Supported by the advent of devices, software and platforms built around blockchain technology and non-fungible tokens (NFTs), the metaverse dominated headlines throughout last year. Although the hype has since diffused, there are still plenty of opportunities in the metaverse space for enterprises of all sizes, says EY global chief innovation officer Jeff Wong.
This is because the metaverse is poised to be the next big technology platform, with a revenue opportunity of about US$800 billion in 2024, according to data by Bloomberg Intelligence. A growing number of enterprises have recognised this opportunity — insights by market research provider Statista suggests that 15% of the digital economy has already shifted to the metaverse, reaching 700 million worldwide by the end of the decade.
As the technology develops further and consumers increasingly participate in the virtual world, it is important for companies that have yet to join the bandwagon to start investing and experimenting with their metaverse efforts, says Wong. This would allow them to stay ahead of the curve, he adds.
“Too often, when I talk to companies, they will mention that they understand the concept but haven’t tried it for themselves. The metaverse is a state-of-the-art technology — getting their hands dirty with it will make them understand it better. This can be done with a relatively modest investment; it does not necessarily have to take an incredible sum of money. Even a small investment will help them recognise which elements of the metaverse benefit their company,” says Wong.
He shares that EY practises what it preaches via its metaverse lab, where its technologists build customised metaverse environments for various uses. Solutions designed in the EY metaverse lab include capabilities across all platforms — web, augmented reality (AR), virtual reality (VR) and mixed reality.
The lab allows the EY team to extensively experiment with the virtual environment, enabling it to determine platform viability; interaction abilities in a cross-platform landscape; and integration with the daily operations of a business, among others.
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We have used spaces in the metaverse for our recruitment process, for example. Upon running all these experiments, we truly believe that unless companies try it themselves, they will not be able to fully understand what is possible and what is not.
Jeff Wong, global chief innovation officer, EY
Metaverse in action
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In many ways, the growth of the metaverse development has been catalysed by social media giant Facebook changing its name to Meta Platforms in October of 2021. Given that it has been a while since then, would it be too late now for companies to participate, and would being a “later adopter” affect their success in the space? Not necessarily, states Wong.
He explains: “If we look back at the early internet days, the companies that figured out how to leverage on the technology well are the ones that ended up being the winners — and these are not necessarily the early leaders. Some of these spearheaders may struggle with the technology, and the second wave of adopters would learn from these experiences. Ultimately, all new technologies and transitions would naturally present challenges.”
While it is still uncertain how the metaverse world will evolve in the coming years, Wong believes there are several use cases today that have shown to be viable. One example is in the gaming industry, where the metaverse has gained the strongest traction.
Before it became a popular buzzword, gaming companies had already built the early prototype of the metaverse, incorporating virtual worlds where players meet on top of providing social features such as in-game chats. Interestingly, many of these games are not blockchain-based and are not tied to any cryptocurrencies, Wong notes. Big names in this area include Roblox, Microsoft (which is acquiring another gaming giant Activision Blizzard for US$68.7 billion ($91.64 billion), Electronic Arts, Take-Two, Tencent, NetEase and Nexon.
The metaverse gaming industry draws a large and growing number of active users — Roblox alone had over 58.8 million daily active users worldwide as of 4Q2022. Leveraging on this, Italian high-end luxury fashion house Gucci hosted the “Gucci Garden Experience”, where players could try on or buy in-game Gucci fashion accessories for their in-game avatars.
“There are several luxury brands that have experimented with the metaverse this way, and we have helped some of them achieve it. There are also entertainment companies that have made significant investments in metaverse lands to figure out how to capture these marketing opportunities,” says Wong.
Organisations in Southeast Asia are using existing metaverse platforms to deliver new experiences or solutions to their customers too.
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In particular, some major banks in the region have experimented or established a presence on metaverse platforms like Sandbox or Decentraland. A handful of companies have also dabbled in virtual influencers and hosted virtual events, particularly in response to the Covid-19 pandemic.
Mike Mason, global head of technology, Thoughtworks
He continues: "Most [of these adopters] are experimenting with existing metaverse technology and platforms rather than investing in developing their proprietary technology, intellectual property, or platforms."
Meanwhile, Daniel Gunawan, Metaverse Continuum business group lead for Southeast Asia at professional services firm Accenture, foresees industries such as retail, healthcare, resources and capital projects to be the first adopters of the metaverse due to their stronger need to engage consumers and investors and upskill their talent in new ways.
He says: “We are already beginning to see adoption beginning to take place in Southeast Asia. For example, Thai retail conglomerate Central Retail plans to launch a blockchain-powered supermarket in the metaverse and has launched a virtual shopping mall powered by VR in 2021.
“In healthcare, Zuellig Pharma Digital & Data launched ZP Metaverse, a healthcare metaverse experience that enhances existing pharmaceutical sales enablement and telemedicine experiences. Through an outpatient clinic experience in ZP Metaverse, users can access a variety of services, such as real-time virtual consultation and diagnosis, removing the need for long hours of queuing and travelling just to get a first prognosis. This service is especially useful for patients who are immobile or based in remote locations.”
Roadblocks to mainstream adoption
At the peak of its growing popularity, there were a lot of “promises” in terms of how quickly the metaverse would be populated, how eager companies would move their workforces to virtual offices and how different individual and institutional investors would snap up virtual real estates. These promises, however, may not come at the pace that the metaverse proponents think they would, notes Wong.
