Since Second Live became a thing around 2005, I have strongly believed that an immersive Metaverse, a supporting decentralized and persistent 3D virtual environment, will take over 2D human-computer interactions on laptops, mobiles, and tablets. This is an immersive mixed reality lifestream that will, continuously, connect the physical and digital worlds across experiential, cognitive and social layers.
It is also very clear that the migration is underway with billions poured by tech giants, emerging bridging tech (e.g. blockchain, AR/VR, generative AI) and changing consumer behaviours accelerated by the pandemic (e.g. hybrid working, creator economy, descentralised digital communities, etc).
However, I’m not sure when and especially where will game-centric consumer Metaverses like Minecraft, Roblox, Fortnite and other early winners in the NFT space like Axie Infinity will migrate to 3D immersive spaces to scale. Also, if they will consolidate or remain walled gardens and, especially if it’s going to happen in the next 10 years.
There’s also a reason why Apple, the single company that has the resources, experience, integrated consumer tech stack and content ecosystems to bring the deep Metaverse into the mainstream, has not publicly confirmed nor announced its commitment to this space (check Apple Glass). Sources even point out that Apple rejects the idea of a Metaverse (an all-virtual world) and assumes its first use cases will be focused on communication, content viewing and gaming. Another company with vast resources and the right to win in AR is Microsoft, which has focused its Hololens headsets not in the consumer market but instead in Enterprise and work segments… and you need the consumer market to bring the Metaverse to the masses.
But, let’s be clear: I strongly believe in non-consensus investment strategies focused on abandoned markets or in new markets that most investors don’t realize exist. However, if you’re after the latter, you need to time it right. Being just non-consensual without a clear idea about timing or too complacent with hyped non-consensual behaviour is a mistake that can cost billions. Just ask Magic Leap or Theranos.
Apple knows that technology maturity alone is not enough to win mass consumer markets. The iPod was not the first MP3 player as it launched in 2001, three years later than the MpMan by SaeHan, nor the iPhone the first smartphone as it launched five years after the release of Nokia’s 9000 Communicator in 1996, the first phone with Internet connectivity. However, both become hugely successful. It’s because, in innovation, ecosystem co-alignment via partnerships and consumer adoption is vital.
The strategic move by Apple was not just the iPhone’s slick design, but the power of the ecosystem carryover from the iPod. By the time of the iPhone launch in 2007, Apple had sold more than 65 million iPods. What the iPhone was at that time was an improved iPod containing all the previous features including the user’s entire library of music, playlists, albums, plus some limited but innovative high-utility apps such as Google Maps and YouTube. For existing iPod buyers, getting an iPhone was therefore an extension to Apple’s premium experience.
Apple understood very well that ecosystem co-alignment of differents interests from partners across the value chain, together with customer-centric products, are needed to succeed. Technology alone is not enough.
January 9, 2007. Steve Jobs introduces the iPhone to the world. The key to success: partnerships and ecosystem alingment, not just technology prowess.
Here is a non-exhaustive list of the hurdles the Metaverse is and will continue to face in the years to come when it migrates from 2D (incl. gaming) to immersive media or XR (wider term used to cover virtual, augmented and mixed reality technologies):
As we wait for a Netscape moment for the Metaverse, Benedict Evans has summarised this moment in time very well:
"So, all of this is rather like standing in front of a whiteboard in the early 1990s and writing words like interactive TV, hypertext, broadband, AOL, multimedia, and maybe video and games, and then drawing a box around them all and labelling the box ‘information superhighway’. That vision of all consumers everywhere being connected to something was entirely correct, but not like that, and many of those components were blind alleys. ‘Metaverse’ today is again a label for a bunch of words on a whiteboard, some of which are more real than others, and which might well all end up combined, but not necessarily like that".
However, this said, there are immense opportunities today for those that can stomach 10+ years of losses by investing in the tools and back-end functionalities that will lead us to that mixed reality utopia with blockchain tech, no code / low code 3D, generative XR, and other enabling tech.
It might be my predilection for abandoned markets or for automating current human-driven processes (see my company Imaginario to understand what I mean), but let’s remember that digital transformation has not even reached 50% of businesses yet. There’s still plenty to do in SaaS and digitalization based on Web 2.0 tech.
Other exciting and high ROI segments that require funding from investors such as climate tech, 2D media automation (86% of companies use video for marketing!), logistics, democratizing professional tools and the list goes on. Ideological fervour for Web3 will not make it a reality, an early majority market will.
The question is not if AR will take over the world, but rather when and how will this happen? Many factors need to converge for AR to inherit the Earth.