3 December 2021. Metaverse | 2021

The metaverse’s early use cases: probably sex and businesses. Some of the 52 things that Tom Whitwell learned in 2021.

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#1: The metaverse’s initial use cases: probably sex and business

I’ve been having an online conversation with a journalist about the metaverse, which I also wrote about here a couple of weeks ago, and I thought it might be worth sharing some of the highlights here.

First, there seem to be three models out there in people’s minds.

1. The model as evolved in Neal Stephenson’s Snow Crash, where the idea was given a name. From memory this is a patchwork of different areas, managed by different people, but are also inter-operable. Metaphorically, this might work a bit like cities and countries: there may be public shared areas (shops, parks) but also some areas where you need to be identified and maybe agree to different terms (this is more like changing countries). There may be some bits which are private and require an invitation (I discuss some use cases lower down). This is probably the version that is most valuable for users.

2. The ‘Facebook dream’ version of the metaverse, where everyone goes to their metaverse and does everything there, rather than mixing and matching.This is probably the version that is least valuable for users. It is also reminiscent of the interactive TV world, Open TV, developed by Sky in the UK in the late 1990s, where some providers were in but others weren’t. It was completely unsuccessful.

It’s worth noting that there’s a metaverse business model paradox in here: the version that the tech companies find most attractive is likely to attract the fewest users.

3. Model 3 is an ‘islands’ model, where elements of the metaverse that have high value for specific groups of users emerge, but you go into metaverse mode only for this. In this model, there’s no point in going shopping in the metaverse because the conventional web allows you to do this more quickly and more simply. From a user point of view, the question becomes: what are the things I could do online that are worth the cost and inconvenience of a full headset or down the line, a special pair of glasses?

In the short to medium term, I’d expect this ‘islands’ model to be the most likely evolution.

And this has some implications when it comes to thinking about lead markets in the metaverse; what are the niches that have a high enough experiential value for users that either they are willing to pay for it, or where the costs are likely to be covered by savings elsewhere? And which offer sufficient value that you don’t mind wandering about in an AR headset?

Putting it this way suggests that one such niche will be porn/ sex. This is partly because it has always been a lead market for new technology products, and because there are already haptic experiments out there. Another might be games-based applications, and similarly that sports could emerge as a significant market. (This might work well for clubs with large fan bases in other countries, since you could potentially make the supporter experience much richer). And, of course, there will be obvious, dull, and effective applications for business meetings. In fact, this seems to be Microsoft’s metaverse strategy, although Ben Thompson seems to be more bullish about this than I am. Perhaps he hasn’t used Teams recently.

It’s possible that we might see some concerts in this mix as well (see sports, above) for a small number of global artists, but I’m not sure that there’s enough habitual behaviour in that space to justify price and inconvenience.

Image: Live radio hour in Second Life with Draxtor Despres and Jo Yardley, 2014. By HyacintheLuynes, via Wikimedia, CC BY-SA 3.0)

Because the thing is this. Despite all the metaverse noise at the moment, this is a technology that is significantly underdeveloped.

Philip Rosedale, who designed Second Life, explained this in an interview at IEEE Spectrum. Rosedale now runs High Fidelity, originally a start up in the virtual reality (VR) space. Incidentally, although people think of Second Life in the past tense, it has a million users and is turning over $650 million a year. But it’s not gone beyond a million users, or so:

(M)ost adults are not yet comfortable engaging with new people, or engaging socially, in a multi-player context online. I've worked on this a lot and it's been incredibly rewarding for the people for whom it has worked... People are not able to communicate with facial and body language yet, in a way that is anywhere near adequate. And I think that it's a very steep cliff.

The fact is that VR take-up has always lagged behind expectations, and early use cases are likely to be disappointing. Rosedale also observes that getting more than 100 people in a virtual reality space is still technically challenging.

So the early applications either have to be in areas where it’s a bit better (and someone else is paying for it, as in business) or where even a disappointing experience is better than the alternative (and remote relationships definitely would come into that category).

(Image via Strategies for Influence)

All of this is reminiscent of Geoffrey Moore’s work back in the early days of the internet on the idea of ‘the chasm’ in the diffusion curve. Moore argued that the early market—innovators and early adopters—was qualitatively different from the early majority. In the early market, you’re solving a much more acute problem for a user. But if you want to make a mass market product, you need to cross the chasm and make something with incremental benefits. (There’s a summary here.)

I think there’s a real question as to whether the metaverse ever escapes from niches. I’m reminded of 3D printing, which has been on my scanning radar for close to 20 years now. Back then, it was going to be the future of production: every home would have a 3D printer, or at least every village and town.

3D printing does work, and it is used. But it’s used a set of specific high value niches, like aero parts, high performance bikes, dental treatment, prosthetics, architecture, and, famously, making a repair on the international space station. It’s as far away as it ever has been from being a mass market product.

#2: Some of the 52 Things that Tom Whitwell learned in 2021

Tom Whitwell’s annual post, ‘52 Things I Learned in ...’ is now in its eighth year. These days it is an internet institution, and the 2021 edition has just been posted.

Because this is Just Two Things, I’m going to share two of them here. But I recommend going and reading the other 50 as well. You always learn something. Actually, you always learn lots.

#20. Women’s relative earnings increase 4% when their manager becomes the father of a daughter, rather than a son. This daughter effect was found in 25 years of Danish small-business data. (Maddalena Ronchi via Tyler Cowen)…

#40. Social media headlines are evolving fast. Since 2017, they’ve got shorter (11 words vs 15 words), and many clickbait phrases like “…will make you…” or “things only … will understand” no longer work. (Louise Linehan & co)

H/t The Browser

j2t#220

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