinks Out Loud. As a bonus, we’ve also included this PDF document that highlights some of our core episodes to help you dig into what the show is about. We think it will help you capture the show’s essence while you’re working your way through the 300-plus episodes published so far. Download it here.
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Past Insights from Tim Peter Thinks
You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:
Technical Details for Thinks Out Loud
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Running time: 25m 44s
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Transcript: The Future of the Metaverse?
Well, hello again everyone, and welcome back to Thinks Out Loud, your source for all the digital expertise your business needs. My name is Tim Peter, this is Episode 363 of the big show, and thank you so much for tuning in. I very much appreciate it.
What is the Future of the Metaverse?
So, I was having some conversations over the last handful of weeks with some friends of mine and some clients of mine and people I know, just colleagues and the like about AR and VR and the metaverse and Web3 and the like. And I’ve said many times before, this show is called Thinks Out Loud, because sometimes, well, I’m thinking out loud.
But during the discussion, we came up with this framework that I think is really valuable when we talk about the metaverse and when we talk about new technology trends broadly and how you can think about whether or not these things have benefit or merit to your business. And I thought it would make sense to share with you what these are and what these say. I want to start by saying that I’m relatively bullish on the future of virtual reality and especially augmented reality. And so, I’m fairly bullish on the future of the "metaverse".
What I also think is true, and this is where I kind of want to dive into the framework a little bit, is that I think there are four things we need to be really conscious of when we talk about new technologies and how they might affect our businesses in the longer term.
So, I’m going to be talking about this today about the metaverse and VR and AR. What is generally true though is you can substitute whatever new tech comes along for whatever it is you’re looking at instead of using the word metaverse or VR or AR or web3 or any of that kind of stuff. So, when you hear metaverse, feel free to substitute a different word when you’re thinking about technology that might affect your business in the future. And I’m going to talk about what these four things are at a high level and then I’m going to dive down into them.
A Framework for Evaluating the Future of the Metaverse
- Define "metaverse." So, the first is that you need to define, in this case the metaverse or Web3. When we’re talking about the metaverse, what are we all saying? What do we mean when we say that?
- Define "success." The second one of course is you have to define success. If we say we’re bullish on an object on a technology or bearish on a technology, what do we mean by success? What do we mean by bullish or bearish? What does that look like?
- Define your timeframe. The third thing we need to define is the timeframe in which we believe these things will come to pass or won’t, right?
- Define your confidence level. And then the last is you need to define your level of confidence. How confident are you in those other things that you say?
What Do I Mean by "The Metaverse?" What Does Anyone Mean?
So, let’s dive into these a little bit. When we talk about the metaverse or Web3, define the terms. There’s a joke that I’ve been telling lately, which is that if you ask 10 different people for a point of view about the metaverse or web3, you’re going to get at least 15 different answers about what they’re talking about.
Until we have a clear definition of what comprises the metaverse, a clear and universally understood definition of what comprises "the metaverse," we’re going to get diverse responses on whether or not these things will succeed. And, don’t worry. We’ll get back to success in a moment.
Three Essential Components of the Metaverse
When I talk about the metaverse, I’m definitely talking about virtual reality. I’m talking about augmented reality, and I’m probably talking about crypto or blockchain. They are essential components.
What is virtual reality in this context? And what I mean by those when I talk about virtual reality, I mean a separate space that we engage with apart from the world around us, usually through a headset of some kind.
What is augmented reality in this context? When I talk about augmented reality, I’m talking about an overlay that allows us to engage in the physical spaces we live in every day.
What is crypto in this context? And crypto and blockchain, I’m talking about some form of trackable currency and ownership title to objects within those virtual or augmented worlds.
I am much more bullish on augmented reality, on AR, than I am on VR. And I’m much more bullish on AR than I am on crypto and blockchain, generally. But I think we won’t have the metaverse if all three of those don’t work to some level or other, at least when I think about the metaverse.
