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Yes, the metaverse is all the rage but here are 6 commercial risks to note

Yes, the metaverse is all the rage but here are 6 commercial risks to note

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Metaverse is definitely one of the buzzwords these days and brands too are also exploring opportunities in this space. Nike, for example, filed trademarks to gear up for its entry into the metaverse while brands such as Gucci bought a virtual land on The Sandbox to prepare for the metaverse. Fashion retailer boohoo even advertised on Paris Hilton's Roblox island.

Just because these experiences are available, that does not mean that consumers will immediately embrace them.

In fact, a Gartner survey conducted in February said 35% of consumers have never heard of the metaverse.

With the metaverse still in its nascent stage, there are definitely commercial risks for brands looking to enter this scene.

1. Consumer adoption is not guaranteed

Less than half of the online adults in US and UK that Forrester segmented display behaviours and attitudes that could possibly make them early adopters and users of metaverse-like experiences. Forrester classified 22% as Digital Immersive, also known as those who are currently intense online gamers and active creators within social media. An additional 25% were classified as Digital Socialites who enjoy customising their online profiles with creative tools to stand out in the metaverse.

2. Initial use cases slow to extend to commerce

Gaming platforms such as Fortnite and Roblox have become popular stepping stones into the metaverse, allowing users to customise their avatars, attend virtual concerts, and even explore with virtual friends. According to Forrester, the next platform will be social media, especialy since Meta, for example, is parking US$10 billion annually into the metaverse space.

3. Consumers won't spend as much time in the metaverse as brands think

According to Forresters, consumers will only spend a fraction of their digital time in the metaverse, even when there are more 3D or immersive experiences available. For example, consumers might still use a website or a chatbot if they were to buy toothpaste or order food delivery. The same consumer is only more likely to seek 3D or immersive experiences when they are want entertainment, education, or exploration.

4. Ad models will still live in the metaverse

Free or ad-supported models play a role in determining whether there is mass adoption of a platform these days. While gaming platforms and virtual worlds do generate revenue through licencing and freemium models, Forrester said they also offer ad or product placement opportunities, which will continue.

What remains unclear is whether there is a possibility for brands to offer entirely free-of-charge tools and services without leveraging the sale of user data. While there is chatter about moving away from purely ad-funded business models, Forrester said that clear alternatives have yet to emerge.

5. There is lukewarm interest in purchasing virtual goods

According to Forrester's preliminary assessment of consumers' interest including the most likely early adopters, only 24% have built and sold digital assets. Half of them have bought digital goods to decorate a virtual home or office.

6. There will still be in-platform currencies

Today, there are still in-game currencies in virtual worlds and games that cannot be used outside of the platform or game. These are usually purchased with national currencies or earned as part of the game play. This isn't expected to change in the metaverse. While there will be new payment mechanisms that provide new ways of acquiring in-gaming currency, Forrester predicts that they won't appear in the games themselves. This is due to regulatory and cost reasons.

Separately, senior digital leaders are also not distracted by the chatter around the metaverse. Forrester's interviews done this year with those leaders at 13 banks, retailers, and insurance firms found metaverse to be neither an interest nor a priority.

The metaverse is still a relatively new concept for most companies and consumers to grasp. While some are making headway into this new space, others are still holding back while they figure out the potential benefits they can reap. While senior digital leaders surveyed by Forrester are not rushing to jump on the metaverse bandwagon, there are still ways for them to ease into this space.

Concentrate on digital experiences that will offer near-term ROI: While metaverse might be the buzzword right now, senior digital leaders should still focus their efforts on creating core digital experiences that are in line with their consumers' access, comfort, and preferences. Most B2C companies have strong websites and mobile apps, Forrester said. Their next move would be to include a more sophisticated use of mobile messaging and adding chat and voice-based interfaces to their portfolios.

Allow the marketing team to experiment with metaverse-like experiences: Brands such as McDonald's, Gucci, Nike, and Standard Chartered are investing in the metaverse and creating relevant experiences. Hence, digital professionals should not be alarmed if their marketers also want to spend on creating metaverse-like experiences. In fact, Forrester described these to be "one-off experiences on third-party platforms" that would not yet affect the core business.

Monitor behaviour of current and potential consumers: It is important for digital professionals to keep an eye on enterprise tech companies. Forrester explained that if metaverse tools becoming increasingly popular within these companies, the higher the chances of consumers adopting them, thus driving the push towards metaverse.

Imagine and mock up future immersive experiences: The creation of a metaverse might still be in the early stages but this does not mean that brands should not start looking towards the future. There are some metaverse-like experiences that will enable 3D events or even shopping on a platform. According to Forrester, these experiences will appear "long before a mature metaverse does".

Also, these experiences don't solely revolve around NFTs. In fact, consumers might even buy, borrow, and use virtual goods without NFTs or cryptocurrencies in the future. Forrester advices brands to start ideating experiences that are either more immersive or blend both the physical and virtual spaces. Companies can even create prototypes to test with their consumers.

Separately, while digital professionals remain calm about the metaverse, a Qlik study published earlier this year titled "Data Literacy: The Upskilling Evolution" said that over 99% of C-suite executives believe that they will hire new roles in the next 10 years, such as chief metaverse officer, chief automation officer, and head of gamification. Also, 85% of respondents believe that it will be important to have a chief metaverse officer in charge of employee and customer experiences that straddle digital and virtual realms.

In addition to a chief metaverse officer, 86% also believe that having a metaverse experience designer, esponsible for employee and customer experiences that straddle virtual and physical realms, and who ensures data transfer is seamless, will be important.

Related articles:
Opinion: With the rise of the metaverse businesses need to shift to become virtual-first
Animoca Brands raises over HK$591m to advance open metaverse
Alibaba, Meta and Microsoft among tech giants to form metaverse standards body
Metaverse is important. But is it important enough for the boardroom?
Heineken pokes fun at its own virtual beer in the metaverse

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