When Metaverse And Blockchain Collide
Written by: Ms. Florence Ip
Metaverse is hot !
Mark Zuckerberg, CEO and Founder of Facebook, announced the transformation of Facebook into a Metaverse platform in July 2021 and later rebranded the company to META in October. Suddenly, Metaverse became a hot topic. A lot of investors and entrepreneurs want to find out more about Metaverse and its business potential.
What is Metaverse ?
Metaverse is a 3-dimensional digital world that runs on the internet. It has been recognised as the next generation of internet (the Internet 3.0). E-commerce platforms on the internet right now, such as Amazon, mostly display product photos only. Those digital photos are 2-dimensional and static. 3-dimensional digital images allow viewers to see from all angles. Viewers can see the product from the top and bottom, the front and back, left and right. It would give shoppers a much more immersive experience.
Metaverse is also where players can play digital online games, meet and work together. The current pandemic has accelerated the development of Metaverse indeed. After a year of lock-down, stay-at-home and work-from-home, people are used to virtual meetings with teachers, classmates, friends and colleagues. Now, many teenagers are playing online games with friends. Games are becoming more 3-D and immersive.
The younger generation of internet users want to make their life more interesting by gamifying their presence and environment in the Metaverse. They would like to be present as cartoon characters, “avatars”. By entering the metaverse we are immersing ourselves in a parallel virtual experience that mirrors our physical world. Some players consider their avatars as their second life.
Companies are exploring new sources of income from the digital world. NVIDIA Omniverse™ is an easily extensible, open platform built for virtual collaboration and real-time physically accurate simulation. Creators, designers, researchers, and engineers can connect major design tools, assets, and projects to collaborate and iterate in a shared virtual space. Developers and software providers can also easily build and sell Extensions, Apps, Connectors, and Microservices on Omniverse’s modular platform to expand its functionality.
Digital Online Games
Online video games are the first version of Metaverse. Most of the existing Metaverse platforms are created by gaming companies. Platforms, such as Roblox, Sandbox and Delta Time, are the well-known online Metaverse games which offer Play-to-Earn feature.
Roblox has been listed on NASDAQ in the U.S. since 2006, with a market capitalization of USD 59.3 billion as of 17 December 2021. Developers can create online games on Roblox and sell their games to other players. Game buyers can earn revenues by selling hints, virtual tools, tokens and NFTs to players in the games. Developers can also buy virtual land in Roblox by spending their native tokens, ROBUX, and then build shops to sell products as well as services. In fact, players can build their virtual home to breed pets and enjoy their virtual life. Players in their avatars can meet up with friends in Roblox cyberspace and go into a luxury restaurant to enjoy virtual meals.
Sandbox is a popular Play-to-earn gaming platform built on Ethereum blockchain. Players build virtual castles and houses in the games. They earn Sandbox’s native cryptocurrency, SAND, when completing a level in the game. Certainly, players can buy virtual land in Sandbox by paying SAND. A piece of virtual land is priced at around 3.0 Ethers (ETH) on Opensea marketplace as of 17 December 2021. In late November, Sandbox attracted USD 86.56 million in non-fungible token (NFT) land sales. The biggest buyer, Republic Realm, spent USD 3.4 million to acquire virtual land to invest and develop virtual real estate in Sandbox [1].
Delta Time is another popular online game of Formula One Racing also running on ETH blockchain. Players spend their native cryptocurrency, REVV, to buy NFT virtual racing cars, NFT car tires, NFT gloves, NFT helmet, etc. The more players spend on NFT products, the luckier the players will be in their racing games. Winners will receive NFT trophies or other NFT products, which can be sold to the secondary market, as rewards. Audiences must purchase entrance tickets to watch racing games. An NFT Apex race car was sold in an auction at USD 111,111 in September 2019. In November 2020, a 5% ownership of one of their virtual racing tracks, Formula 1 Grand Prix de Monaco, was sold in another auction as a NFT at USD 223,000 [2]. The buyer of the Monaco virtual racing track, the largest NFT investment fund ‘MetaKovan’, will receive the 5% of entrance ticket revenue as dividend every year. The estimated return was 7% to 11% annually.
Sport Industry Is Jumping In
On 2 December 2021, Adidas announced their foray into Metaverse with partnerships and opened a shop in Roblox to sell NFT sport shoes. Adidas stated that digital worlds that constitute “the Metaverse will be a place where anyone can express their most original ideas and be their most authentic selves.” Furthermore, Adidas spent 46 ETH, a slightly more than USD 150,000, to purchase Ape #8774 in mid September. Upon the announcement, the blue furred, heart-bespectacled ape appeared wearing Adidas tracksuit.
Nike unveiled their acquisition of a virtual sneaker brand RTKFT so as to join the Roblox community too.
More excitingly, English premier league football team, Manchester City, has teamed up with Sony to build its own virtual stadium on 1st December, 2021. Their virtual Etihad Stadium will be an exact replica of Man City’s actual stadium, but it will feature virtual experiences, customizable avatars and interactive loyalty programs. The virtual stadium will connect footfall fans from all over the world, let avatar fans to visit and create immersive digital fan experiences [3].
Physical Fitness Trainers In Metaverse
Eggplant, which is a Hong Kong based physical fitness coaching software company providing physical training programs to members via mobile applications, will expand their training courses into the Metaverse world. Eggplant will offer an Artificial Intelligent (AI) coach in their training program. Members will be able to select a virtual background and enjoy physical exercises with friends, regardless of where they actually locate. Eventually, members can do yoga in a virtual beautiful rose garden with an overseas friend and an AI trainer. Perhaps, members can do boxing exercises with a virtual monster. By knocking down the virtual monster, members may earn tokens and challenge a higher level for more excitement. Will that be fun?
NFT Sales Is Booming
Metaverse is thriving now, as many more people and companies are interested. In Nov 2021 USD 106 million was poured in to purchase virtual properties, including digital land, luxury yachts and other digital assets. Unsurprisingly, virtual land will be the accelerator of NFT sales growth in the future. According to Cointelegraph research, NFT market has become a booming market that expands year after year. As players are spending more time in the virtual world, their virtual images become as important as their appearance in real life. Players will consume more on NFT clothes, including jackets, dresses, shoes, sunglasses, handbags and accessories, to make their avatars look glorious. Therefore, players spending on NFTs will increase exponentially. The NFT sales have grown from just USD 41 million in 2018, USD 340 million in 2020, to an astonishing USD 2.5 billion in the first half of 2021. It is aiming for a USD 17.7 billion record by the end of this year, accounting for a 52 fold expansion in just one year. By the way, 80% of the NFT sales volumes are held in the Ethereum blockchain.
The number of online game players will grow to 1.3 billion by 2025. Sales revenue of the global online gaming market is projected to reach USD 23.6 billion by the end of 2021 and USD 31.3 billion in 2025, with a CAGR 7.36% from 2021 to 2025 [4].
Do Your Own Due Diligence
Caution is very important to the NFT buyers. NFT buyers should consider the risk of the termination of the game and losing NFT ownership. If the NFT will disappear when the online game shuts down, the survival rate of the game should be considered and the value of NFT should be discounted. Of course, a well-funded company always has a higher chance of survival.
References:
2. https://cointelegraph.com/news/nft-representing-5-of-monaco-f1-delta-time-track-auctioned-for-220k
4. https://www.statista.com/outlook/dmo/digital-media/video-games/online-games/worldwide
