There are a multitude of competing definitions for the metaverse. This can make it quite difficult for our clients to see through the hype and make the appropriate choices that actually produce customer value.
In this article, we provide practical suggestions for our customers through an exploration of three significant narratives of the metaverse. We align these to specific business use cases, exploring the technology that would be needed to make this happen and offer our view on how organizations can best proceed to create customer value.
Today's metaverse narratives
The metaverse is a highly charged term. Some focus on the economic aspects while others on the technology. Still others focus on the cognitive ramifications while some focus on the social implications. Some may agree with, while others may even object to the term “metaverse” as an appropriate name. Some may view the metaverse as a rebranding of existing approaches while others may see it as an entirely new category.
Irrespective of one’s position, the use of the term has been further entrenched with Meta's recent $10 billion bond issue and many other related metaverse investments. At Thoughtworks, we see the emergence of a range of metaverse potential futures in the form of specific narratives, each of which is attracting investment. Together, we see these as a bellwether for fundamental shifts in the way our clients can leverage technology to create customer value. While distinct, all of the narratives about this technological future share an emphasis on recombination, environmental fit and path dependency.
Let’s first look at where the term comes from. According to the Oxford English dictionary, the word “metaverse” was coined in 1992 in Neal Stephenson’s novel Snow Crash. Its protagonist, Hiro, “spends a lot of time in the metaverse.” In this use of the term, metaverse is synonymous with cyberspace or any common form of virtual reality. Under that definition, you reading this text on your computer by using the internet would be sufficient to place you in the metaverse. However, since 1992 and up until 2021, the use of the term “metaverse” has been fairly consistent.
Since Facebook announced the change of their company name to “Meta” in October 2021, aligning itself with the “metaverse” as its foundational purpose, we have observed a flood of companies that have joined the metaverse bandwagon. It is clear to us that the “metaverse” represents a paradigm shift in the Kuhnian sense, but what is not clear is whether the metaverse is a Palm Pilot or an iPhone. Existing technologies are being rebranded as "metaverse" in order to capture the momentum. What does all this activity really mean? And should your business be investing in the metaverse?
To help guide our clients, we explore the possible futures described by three different metaverse narratives. These include:
- Mark Zuckerberg’s vision for Meta
- Web3’s "ownership economy"
- The "industrial metaverse"
Each of these narratives offers a distinct perspective on a possible technological future and associated benefits to create customer value. However, it's important to recognise that any combination of these could play out; they are not mutually exclusive, but rather forces for moving in a particular direction that both shape and are shaped by the environment they seek to alter. We analyze these in terms of business use cases, correlating them with the technology that would be required to make such a vision feasible. For each narrative, we point out tangible opportunities to support our clients in making investment decisions that produce tangible customer value.
Zuckerberg’s “embodied internet”
When Facebook rebranded itself as Meta in October 2021, Mark Zuckerberg announced the change through a glossy, “Ready Player One” style video presentation of what his metaverse might look like. We think the Meta vision is best described as an “embodied internet” with an emphasis on 3D avatars that exist both within fully immersive virtual reality and as holograms in your living room through augmented reality. As expected from Facebook, there is an emphasis on social interaction and content creation, but with the addition of an economy where creators get paid and participants get to flaunt their digital assets as they move between metaverse experiences.
Low fidelity versions of this kind of metaverse already exist; in fact, they have for years on platforms such as Second Life, Roblox and VR Chat. However, to bring Meta’s vision to reality, much higher fidelity VR and AR headsets need to be developed, and the price point needs to be correspondingly accessible. Meta’s Reality Labs (previously Facebook Reality Labs/Oculus) have invested a huge amount in VR and AR research. John Carmack, co-founder of the software company that produced Doom observes that “Mark Zuckerberg has decided that now is the time to build the metaverse, so enormous wheels are turning, resources are flowing, and the effort is definitely going to be made.” Whether the answers come from Meta Reality Labs, we believe it’s likely that these higher fidelity experiences will be realized in the next few years.
