July 18, 2022

What Is the Metaverse, How Is It Different, and Why Does It Matter?

By Michael Diamond and Elizabeth Haas

When recently asked, “What does the Metaverse mean to hospitality?” Jonathan Tisch replied, “We need to define it….and understand what it means to us.”  He took a breadth, picked his head up, looked at the audience and then added, “It is our future.”

What is the Metaverse?

Much has been written about the Metaverse, with a great deal of time and editorial space devoted to defining what it is. Many of the definitions focus on the Metaverse as an absolute state, or view what it is through the lens of a specific industry or application.  Missing, thus far, is clarity on its intent, its use, and its impact — which is why we wanted to share what the Metaverse is and why it matters from where we sit. 

First off, we see the Metaverse as multi-armed with transformative reach and influence.  One arm – the Metaverse as a utility – will change human engagement and connection. As hard as we try to corral the Metaverse into one idea, concept, or phenomenon, we can’t.  Why? Because the Metaverse is not a specific place or type of technology. It appears in many places and across many platforms, allowing us the ability to travel space and/or time, own digital assets, and create experiences that might not otherwise be possible. 

For example, in the Metaverse you might visit a museum in Amsterdam with your grandmother, or go to Atlanta and feel the energy in the room as Martin Luther King speaks. You might watch a tennis match as if you were one of the players slogging through five match points.  Or, you might visit the Great Pyramid of Giza with the touch of a button before deciding if you want to spend the money to travel there.

In the Metaverse, consumers can interact with brands without the barriers of the physical world – time, gravity, and geography.  Shoppers can visit virtual stores anywhere and anytime to sample new fashion trends, or play virtual games in Nike Land to redeem points for digital apparel. Best yet, consumers can now use Amazon’s new room decorator tool to visualize furniture in their own virtual living room.

Another arm – the Metaverse as a new reality – reflects a transition that is already underway, a convergence towards a universe where the digital, physical, and virtual meet. We had an inkling of what was possible when Motorola introduced the Razor flip phone, or when RIM came out with the BlackBerry, long before we recognized the impact and reality of mobile communications. Today, not a day goes by without the Metaverse shaping our new reality, whether it’s working remotely with colleagues in Prague on a new medical device that can be seen in 3D, or making day-to-day purchase decisions using our own personalized avatar. The seismic shift that will come with the Metaverse might prove even more significant than the mobile revolution — and it is our responsibility to prepare ourselves accordingly.

A third arm – the Metaverse as a divide – mirrors the significance of other historical divides (clear moments of “before” and “after”), such as the printing press, electricity, or the Internet.  Even in the flattest landscape, there are passes where the road first climbs to a peak and then descends into a new valley. Most of these passes are only topography, with little or no difference in climate, language, or culture between the valleys on either side. But some passes are true divides with different systems, termination points, and obvious boundary conditions.  The Delaware Water Gap, some seventy miles west of New York City, divides the Eastern seaboard and middle-America. History, too, knows such divides which tend to be unspectacular until these divides have been crossed. Once crossed, the social and political landscape changes, often impacting everything from language to cultural norms. The Metaverse, as a divide, is challenging every assumption we make about education, business, technology, industry, and society. Unlike other moments when technology transformed day to day life, the Metaverse is a “pass” that will be critical to navigate.

How is the Metaverse different from other technology-inspired trends?

As the Metaverse gathers steam and pulls an increasing number of companies into its whirling orbit, the media focuses its attention on the types of initiatives that companies are launching, as well as industry-wide levels of adoption – high, medium, and low. What’s been missing is a focus on the characteristics of the Metaverse that make it distinct. From the early data and information, three specific characteristics of the Metaverse emerge:

  • A Deep Social Immersion that provides a new level of emotional connection and an experience that is palatably different in feel, scale, and scope.

  • Greater Control as a Creator that allows an ability to create, control, and/or own a product or experience.