And I do think we’re going to see a fair bit of AR augmented reality pretty soon. I think we’re seeing a lot of it already working its way into our day-to-day.
Other Technologies Shaping the Metaverse
Now, some people also include other additional technologies that add to the cloudy definition of the metaverse, such as generative AI for its ability to help designers or developers create metaverse or extended reality experiences. Some people include edge computing because it will improve the performance and the customer experience. Some people include things like the internet of things, IoT, for distributed sensing and the like. Personally, I’m a little less sold on that. I could be wrong. To me, that feels like existing tools trying to burrow the hype around newer and flashier technology.
But maybe I’m wrong. I want to be fair.
How Mature is the Metaverse?
At the same time, the definition of the metaverse is a bit of a mess right now. It’s not necessarily a bad thing. It is a signal that the metaverse is not a fully mature offering yet. I’ve heard a number of people compare where we are with this to the internet in, let’s say ’95 or ’96. And I would say that most early adopters had a pretty good sense in that period of what the internet was. Yahoo, Excite, MSN, they all existed by late ’95.
Today, something like Horizon Worlds for Meta or Roblox or someone else might turn into the Yahoo or the Google of the metaverse. They also might be the Alta Vista or the Geocities or the Flooz or the Second Life of the metaverse/dot-com bubble, right? I think Flooz is a particularly interesting example given that it was also a virtual currency.
At the same time, the internet, the web, and many of the business concepts of the mid ’90s did win. People like to point to Pets.com as the biggest dot-com bust. But Chewy, which is now owned by PetSmart, seems to have figured it out. So, it’s not that the idea was bad, they were just way too soon.
Many Metaverse Ideas Will Be Around for a Long Time; Not All Companies Will
One of the lessons we should take from this is that it’s challenging but not impossible to identify the underlying ideas that would resonate.
- Virtual worlds have merit.
- Augmented reality has merit.
- The ability to transact and define ownership in those spaces has merit.
Picking the companies or the precise technology that’s tougher and it borders on the impossible, particularly the less mature something is.
Now, once we’ve defined our term, we also need to define what we mean by success. And if we’re talking about VR headsets, selling as many units as for instance, video game consoles, we’re there today more or less.
If we’re talking about VR headsets, selling as many units as the iPhone, we’re not remotely close. We’re not remotely close to remotely close. If we’re talking daily users, it’s a very small set of daily users outside of certain industrial applications and gaming — and not a lot there.
There actually was a story the other day in The Wall Street Journal about how Meta is requiring their developers to spend more time using the tools — they’re forcing them to do it — because there’s no compelling reason for those developers to do it themselves every day.
I think we can absolutely call VR a qualified success, but it’s by no means mainstream yet. The fact remains that most people still have never used a VR headset. Most people don’t own them.
The Revenue Test
I also tend to define success in terms of material to earnings or at scale for a given company. If you’re a small business, if you’re an individual hotel and you figure out how to use this to sell an extra room per night, especially at a low cost, that could be successful.
But if you’re a $100 million company, you’d probably want to see a million or 5 million in incremental revenue before you’d call any metaverse activity material or successful in real terms. And of course, companies like GM or Toyota or Marriott or Google with billions of dollars in quarterly revenue would need to see much greater returns or commensurate savings — efficiency gains — before they’d call the metaverse anything more than an interesting experiment.
I do tend to think about new technology more from the perspective of companies with maybe $50 million to $500 million in revenue. That’s where most of my clients tend to live. So that tends to be the lens I look through. You might look at it completely differently and that’s okay.
And there is of course some public relations value if you come up with a good story. Accor did some neat things with artificial intelligence a few years ago that generated some positive press for the company. I also think it’s true, and I think this is true, that they got kind of a one time hit from that and that they’re not getting much in the way of significant returns from that project today. That’s okay. Just be clear about what you mean when you’re using new tech, whether it’s the metaverse or anything else for PR.