One thing we think is important to point out is that Meta’s vision of a “creator economy” does not necessarily require any kind of open standards or distributed Web3/crypto. From Facebook’s perspective, one of the biggest inhibitors to their profits is Apple: without control of users’ phones, Facebook must play by Apple’s rules.
With a Facebook metaverse, they could build a walled-garden platform and define their own rules. Users could participate in an economy and carry digital assets between experiences within the Facebook metaverse, but which would not interoperate with anything outside. This could lead to a potential future where our current fragmented set of multiple social media spaces could be replicated in multiple competing consumer metaverses.
To avoid that outcome, and possibly to juxtapose their approach to Apple's as a way of encouraging innovation, Meta have launched a consortium to advance standards. Time will tell how open the approach truly is. Even so, we see the possibility of there being multiple metaverses as opposed to a single metaverse.
Implications for business
The Facebook narrative extends a trend we have already seen where large brands have been experimenting at scale with augmented reality. For example, fashion houses now commonly present their collections against an augmented background; it would be a natural extension for such shows to offer a more immersive environment such as the metaverse. Business sectors including entertainment, retail and gaming are all clear candidates for scaling user interaction through increased immersion.
What we think is perhaps the most critical work that businesses should be doing today is to reflect on their customer experience strategy and take into account the expanding spectrum of AR/VR/metaverse experiences. It’s important to develop a value-based view before jumping into technologies, by focusing on customer-centricity and better understanding what kinds of products and experiences customers actually want. We advocate a customer-driven approach that relies on an empirical understanding of what customers want and expect, rather than being captivated by the bright lights of novel technology.
Web3’s “ownership economy”
Another narrative for a version of what some people call the metaverse centers around the idea of an “ownership economy.” This view is generally put forward by those who favor so-called “Web3” technologies that leverage decentralization, blockchain and token-based economics.
For example, a recent report from JP Morgan summarizes this view as one that seeks a “metaverse that will turbocharge the shift in gaming, sports betting and gambling from cash to crypto.” At Thoughtworks, we would question whether this narrative was in fact something of value for customers. We certainly do not see it as an essential component of a future metaverse.
Whatever technology is used to actually render this future internet — VR, AR or the humble smartphone — proponents believe that it will be underpinned by Web3. Users will rely on Web3 primitives such as NFTs (non-fungible tokens) to prove their ownership of digital assets; in turn, this will allow them access to exclusive communities and will ultimately power a digital economy where transactions are built into the fabric of the platform rather than added on as an afterthought.
As with the embodied internet, early versions of Web3 technology already exist. The Bitcoin and Ethereum blockchains are the biggest and most visible examples of Web3 platforms, the recent NFT craze an example of digital assets and the bewildering array of financial instruments such as stablecoins are early pieces of today's emerging digital economy.
But to truly bring Web3 to life, it needs to find use cases beyond money laundering, ransomware, scams and ponzi schemes. It also desperately needs to improve its energy footprint and transaction speed. A full analysis of the Web3 space is beyond the scope of this article — and such a thing would be out of date almost as soon as we’d written it — but the “Web3” metaverse narrative clearly depends on the success of crypto in general.
Here, though, we need to point out that "ownership" of digital assets could still be possible without a fully decentralized network such as a blockchain. Large industry players in China have launched “digital collectibles” based on consortium-controlled blockchains, allowing ownership of those assets within a particular ecosystem. Decentralization fans and authority-sceptics would probably scoff at this kind of thing, but it’s important to think about how people would actually use this stuff. Today’s mostly-useless NFTs aren’t doing anything for their owners, whereas a metaverse created by a gaming company such as Blizzard or Tencent could be quite compelling, as both of these companies have a longstanding history of creating popular video games with enthusiastic player bases.
Implications for business
Businesses considering a Web3 approach to the metaverse should concern themselves with the foundational question of what value exists for customers in providing crypto-based and decentralized solutions for purchasing and ownership.
