The Metaverse Isn’t Real Yet but It’s Already Really Lucrative

Photo Illustration by Thomas Levinson/The Daily Beast/Getty
Photo Illustration by Thomas Levinson/The Daily Beast/Getty

In a society that seems addicted to the “new, new thing,” it is easy to pass off talk about the “metaverse” as classic techie hype. It’s not that or, at least, it’s about to be and is already becoming much more than just that.

There’s a reason that tech oligarchs are betting their futures on this technology to extend the internet into a permanent virtual reality, one with the potential to consume everything in its path and remake societies. Mark Zuckerberg may be a menace but he is willing to ignore critics and seize the future. In renaming Facebook as Meta, he absorbed a $200 billion loss in market value for the company and a $30 billion drop in his own net worth.

He’s hardly alone in being willing to take the risk. Rony Abovitz, a confidant of Zuckerberg , received more than $2.5 billion in funding from a diverse list of venture and private equity investors, including Alibaba and Google, for his previous virtual reality venture, Magic Leap. Former Disney CEO Robert Iger is also taking the plunge, taking a seat on the board of Los Angeles-based Genies, which has raised $100 million in venture funding to create avatars for celebrities on the Metaverse as well for the sale of virtual “goods.” Disney itself has a senior VP dedicated to its metaverse strategy, a former CTO at the entertainment giant with “a history of enabling transformation… Especially when it comes to bridging the physical and digital worlds.”

Abovitz compares the current discovery of what he calls “inner space”—a blending of “neuroscience, imagination, consciousness, physics, and adventure”—to the space pioneers of the Mercury program. Matthew Ball, the CEO of Venture Capital firm Epyllion, told Bloomberg that he anticipates the metaverse economy producing $10 to $30 trillion in 15 years.

The idea of a “metaverse” began in 2003 with Second Life, a game and marketplace that former Linden Lab CEO Philip Rosedale envisioned as a limitless, immersive “green field” where avatars interacted with other avatars, creating buildings and communities together and building a virtual economy. In practice, it seemed (and still seems) cartoonish and artificial, a “place” where people buy and sell virtual goods and virtual real estate with little consumer protection. That said, as of this writing, over 900,000 people still “play” Second Life, which was acquired by an investment group led by Randy Waterfield and Brad Oberwager.

The Slaughter of the Tech Unicorns

As to the cartoonish and artificial feel, including in Zuckerberg’s introduction of Meta’s metaverse, of these worlds, that’s something that can change quickly with technological progress, whose breakneck pace was further accelerated by the online impact of the pandemic, allowing for major advancements in vividity, or the “real-seemingness” of these virtual environments. Two technologies in particular, sensory field computing and artificial intelligence, can help make users feel like what they are experiencing is real. Sensory Field Computing refers to the way in which computers translate the five senses (sight, sound, touch, taste, and smell) into digital reality. The intended effect, explains virtual reality pioneer Charlie Fink, who teaches at Chapman’s Dodge Film School, is to create an “internet that you are inside of looking out at” rather than observing from a screen.

The invention of virtual reality goggles like Oculus, later acquired by Facebook (now Meta), was one big step forward for the sight and sound elements, albeit an insufficient one. But, according to Abovitz, founder of Mako Surgical, Magic Leap, and now Sun and Thunder, we are moving toward what he calls Neurologically True Reality, where all five senses can be represented so vividly that one’s neurons cannot tell the difference between physical reality and digital reality. He believes that this technology offers the potential to help severely traumatized people, such as those suffering from PTSD, recover by “rewiring” their brains to adapt to a different, non-traumatic reality. The sufferer can replace their old, disruptive world with a completely new view and context to lead a more normal life.

But whatever the personal impact of this technology proves to be, the real play here is economic. The development path of social media, on which the average American spends more than eight hours a day posting, checking in and conducting e-commerce, has proven highly profitable—and even more so amid the pandemic shutdowns—for the platforms controlled by a handful of tech oligarchs. As the tools to create more vivid, hyper-real content proliferate, people will find themselves spending more time in the metaverse. That, combined with the building blocks of secure digital commerce including cryptocurrencies, blockchains and non-fungible tokens, will lead to people using the metaverse as their primary platform for interacting with each other.