One reason is the lack of a ready infrastructure, given that the metaverse demands a large amount of high-performance connectivity. Joining the metaverse would also require some form of device investment — the VR set Oculus Quest 2, for example, starts at US$399, which may be seen as hefty for many.
“Not all users in Asia Pacific have access to sufficiently stable and high bandwidth network connectivity to access the metaverse, which can become an inclusion issue where selected sections of society may be excluded from the metaverse. The Asian Development Bank estimates that only 41% of households have internet access, and only 18% have computers in developing parts of Asia. Furthermore, many of the technologies required for the metaverse, such as VR/AR, remain in the early stages of adoption,” says Wynthia Goh, senior partner and global co-lead of NEXT at NCS, a technology services firm.
She also highlights the lack of standards and interoperability as another obstacle to the metaverse development and adoption.
“According to the World Economic Forum, the lack of a common definition for the metaverse has led to confusion and disagreements among stakeholders. The development of the metaverse is a complex and multi-faceted process that will require significant investment and collaboration among stakeholders. By establishing common standards and best practices in data transparency, security and privacy, we’ll be able to ensure the metaverse is safe and beneficial for all users.”
Accenture’s Gunawan agrees that fostering trust in the underlying technology and experiences of the metaverse will drive adoption and user acceptance.
The metaverse is a place where people can meet and interact, where digital assets – land, buildings, items, avatars and even names – can be created, bought and sold. We can expect ethics, privacy, security, behavioural issues, equity and inclusion, safety, integrity and environment issues to emerge as challenges that everyone has to overcome.
Daniel Gunawan, Metaverse Continuum business group lead for Southeast Asia, Accenture
He continues: “Studies show that trust is the decisive variable in forming commitment, which explains why users are more willing to engage with online platforms that they consider trustworthy. It is, therefore, reasonable to expect that if we build trust in metaverse technologies and experiences, we can attain widescale user adoption.”
Meanwhile, Thoughtworks’s Mason cites the volatile investment cycles in the metaverse as a roadblock. “The hype and “boom and bust” investment cycles in the metaverse are potential obstacles, as is the association with cryptocurrencies and NFTs. In challenging macroeconomic conditions, these kinds of investments become more difficult or at least attract more scrutiny, [which could present challenges to developing and adopting the metaverse],” he says.
Realising the metaverse future
It is difficult to predict when the metaverse will take off as it will take time to overcome challenges such as ensuring the interoperability of enabling technologies, having the talent to support its development, and regulatory and ethical concerns.
Yet, industry and thought leaders are optimistic about its growth in Asia Pacific.
Specific to Southeast Asia, Accenture’s Gunawan believes it possesses prime conditions for metaverse adoption as it is home to a growing youth population that is increasingly digitally connected and receptive towards new technologies.
“The region has a vast youth population estimated to reach a peak population of just over 220 million in 2038. There is also rapid growth in the region’s potential for digital adoption. Apart from the high level of connectivity, internet users in the region appear to be curious about and open to new services and technologies – 68% of those Accenture surveyed say the metaverse will have a positive impact on their organisation in the future.”
Echoing him, EY’s Wong says: “There will be an opportunity [for the metaverse to flourish] in the future because the metaverse natives – who tend to be the younger generation – understand how to interact in the 3D-rendered environment organically. Coupled with Web3 developments, the possibilities in the metaverse space could be endless.” He adds that there is a good possibility that VR headsets may be further democratised in the future.
Accenture’s Gunawan also observes that Asia Pacific is keen to explore the space of immersive digital twins and connecting real-world data and their virtual representations.
For instance, Indonesia launched a metaverse collaboration initiative just last month. The effort aims to promote collaboration, research, innovation and development in the field of metaverse technology, elevating the country from being just a consumer to a producer in the metaverse industry.
Another example is South Korean telecommunications giant SK Telecom inking an agreement with Axiata (which operates in 11 countries in Southeast Asia) and Malaysia’s CelcomDigi to expand its metaverse platform, ifland.
According to NCS’s Goh, organisations looking to lead the metaverse race must leverage and bring together different technologies seamlessly to deliver an excellent end-to-end experience to end users.
A sole reliance on building separate technological capabilities will not be sufficient in attracting and retaining users. To build a metaverse world, companies need expertise in VR/AR, edge computing, spatial computing, AI, payment, blockchain, gaming, 3D modelling, digital humans, and more, to lay the foundation for the creation of metaverse platforms.
Wynthia Goh, senior partner and global co-lead of NEXT at NCS
Accenture’s Gunawan adds: “By incorporating [the foundational technologies of the metaverse like AR and digital twins] into the products and services they offer, businesses will be able to wholly reinvent the way they engage with their customers. Research has shown that 96% of shoppers are interested in using post-purchase AR experiences such as usage instructions, suggested pairings and purchase recommendations.
“As consumer priorities continue to evolve, businesses must ensure that metaverse experiences remain relevant. While promoting the art of the possible generates excitement, tangible experiences capture both consumer mindshare and market share.”
Besides that, realising the metaverse future also calls for IT companies to work with non-tech organisations such as policymakers and civil society organisations.
“The metaverse is a multidisciplinary field. It requires tech and non-tech stakeholders to collaborate to develop interoperability standards, create compelling content and use cases, ensure that the metaverse is safe, equitable and sustainable, as well as educate the public about the benefits and risks of participating in the metaverse. While the Open Metaverse Interoperability Group (OMG) is working towards establishing common standards for the metaverse, it is also critical that metaverses are designed as a user-friendly and inclusive environment accessible to a diverse set of users,” shares Goh.