Thoughtworks would advise caution here, as we do not feel it is a requirement to couple the metaverse with cryptographic currencies or tokens. As mentioned above, a recent JP Morgan report suggests that Web3-based approaches will “turbocharge the shift in gaming, sports betting and gambling from cash to crypto.” While we do not doubt the possibility this might happen, we would advocate that businesses carefully check the desires of their customers against what they know to be in their best interest.
If your customer experience strategy and its underlying research support the need for alternative currencies because this produces tangible value for the customer, this, from our perspective, would be a solid reason to explore a Web3-based approach. Our advice here is to ensure that your customer and their best interests are at the heart of your technology decision-making to ensure the right outcomes for your customers — and your company’s growth.
The industrial metaverse
You may have already heard of continuous delivery (CD) in software development, which makes it possible to continuously adapt software in line with user feedback, shifts in the market and changes to business strategy. Test, support, development and operations work together in CD as one delivery team, where they automate and streamline the build-test-release process.
But did you know that Tesla has a continuous delivery system, not only for their software, but one that configures the physical environment of their factories? Because Tesla’s factories are largely automated and robotic, they are controlled and defined by software, which means that software changes are required in order to enable the robots to build different cars.
Recently, Tesla upgraded their production line via software so the maximum charge rate of a Model 3 increased from 200 to 250 kilowatts. This involved continuous delivery of software that was run through a suite of software tests before it was put into production. The result of this software, however, was a change in the physical product they were building.
This example from Tesla epitomizes a narrative of what an industrial metaverse is about: using virtual environments to test and model desired physical outcomes through a variety of means such as continuous delivery and simulation to produce advanced and accelerated physical outcomes. It flips the Zuckerberg narrative on its head: it is about pushing software changes faster and more effectively to shape physical reality.
We find another example of this approach in a partnership between industry giants NVIDIA, Siemens and Microsoft. They are creating what they call the “industrial metaverse.” Their vision is to combine existing industrial control systems with virtual and augmented reality, creating digital twins of machines in a factory or production line. A company like Siemens brings detailed knowledge of how its robots and plants work, while NVIDIA brings high fidelity physics simulation and rendering.
Simulation becomes the engine that powers everything. With simulation, a wide range of stakeholders can access the environment, instead of just developers. This means that developers and domain experts can begin to come together using new sets of tools. Designers, product managers and engineers will be able to collaborate inside a VR or AR representation of the factory, debug problems, simulate solutions or improvements and then deploy those to the real world.
Design and manufacturing already occur wherever in the world makes the most economic sense. With the industrial metaverse companies might be able to take things even further, as the technology could improve and accelerate remote collaboration, global teams and possibly the on-shoring of manufacturing.
In contrast to consumer metaverses — where we expect competing platforms and lock-in — we think the industrial metaverse will be much more open. In the industrial space it’s in players’ best interests to collaborate as much as possible and to differentiate and compete based on things like the fidelity of their physics simulations or integrations with existing industrial control processes.
The emergence of a ubiquitous visualization medium enables a much more immersive environment for simulation applications than we have today. This means industrial simulation users will be able to experience themselves “within” an environment effortlessly. This will open up the space for much richer interactions. Taken together, we believe that these capabilities will enable organizations to accelerate the safe adaptation of manufacturing processes through the development of software.
Implications for business
The industrial metaverse, like Meta’s commercial metaverse, has strong precedents in work that are already in place, whether it be an implementation of digital twins or augmented reality-based worker support on assembly lines. As with the commercial sector, we see an expansion of the overall spectrum of augmented options.
In making these choices, we believe organizations will benefit from the learnings they have gained from cloud computing, specifically navigating a multi-vendor landscape. In other words, as we have learned how to build technology strategies that help us clarify whether we need single or multi-cloud environments based on the problems we are trying to solve, we are also able to extend these strategies into an augmented space based on similar criteria.
While the customer will remain central here, within the industrial space, complex entities such as supply chains play a proxy role for the client. Ensuring resilient supply chains provides value for the client. Therefore, we would advise organizations to explore the benefits of increasingly immersive technology to improve things like operational resiliency.