Since Facebook changed its name to Meta, we’ve seen one movie in particular climb the charts at the streaming aggregator we run: Ready Player One.
The film, based on a 2011 book with the same name by Ernest Cline, depicts a dystopian future where the physical world has crumbled to dust, and humanity has fled into a virtual world called “Oasis”. It’s a perfect encapsulation of any tech utopian's teenage dream: a parallel digital world where magic really exists and the only real limitation is users' imagination.
What’s striking is how many characters, gadgets and vehicles from other franchises appear in the film. Star Wars, Minecraft, Monty Python, Sesame Street, Overwatch, Halo, Batman, Pac Man, Turtles... it’s a giant mashup of famous intellectual properties (IP).
Even when no one was talking about the metaverse, Cline had the great insight that these cultural symbols would be hard currency in the virtual world. His work alone has anchored the expectations of a whole generation that IP from different universes will be available in the metaverse.
As consumers want to wear, drive and play with their digital stuff across metaverses, big IP owners and virtual goods producers are about to enter a golden age.
Wonder Woman, here’s your Iron Man suit
A world where famous IPs intermingle freely on the same platforms may sound like an unlikely future. IP rights holders have zealously guarded the contexts in which their IP is used. While Ready Player One may have planted the original seed in the minds of IP-owner execs, the first company to actually pull this off in a big way was Fortnite — one of the few places where you can already mix and match gear from rivals DC Comics, Marvel and many more.
If this kind of openness becomes the norm in the metaverse, the virtual goods market is about to grow by orders of magnitude as big brands virtualise their assets and offer them up to a consumer base eager to buy (and own!) them.
"In Europe, there is an exciting new generation of companies already working at the intersection of well-known IP, gaming and the metaverse"
In Europe, there is an exciting new generation of companies already working at the intersection of well-known IP, gaming and the metaverse.
Take French unicorn Sorare, that allows users to buy and sell tokens representing actual football players. Or Estonian 3D avatar company Ready Player Me which has collaborated with Pull and Bear on branded clothing, and which is currently integrating with Portals, the up-and-coming metaverse with a partly Danish founding team.
Interoperability reduces risk, complexity and overhead
With so many metaverse contenders, where should creators, entrepreneurs and investors in this space place their bets? Predicting which of these projects will come out on top is of course very difficult. Luckily, it seems they won’t have to, so long as they make interoperability an integral part of their strategy.
This means building or investing in companies that use technologies that can be read and authenticated by several metaverses. In fact, large parts of the infrastructure to enable this are already in place — for instance, items/avatars/experiences built in Unity/Unreal Engine where the ownership is authenticated through NFTs on various blockchains.
Mark Zuckerberg has signalled that his ambition is to allow a high degree of interoperability between Meta's universe and other worlds
The big crypto-based metaverses are working hard to let you teleport your avatar, your data and your virtual goods between them. In fact, even Mark Zuckerberg has signalled that his ambition is to allow a high degree of interoperability between Meta's universe and other worlds.
This is huge because it means that the development, marketing and sale of virtual goods can be managed outside of — and independently of — the worlds in which they are intended to be used (in what is sometimes being referred to as the direct-to-avatar economy).
This should translate into increasingly attractive margins for creators as world builders will have a hard time taking a cut of transactions happening outside of their platform. And that's not to mention reduced development costs as virtual products will run across multiple metaverses.
More winners than we're used to
It’s an exciting development for sure, and a future with a lot more winners than we are used to seeing on the internet where most of the profits flow towards the platform owners and aggregators.
That being said, it’s far from certain where big players like Meta will eventually end up on all this. They currently talk of openness and interoperability. But given their track record, it’s likely that when push comes to shove they may in fact fight this distributed paradigm tooth and nail.
If they do, it will increase overheads for virtual goods producers, but it’s unlikely to be the end of the trend towards interoperability. More importantly, it’s quite possible that interoperability becomes so important to users that Meta will simply be forced to embrace it all the way.
All of this is still early stage, and beyond questions of where the big players will come down on openness, there are lots of technical industry standards and best practices that have yet to crystallise, so startups operating in this fast-moving space will need to be flexible.
And although NFTs and virtual worlds are getting a lot of attention, it’s some way before it goes mainstream. But when it does go off, it will go off in a big way in a short amount of time. So gear up — this will be one hell of a ride!