The Metaverse: So What Is It, Exactly?

What exactly do you mean by “metaverse”?

This is the latest insight in our series on the predicted next wave of the internet and its very real legal challenges. We look beyond the hype and offer some simple guidance to help you navigate this complex, constantly evolving space.

The term ‘metaverse’ has been much used, abused and derided.  Sometimes the term is used to evoke a video game like virtual world accessed using virtual reality headsets; in other cases, it seems to be used simply to indicate that a certain product has some vague connection to the internet (a synonym for ‘cyberspace’). Even those watching this space carefully might understandably be confused by how the seemly different technologies of VR, AR, virtual worlds and digital twins relate. So it is natural to ask: what exactly is the metaverse?

To assist you in conceptualising the metaverse and what it may mean for your business, we wanted to dive deeper into the concept of the ‘metaverse’ and share with you how we have been thinking about the metaverse here at KWM.

Trying to define an uncertain future

As noted in our previous article in this series, every big tech company has its own way of describing the metaverse that unsurprisingly aligns with the company’s core strengths and priorities.  For example, Mark Zuckerberg’s descriptions of the metaverse suggest the central role of virtual and augmented reality; Tim Sweeney of Epic Games, when explaining the metaverse to a US court, focused on games and their emergence as a social medium; and Satya Nadella of Microsoft has emphasised the less buzzworthy (but possibly more impactful) enterprise and industrial use cases of metaverse technology.

While a single clear definition of the ‘metaverse’ would be nice (and would make some metaverse discussions easier), ultimately we don’t think there is too much value in trying to identify an exact line between what is and what isn’t part of the metaverse.  After all, people such as Khronos president Neil Trevett have suggested that, in 5 to 10 years’ time, the term ‘metaverse’ will likely go the way of ‘cyberspace’ or ‘the information super-highway’.  As a result, we think it is much more useful to focus on the underlying internet trends that big tech is referring to when they use the overarching term ‘metaverse’.    

The metaverse as a series of trends

In our view, there are four key trends that emerge out of how the term ‘metaverse’ is used in the tech sector.  These are:

• 3D computing
• immersive technologies
• interconnection
• user-generated experiences

If the metaverse is ‘the next wave of the internet’, then these are the trends that characterise that predicted wave (or at least how it is currently envisaged by its leading proponents).

3D computing: seeing the internet from a new perspective

Currently, the internet is largely 2D: not just in terms of the displays, but also in terms of the content. To put it simply: the content in text, photos and videos can only be viewed from a single perspective. 

By contrast, 3D content involves modelling objects in 3D (including such things as the camera angle and lighting) before rendering them onto a device.  Although the end user device most commonly involves a 2D display, the existence of an underlying 3D model enables a user to change the camera perspective (often in real-time), which can give the impression that the user is rotating or moving an object, or moving through a virtual world.  

This 3D content can be used in a number of ways, including to create:

While some of these concepts might, at first glance, appear quite distinct, sitting behind them all are advances in real-time rendering and technology such as graphic processing units (GPUs) and 3D graphics engines (such as Unity and the Unreal Engine).  The metaverse may involve many things but, at its core, it is about 3D computing.

 The Metaverse is the Internet, enhanced and upgraded to consistently deliver 3D content, spatially organized information and experiences, and real-time synchronous communication.
Tony Parisi, co-creator of VRML & glTF

Immersive technologies: Bringing users into the internet

A second key trend in the tech sector’s vision of the metaverse is the increased use of immersive technologies. The two technologies that currently seem poised to have the greatest impact on the market are virtual reality and augmented reality, as summarised in the table below.

Although there is currently significant investment in developing AR and VR headset and glasses, it should be noted that immersive technologies are not essential to all metaverse use cases.  For example, the majority of artificial virtual worlds that currently exist (mostly in the form of video games) are accessible through traditional devices like mobiles, tablets and PCs. Even VR-native environments, like VRChat and Meta’s Horizon Worlds, either allow or are expected to soon allow access through these traditional devices. This is not surprising given that mobiles and PC are likely to have a much greater market penetration than that of AR/VR headsets and glasses, at least in the short-to-medium term future.

While immersive devices are a significant trend implied by the concept of the metaverse, they are not the whole story.

‘even more immersive - an embodied internet where you’re in the experience, not just looking at it.’
Mark Zuckerberg, CEO of Meta

Interconnection: the metaverse is a network

The metaverse is not a single virtual world but, like the internet, a network. Unlike some sci-fi visions of the metaverse, it seems highly unlikely that a single company will build or control all the virtual worlds, let alone the underlying ecosystem, of the metaverse.  

As a result, for the metaverse to live up to the hype and to become the next iteration of the internet, it will need a significant degree of interconnection. This can be understood as referring to two related concepts:

• interoperability between devices, software and platforms (eg, the ability to access a virtual world through multiple digital storefronts and on multiple hardware devices)
• a degree of connection between experiences, such as giving users the ability to transfer their virtual assets, virtual currencies, and even aspects of their virtual identity (including log-ins and avatars) across experiences.

Not only is this interconnection desirable from a consumer’s point of view, but it also has significant potential for enterprise or industrial use cases. Currently, many businesses have 3D assets that have been built in specialised software and that are locked into proprietary software formats.  The so-called ‘industrial metaverse’ envisages a larger ecosystem to exploit these assets.

For example, a car company could design a vehicle in an engineering CAD program, test its aerodynamics in a virtual wind tunnel and then experience the interior’s design in VR – all before beginning the expensive manufacturing process.  The same 3D assets could then be reused for marketing materials or even to place the 3D asset into a film or game.