  • Access to New, Unique, and Increased Value in the Digital Space that supports using new forms of currency, digital assets, and ownership, including an ability to own segments of the economy created.

Why does the Metaverse matter?

Answering the question of why the Metaverse matters assumes we don’t know the answer.  In fact, the answer is all around us. The Metaverse matters because it is already here and already happening with transformative changes that are likely to occur over the next 10 years, and with ramifications that will last a lifetime.

As this piece is being written, hundreds of millions of people are connecting to Metaverse-inspired environments and having “never-before-imagined” virtual experiences at work, at home, and at play.  Many of the most storied brands doing business around the globe are building a presence in these virtual spaces, with whole industries viewing Non-Fungible Tokens (NFTs) as a new weapon in their arsenal. In 2021, $70 billion was spent on purely virtual goods; NFTs added another $40 billion; and advertising in the gaming market alone exceeded $25 billion.

It’s not just the promise of increasing profits that is driving interest in the Metaverse. Certainly, “you have to be in it, to win it is one mindset prompting investment in the Metaverse; there is a genuine fear of being left behind. Lurking behind the lure of money is an even more attractive carrot — the ability to influence how the Metaverse forms, and to lead your brand, business, and industry to a place it has never been.  One of Peter Drucker’s often-referenced quotes hits the nail on the head when it comes to the Metaverse: “The best way to predict the future, is to create it.”

The emergence of the Metaverse’s key technologies, including extended reality and NFTs, is already impacting branding strategies. The interactive, immersive nature of these experiences changes the relationship and stickiness that brands have with consumers.  For example, several companies have launched AR and VR applications to help buyers test and shop their products. Walmart provides exercise equipment in the Metaverse to familiarize a new consumer group with their brand name. Leading brands, such as Estee Lauder, Nike, Benetton, Roblox, and Disney, as well as virtually all of the fashion houses, provide compelling evidence for why the Metaverse matters. It matters to these companies because they recognize that to play in the virtual world of tomorrow, they have to play now or forever wish they had.

Many businesses recognize that brand identities are going to switch much faster and more often in the Metaverse. Clock speed – for product development and product branding – is increasing dramatically.  For those already playing, the Metaverse’s influence on brand investment will be greater than the relative size of the Metaverse itself.

Perhaps the greatest reason the Metaverse matters is its influence on behaviors, social norms, and expectations. As Bill Gates anticipates, “The Metaverse will shift how people hear and receive stories as much as the novel did after the birth of the printing press.” As educators, we will teach with new tools and encourage greater engagement with students able to see a building they drafted in 3D, or medical students able to sharpen their surgical skills on a visual cadaver, or college athletes able to practice a sport in a simulated environment. New social behaviors and cultural norms will emerge from the rules and practices we create as we live, work, and play in the Metaverse.

In fact, the Metaverse may come to change human coordination itself. In Decentralized Autonomous Organizations (or DAOs), for example, communities manage assets in more democratic ways across borders. The Metaverse need not be a playground for giants, but a mosaic of smaller worlds where each niche determines its own culture. The boundary between user, consumer, and owner will vanish as participants write their own rules. New modes of coordination may supplant conventional corporations, NGOs, or even cities. In this new book The Network State, Balaji Srinivasan goes so far as to argue that on-chain communities may outcompete nation-states as the political units of tomorrow. Whether the future proves Srinivasan right or not, the fact that web3 and the Metaverse will push the frontier of human coordination remains undeniable. 

A final word: We should not fear the Metaverse or attempt to escape from its new reality. Instead, we should embrace it, shape it, and work to deliver the value it offers. The issue with the Metaverse is not what do we do tomorrow, but rather what do we do today in anticipation of tomorrow.

Elizabeth Haas is senior adviser to the Dean of the NYU School of Professional Studies. Michael Diamond is the academic director of the NYU School of Professional Studies, Division of Programs and Business, Integrated Marketing and Communications Department, and a clinical assistant professor of marketing.

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