Is the Metaverse in Your Future?

It wasn’t that long ago when everyone was talking about the metaverse. As for now, stop at a quiet place and listen. Can you hear even a whisper about it? Hardly. So, what happened? One might reach for an easy answer and suggest that ChatGPT, generative artificial intelligence (AI) and large language models eclipsed the metaverse buzz.

But there is more to it than that. Meta couldn’t get its metaverse initiative off the ground, the non-fungible token (NFT) market crashed, and Apple stepped in with its spatial computing focus. Even the pandemic contributed as the hype around the metaverse reached its peak when everyone had to lock down. Once the pandemic was in the rearview mirror, the hype lost its steam as people tapped into their cravings for social, in-person-experiences. Add the ambiguity of the metaverse concept, failure to deliver to unrealistic expectations, consumer reluctance in these early stages of its evolution and scaling back of metaverse projects by high-profile companies and perhaps that is why you can’t … hear … a … thing.

But write it all off at your own peril. After all, the underlying technologies remain — augmented reality, virtual reality, mixed reality, blockchain, spatial/edge computing, 3D modeling, the Internet of Things and even AI. As a result, many believe the metaverse is being rebranded on a foundation that is more stable, yet slower growing. And that foundation may make more sense, as the concept has always been a longer-term play — notwithstanding the hype may have made it appear as if it was more imminent.

For definitional purposes, we define the metaverse as “a collective of virtual-reality shared spaces, where users interact with a computer-generated environment as well as other users, typically represented as avatars, in an interconnected network of 3D virtual worlds.” Much more than connecting people to information, the metaverse vision for the future is the connection of people, places and things, sometimes in a fully virtual environment. According to a global survey of 250 global business leaders, this vision has the potential to dramatically impact the future of the human experience.

Among the key findings from this study are insights regarding the metaverse’s expected impact and applications. Almost all survey participants expect a “moderate to significant impact” on the global economy 10 years out and believe that the metaverse will be “moderately to extremely important” to business success. While views of the metaverse may vary, over two-thirds of business leaders across the globe believe that something impactful is coming in the market, even a technological and societal shift similar to what has occurred during the internet age.

According to the survey, a majority of organizations (55%) are already deploying into the metaverse in a variety of areas. Thus, the metaverse is penetrating the wider world of commerce well past the emphasis over the Past decade on gamification. In terms of current use of the metaverse, the survey respondents report they are deploying it for marketing and advertising purposes (87%), conferences and trade shows (53%), recruiting and training (47%), immersive shopping and product simulations (37%) and entertainment experiences (20%).

Given that almost all organizations believe that over the next 10 years, the metaverse will prove to be “moderately to extremely important” to the customer experience and to sustaining customer loyalty, it is no surprise that they expect a “moderate to significant change” in their product and service offerings in 10 years’ time.

This is the dawn of a new generation of technological capabilities, as more than two out of five organizations already have a tangible metaverse strategy, while among the other organizations, almost all of them will have such a strategy in place within five years. Moreover, a majority of organizations (59%) have immediate or short-term plans to develop apps, products or services for the metaverse to enhance connectivity with customers.

The metaverse technologies that organizations are most excited about include augmented, virtual and extended reality as well as AI. Enhanced branding and consumer experiences as well as digital twinning to simulate actual performance of assets and processes are significant opportunities. But leaders see significant roadblocks as well, including cost, privacy and security risk, interoperability and technology infrastructure.

Too big to ignore

Detractors of the metaverse point out that no one can say for sure what it will look like in 10 years and that a fully realized metaverse — however one chooses to define that term (and whatever one calls it) — requires orders of magnitude more computing power than what is currently available. Networks need to become much faster, with less latency, so that experiences are not impeded. Skeptics also question how much a company can prudently invest given the uncertainty over the length of time it will take for the metaverse to become commercially viable.

Proponents counter that at the turn of the 21st century, no one could have predicted the full impact of today’s internet. Projections of the potential dollar value of metaverse-related activity vary wildly — in large part due to the unknown ways the metaverse will mature over the next five to 10 years — yet they tend to be massive, ranging from $5 trillion to $13 trillion and averaging around $8 trillion. Of course, that is just guesswork. But even if the metaverse generates just a fraction of these projected values, it merits attention in the C-suite and the boardroom as powerful use cases continue to appear across a diverse collection of industries.

According to the aforementioned research, respondents envisioning the greatest economic impact a decade from now represent technology, media and telecommunications, consumer products and services, healthcare and financial services — in that order. These same groups rank highest in viewing the metaverse as the “new internet” (at least 75% in all categories “strongly agree” or “somewhat agree”), and the consumer products and telecom industries rank the highest (51% and 47%, respectively) in viewing it as a game changer in a decade. Thus, more than a few across multiple sectors are giving the metaverse close attention.

Bottom line, the metaverse poses a classic too-big-to-ignore dilemma compounded by uncertainty over the time horizon for evaluating ROI. With most companies averse to moonshot projects at present, these business realities present a challenge to any business case. Given the risk, the good news is that companies don’t have to be first adopters. Perhaps the safest strategy is to wade into the shallow end of the investment pool rather than jump headfirst into the deep end.