This interconnection is expected to be made possible by a number of technologies, including:

• 3D engines (such as Unity and the Unreal Engine), CAD programs and digital twin tools
• emerging 3D open standards and open source software (such as glTF and USD), and collaboration platforms (such as Nvidia’s Omniverse)
• innovations in digital payments and virtual currency.

The industry is already taking steps towards building this ecosystem, with new partnerships, collaborations and integrations announced almost every week.  And recently industry has rushed to join the Metaverse Standards Forum, which aims to coordinate between industry and the numerous standards organizations that impact the metaverse. The Forum now has over 1500 members, including key players such as Meta, Microsoft, Google, Amazon, Nvidia, Unity and Epic Games.

‘The Metaverse, like the internet, mobile internet, and process of electrification, is a network of interconnected experiences and applications, devices and products, tools and infrastructure.’
Matthew Ball, CEO of Epyllion Co and author of ‘The Metaverse: And How it Will Revolutionize Everything’

User-generated experiences: 3D’s a crowd

Lastly, how an individual interacts with the internet is likely to change as a result of virtual worlds and immersive environments.  This may happen in a number of ways:

Taken as a whole, these discrete changes can be seen as a shift from today’s internet of user-generated content to an internet involving an even greater variety of user-generated experiences: an internet that gives end users not only a greater sense of presence in experiencing the internet, but also greater agency in building it. 

It is difficult to foresee all the potential consequences of this shift of how users interact with the internet, but it seems likely that it will have a significant impact both on the type of use cases that will succeed and on the risks to end users.

‘The defining quality of the metaverse will be a feeling of presence — like you are right there with another person or in another place.’
Mark Zuckerberg, CEO of Meta

Evolution not revolution

So how is any of this new? The answer is: most of it is not. Virtual reality headsets, for example, were available for sale in the 80s, and 3D graphics have long existed in the world of games and animated films.

But, in a similar way, the world wide web, smartphones, social media and cloud computing all took a while to take off, before ultimately causing dramatic changes across entire industries. For that reason, the analogy of a wave seems appropriate: there is no clear line that marks its beginning, but that doesn’t stop it from rising up and potentially crashing down upon us.

Where do games fit in?

Popular culture and the mainstream media often depict a vision of the metaverse that is closely connected with video games and gaming culture. It’s true that games are an important part of the metaverse. For example:

• The worldwide gaming industry is worth an estimated US$200 billion (bigger than the film or music industries) and is becoming increasingly important for Gen Z and Gen Alpha. The spend on virtual-only goods in games is also impressive (more than the spend on the original purchase of games), which suggests that there might be a large market for virtual-only goods outside the world of games.
• Video games are becoming more than just games, with platforms like Fortnite and Roblox becoming de facto social networks and places for events (such as concerts). Both in terms of ambition and user base, these gaming platforms are at the vanguard of the consumer side of the metaverse.
• Demand from the video game industry has also been, and will likely continue to be, a significant driver in the growth of key technologies like GPUs and 3D graphics engines.

However, as noted in our previous article in this series, the metaverse is about much more than just games.  There are consumer uses cases for metaverse-related technologies in areas such as fitness, healthcare and education.  There are also numerous enterprise and industrial use cases for the metaverse (such as remote work and in engineering and design) in which the influence of games might only be tangentially at best.

So while games are expected to form a significant part of the metaverse and to drive its overall development, viewing the entire metaverse through the lens of the gaming industry can lead to a very narrow (and somewhat misleading) vision of what the metaverse is likely to be.  That said, from a purely entertainment perspective, we are not expecting to see a blockbuster sci-fi film set in the industrial metaverse anytime soon.

Web3 and the metaverse

Finally, we should note that, although the concept of the metaverse is sometimes conflated with Web3, the metaverse and Web3 refer to two different things:

• the metaverse, as we have described above, generally refers to concepts such as 3D computing and immersive technologies.
• by contrast, Web3 generally refers to an internet built on the backbone of distributed ledger technology (ie, blockchains) and includes such things as cryptocurrencies, NFTs and blockchain-based smart contracts.

Although they are separate concepts, there are a few reasons why Web3 often comes up in the context of the metaverse:

• both the metaverse and Web3 are sometimes seen as potential successor states of the current internet
• there are some existing products that incorporate both virtual worlds and Web3 technology (like The Sandbox and Decentraland)
• some proponents of web3 argue that blockchain technology could form the backbone of the metaverse by enabling such things as the ability to transfer virtual currency and assets between platforms, the ability to avoid the commissions that some app stores currently charge on in-app transactions and even by enabling the creation of new network architectures based on distributed computing.

However, blockchain technology is controversial to say the least, with some large virtual worlds such as Fortnite and Minecraft either staying clear of (or outright rejecting) blockchain technology and many individuals in the tech industry questioning its usefulness and desirability. Some businesses have even found their Web3 projects met with consumer backlash and mockery, potentially causing brand damage in the process. The recent Web3 crash and increased push to regulate cryptocurrency may only serve to increase these doubts.

Web3 may eventually overcome these challenges and prove to be an essential enabling technology for the metaverse. But it is not inevitable and issues like interconnecting virtual worlds may ultimately be solved without blockchain technology.

So what?

There might not be a single perfect definition of the metaverse, but the evolution of the internet does not wait for dictionaries.  As envisaged by the tech sector, the metaverse refers to an internet characterised by 3D content, immersive technologies, a significant degree of interconnection and fundamental shifts to how users will interact with the internet. 

It’s a predicted next wave of the internet and the tech industry is betting billions that it will prove transformative.

Over the coming months we will continue to dive deeper into the metaverse. Subscribe by selecting ‘Tech & Data’ as your area of interest here. Also our upcoming Digital Future summit will feature an exciting session on the metaverse with guests from Meta and Microsoft. Register for the virtual event here.