In the past, most people had to go to a workplace to earn a living. Now, many more people can now work from home and even after the pandemic, according to Stanford’s Nicholas Bloom, roughly 20 percent of the workforce will not show up in the office daily—four times the pre-pandemic rate. In the tech world, suggests the University of Chicago, that could cover 50 percent of the workforce. This next tech boom may still have its headquarters in Silicon Valley but it will not be as geographically concentrated as the last one; Meta itself has leased 33 floors in Austin. This boom likely will be widely distributed.

Looking into the future, it is not at all far-fetched to think that people will adapt themselves to being online continually. Not all the implications are negative. Chabad, the Jewish Orthodox powerhouse, has already purchased what The Times of Israel calls “the first Jewish outpost in the metaverse.” The potential for learning experiences, notes Abovitz, could vivify the past in ways that hadn’t been conceivable until now.

But at the same time, as they live their lives online, people also become more observable, making the companies that control the metaverse far more capable of accurately sensing and predicting peoples’ behavior and offering them opportunities to purchase digital and physical goods and services that satisfy their precise needs. This economy will not only be fueled by personalized advertising, as social media currently is, but by the buying and selling of actual goods. Unlike in primitive virtual worlds like Second Life, people buying things in the metaverse will be tracked in terms of ownership, transactions, currencies, and assets in ways that will offer some measure of security. This has the hallmarks of an actual economy.

And, because it is not being built off advertising, the metaverse won’t end up as “a mind-numbing neuro influence drug addiction thing” like phones and social networks have, Abovitz suggests, but as something “well-curated” and with anyone to both produce, and consume, digital goods.

Real estate, or maybe better unreal estate, seems a particularly hot area. If you are spending 18 hours a day in virtual reality, maybe you’d like a 32-room mansion in Southampton. You cannot afford to buy that in the physical world. But you can buy a virtual one, furnish it with “authentic” Napoleonic-era virtual antiques and go to sleep in it wearing your immersive headset. You can even “own” that mansion, although the creator of it may also make 2 million copies of it to sell to other people, who will “own” their copy of it.

Banking giant HSBC made headlines when it agreed to a partnership with The Sandbox, a San Francisco-based startup, to push virtual real estate. JPMorgan Chase has developed its own digital real estate product in Decentraland.

You also may want to have a family, but having children in the “real world” is an expensive proposition. The pain of childbirth and the long slog of child rearing can also be a deterrent. Imagine being able to select and rear virtual children. Harkening back to the days of “Neo Pets,” the virtual children will be nurtured, educated, and virtually well fed and cared for. The cost of doing all of this will likely be a fraction of its real-world equivalent. But imagine a world where there are no midnight feedings of infants, no stretch marks, no pain. And those kids will be yours. They will have your digital DNA in them. You will have “clear title” to them.

That’s the upside, and theoretically the metaverse could reignite the diversity and openness of the early internet. But as Abovitz points out, the big advances are not coming out of the garage startups but from the large tech firms, who, like Facebook, can afford to invest billions and have already become “the techno-shamans” of our modern age. The risk, as we have seen in recent years, is that we could end up ceding our lives to a few companies that lease their serfs, not citizens, their daily digital bread because “we liked their free software and their games.”

The history of the past decade—growing tech concentration, censorship and growing inequality—may simply repeat itself in the new universe. After all, we have known the negative social effects of internet technology for a quarter century, but have kept enhancing and expanding its concentrated power. Fink suggests the pace of technological development is so fast that “no form of representative government is going to keep up with what is happening.” Instead we may see the further enhancement of our already existing “surveillance society”—and even a move to achieve eternal life (or, perhaps, eternal second life) by downloading consciousness into the metaverse.

Yanis Varoufakis, the former Greek finance minister, suggests that the metaverse may be the killer app for an emerging “techno-feudalism,” where a handful of companies essentially create “absolute control of your senses within a multiverse created by some device.” These firms could exercise “excessive power over the disordered soul”, a dystopia like that first explored in Huxley’s Brave New World, and more recently in movies like Elysium and 2047.

This sounds more than a bit scary. But as the real world becomes increasingly problematic and people seek ways to escape inflation, crime, disease, and other norms of contemporary life, the appeal of another world, a place of escape, may prove irresistible to consumers and highly profitable for providers.

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