Additional Success Measures
There are plenty of examples of technology that "failed" but also did well in other ways. I always think of the Beta vs VHS example, right? Where, for those of you who remember when videotape first came around or if you’ve seen this in a business class somewhere along the way, Betamax from Sony was a better technology than VHS. But VHS won in the consumer marketplace. VHS was undoubtedly much, much, much more successful. Beta never went away. Broadcast television studios used it as their preferred format most of the time. So, it was also successful. But if you look at the two different technologies side by side and say which was more successful? Well, VHS was much, much more successful.
I think there’s some relationship there we can look at and say there are applications for VR in particular in industrial settings or entertainment or gaming that are being used today really well. I saw a presentation the other day where they were showing this idea of digital twins and building buildings, building large capital intensive projects, in virtual reality before building them in the real world so that you could determine how well it worked for the people who are going to be involved with it. That’s a really cool concept.
Other examples of Rolls-Royce is using VR to train mechanics who can actually learn at home before they airline engine airplane engine mechanics before they have to go into and start working on the actual engine themselves. So, from an industrial training perspective, that’s really cool, and that is definitely successful.
Where is the "Killer App?"
What we haven’t seen yet is a killer app. We haven’t seen the thing like spreadsheets were for the home computer way back when, or the internet was, or search was, or social was for mobile that got people to say, "Oh wow, this is a thing I have to have."
So, when we get to the point of the killer app, I don’t think we’re there yet.
What’s Your Timeframe? Ten Years? Or Two Years?
When we think about success, we also need to define our timeframe. I generally believe in the Bill Gates’ quote. Bill Gates once said, "We overestimate the change we’ll see in the next three years and underestimate the change we’ll see in the next 10."
Gaming. For gaming in VR, I think we’re getting close to "mass appeal" in that people who are heavy gamers probably are using it more or less. Though again, a killer title of the killer app of gaming, whether it’s a "Call of Duty" or a "Halo" or a "Grand Theft Auto" or "The Legend of Zelda" or a "Myst" still seems to be missing. I could be wrong about that. I’m not a hardcore gamer, so I might be missing one.
Industrial applications. For industrial applications, I think we’re getting pretty close, so probably closer to three years than 10 from significant adoption. Again, "define success." But there are plenty of training applications or medical and telemedicine both from a training and a telepresence perspective. The pre-visualization or digital twin idea that I mentioned a moment ago that are exciting ideas, they are useful ideas and they’re getting close enough to sufficient scale to be considered meaningful to somebody’s business.
Casual gaming and telepresence. If we take a step back and look at the metaverse more broadly, though, and say for casual gaming and telepresence, we are probably a little ways away. We don’t have enough penetration of the platform to where most people are going to be using it regularly. The tools, the killer apps, the comfort, the cost, the hardware penetration just isn’t there yet for mainstream adoption.
Desktop replacement. And if we’re talking about desktop replacement, where we’re using the metaverse as a place, we quote go to work every day, I think that’s closer to 10 years away using the Bill Gates’ timeframe before we see mainstream adoption. The tools just aren’t there to that point.
I’ve been participating in a series of meetings using virtual reality for the last 18 months, and it’s definitely a cool system. I like it. I like it a lot. I come away from those meetings far more engaged, less tired, right? Because I’m not just staring into a screen. I actually can move my head, "walk around" to talk to people. What’s also true is it’s really hard to take notes. It’s really hard to pick up a glass of water without knocking it over while you’re wearing this headset. And even for me as a bigger guy, after about an hour of wearing the headset, it gets a little heavy, it gets a little uncomfortable. I don’t think it works for day to day. So, I think that some sort of smart glasses will replace the desktop or laptop for some applications some day, just as mobile has taken the place of the traditional desktop or laptop for some applications. But if you think about the amount of work done on traditional computing platforms, it’s still a lot even 15 years after the launch of the iPhone. I expect the amount of time it takes before VR takes the place of desktop to be… a while.