Considerations for senior executives and boards

Square One for leaders in the digital world is to get up to speed on emerging technologies and sustain their currency in a digital world. Bring outside experts into the C-suite and the boardroom to keep directors and the executive team apprised of relevant technology trends, how those trends affect industry fundamentals and specific market opportunities and use cases germane to the company. Identify and lean on expert resources inside the organization — regardless of the function they support. When seeking guidance from functional leaders, advisers and others, insist on getting it in plain, practical terms. Share relevant articles from publications with strong technology content presented in practical ways.

Four important considerations:  

Address technical debt with intention. With the metaverse among numerous emerging, disruptive technologies driving the need for agility, a focus on technical debt is a safe play. For many organizations, technical debt has accumulated slowly and insidiously to the point where it has become a proverbial ball and chain that constrains an organization’s ability to keep pace with agile and born-digital competitors.

As emerging technologies continue to create market opportunities, competitive threats and evolving customer experiences, it is time for many organizations to pay the piper. Protiviti’s research indicates that nearly seven out of 10 organizations (69%) believe technical debt has a prominent impact on their ability to innovate. Accordingly, to ensure that their organization can adapt its business processes and systems to metaverse adoption and, more broadly, a rapidly changing world that is getting more digital, senior executives and directors need to understand the nature and extent of its technical debt. They also need to inquire of the technology function and other appropriate stakeholders as to where they are in formulating and/or executing a plan to modernize legacy applications.

Begin with the right mindset. It is important to view technology as a strategic enabler rather than something implemented for its own sake. As for the metaverse, leaders should not buy the hype (or what’s left of it) or the backlash. They should keep an open mind in focusing on the technologies underpinning the so-called metaverse as an integral part of a strategic conversation in which long-term goals, the technological innovation needed to reach those goals, the capital deployment ramifications and the related upside opportunities and downside risks are considered. The risk equation is as much about the risks of late entry and opportunity costs as it is about innovation failure and lackluster returns.

Understand the strategic implications of metaverse technologies. No company can ignore the possibility that the metaverse offers an opportunity to participate in the construction of the future. To that end, the board should engage management in strategic conversations regarding the playbook for seizing opportunities as marketplace-disrupting technologies emerge. Many technology companies already have this capability, leading them to place significant bets on the metaverse while developing new offerings related to many of its components. As for other companies, the strategic focus will vary by industry.

Following are questions senior leaders and their boards should consider when engaged in these conversations:

• Do we understand the potential use cases for our industry and have a point of view regarding the impact of the metaverse? For example, will it improve operating efficiency, create immersive experiences for customers, enhance brand image and offer new revenue streams? Does our strategy consider these impacts?
• What criteria are we using to evaluate the supporting business case for each metaverse initiative, including fit within our strategy?
• Do we understand the level of investment that will be required to make an impact, and are we prepared to commit to the investment?
• What governance structure is in place to manage the efficacy and reliability of investments in emerging tech — e.g., executive sponsor, initiative owners, appropriate stakeholder involvement, accountability for results, success measures and user-feedback loops, as well as pilots that break initiatives into discrete activities to facilitate progress, failing fast and learning?
• Do we have to be a first mover to be a winner in the metaverse? Do we know what our competitors are doing with respect to the metaverse (e.g., their strategic focus, use cases and current and planned investments)?
• Are we sufficiently focused on how the metaverse can affect the customer experience? Have we segmented our future customers to evaluate the way they will embrace the metaverse? For example, digital natives, including Gen Z, are different from their parents and grandparents in terms of being receptive to a virtual marketplace.
• Do we have the talent we need to address the technologies we choose to pursue as we evolve toward and prepare for our vision of the metaverse? Do we have a talent-development strategy in place to acquire and skill the talent needed to leverage these technologies?

Apply a risk lens. In approaching the future, risk management is key in evaluating potential use cases — the risk of investing in metaverse technologies as well as the risk of late entry and missing the wave of opportunity are relevant considerations. As with all emerging technologies, executive teams and boards can expect the usual cybersecurity, data privacy and regulatory discussions. The metaverse will spawn fresh threats like the cloning of voice and facial features, the hijacking of video recordings using avatars, and invisible-avatar eavesdropping. For sure, there will be issues around disinformation and protecting children. Additional risks to the strategy will also arise if the metaverse is akin to the Wild West, without rules, regulators or guardrails — fears that currently exist with generative AI.

In summary, senior executives and board members should evaluate the potential of the metaverse to the organization with a focus on the organization’s capabilities for monitoring emerging technologies, evaluating potential threats and opportunities and developing use cases to reality test opportunities and identify risks. With the huge long-term market opportunity of the metaverse and the enormous amount of investment capital projected to flow into the space in the coming years, this is a smart thing to do.

Directors should invest the time with senior management to better understand and envision the possibilities and prepare for the future. Even if the metaverse does not realize what some believe is its full potential, it will open up many new possibilities and encourage companies to consider different and creative ways to engage markets, customers and employees. So, starting small, realizing quick wins and going all in on the most promising use cases could be the most prudent way to begin.