Success Happens Slowly… Then All at Once
The last thing I want to say abouttime frame of course, is that when it happens, when we reach "success" for "a given timeframe", it will likely happen fast. We’ve seen this with tipping points again and again and again. All the pieces get lined up, kind of like people setting up dominoes, and then all it takes is the right push for it all to fall over.
But I still think we’re in the process of setting up the dominoes. It’s still a little ways before we’re going to see this, the metaverse reach mass adoption, particularly for day-to-day activities.
Augmented Reality (AR) is Much Closer
Again, I think AR, we’re way closer there. I’ve talked about things like Houzz and Google Maps Live View, and this really cool game called The Machines. I think we’re going to see augmented reality functionality slowly creep into everyday use. Again, like tipping point. And we’ll look around and go, "Where did all this augmented reality come from?"
Think of things like the ones I’ve just mentioned. But of course Pokemon Go or as a friend of mine pointed out the little Snap hotdog dude that was really fun and everybody was using. We’re getting close and I think we’re much closer to the two years than the 10. But of course, the success and timeframe caveats still apply.
How Confident Are You About Your Answers?
Finally, we need to define our confidence level on these things. How confident am I in these predictions? It depends.
It’s Easier to Predict a Future That’s Only a Couple of Years Away
On the things where we’re talking two to three years down the line, I’m much more confident. Maybe 80%-90%, barring some significant change or advancement that we can’t see yet. I’m mostly looking at the trends we see right now and kind of straight lining them and expect that straight line to continue for the next year or two until or unless something’s significant and currently unknown emerges. So, something could accelerate that or something could push it back. But right now, if we’re looking at where we’re going to be in two years, it’s pretty safe to say it’s going to be like where we are now just more so.
The Longer-Term is Much Tougher to Predict
For anything five years out or longer. My confidence on this drops a lot, maybe 45% on the low end, maybe 65% on the high end. But there’s a lot we know we don’t know, let alone the things we don’t know that we don’t know. So, those are the places where I would not straight line the trends because something is likely to come along that tips over all of those dominoes.
Mark Zuckerberg is Looking 7-8 Years Ahead
Even Mark Zuckerberg is talking about how this will be material to his company’s earnings in the 2030s. So, even Mark Zuckerberg is not saying this is something that’s going to happen right away. Now, he may be sandbagging, Maybe it’ll really be the late 2020s, but that still puts us five/six years away, probably, on the short side.
Now, none of this means that the technology today isn’t cool or fun or eventually useful, and opportunities undoubtedly exist for smart early adopters to make some money here. It’s more just a question of how much money, how soon, and how confident I or anyone else feels about these predictions.
In a week or two, a friend of mine is going to come on the show who’s much more bullish and give the counterpoint to this. So, if you disagree, that’s okay. I want to give equal time to somebody else who’s got a different point of view on it. So, wait a week or two and please be looking forward to that episode.
Conclusion: A Framework for the Future of the Metaverse
But when we think about these things, remember we want to first define what we mean by the metaverse or define what we mean by technology. Second, we want to define what we mean by success. Third, we want to define what we mean in terms of the timeframe. And fourth, we want to define how confident we are in those predictions.
Because when you ask those questions, you’ll set yourself up for success regardless of which future comes to pass. Whether it’s the bullish future, whether it’s the bearish future, or whether it’s any of the places in between. I’m going to be okay if I turn out to be wrong on some of these predictions because I will keep asking questions along the way to get more and more confident. And that’s what I’m encouraging you to do at the same time. I can’t wait to see where we end up.
Now, looking at the clock on the wall, we are out of time for this episode. I want to remind you that you can find the show notes for today’s episode as well as an archive of all past episodes of Thinks Out Loud by going to timpeter.com/podcast. Again, that’s timpeter.com/podcast. Just look for episode 363.
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I hope you have a great rest of the week. I hope you have a wonderful weekend, and I look forward to speaking with you here on Thinks Out Loud next time. Until then, please be well, be safe, and as always, take good care of yourself.