If you’re still digesting the term “metaverse” and contemplating its possibilities, don’t be surprised if you start hearing another term increasingly used: “metanomics.”
While the word has been around for some time now, loosely used to describe the economic opportunities in the digital world, it’s gaining further traction since a JPMorgan report in February this year used it to describe the economics of the metaverse. In this article, we’ll look at the metaverse, metanomics, and what it all means to you.
The term “metaverse” is a concept to describe the increasing digitization of our lives. As many new elements of a digital age, from hand-held devices to smart fridges, online banking to entertainment, begin to converge, the metaverse will unify them into one immersive experience.
The metaverse can also act as an extension of our daily lives, allowing us to connect with people worldwide through digital interactions, attend online events and conferences, and even go to virtual fashion weeks. You can read our article on the metaverse here for a more detailed explanation of the term.
Along with this new and immersive way of socializing, transacting, traveling, and working, the metaverse presents a wealth of economic opportunities for consumers and brands alike: which brings us to metanomics.
As the term suggests, metanomics is the combination of two words “meta” and “economics.” JPMorgan estimates that market opportunities in the metaverse will soon value over $1 trillion a year as the digital world continues to infiltrate our lives in more ways.
From behemoth tech giants like Facebook, Google, or Microsoft, to sports and entertainment stars holding tournaments and concerts, “the opportunities presented by interactive, digital worlds seem limitless.”
Indeed, at the recent Nonfungible Conference in Lisbon this April, one panel described how Fashion Week had been successfully pulled off in the metaverse at Decentraland. As many as 70 popular fashion brands attended to exhibit non-fungible token (NFT) fashion collections in the blockchain-based virtual world, including names like Dolce & Gabbana, Estée Lauder, and Tommy Hilfiger.
Attendees could purchase newly minted NFTs of wearables for their digital characters and certificates of ownership that went alongside physical clothing. They could see and experiment with clothing in the metaverse and use the opportunity to purchase real-world items.
Beyond fashion and wearables, we’re seeing all types of companies unveiling metaverse strategies as the possibilities of opening up new revenue streams become more apparent.
Brands now have more than just physical consumers to sell their wares to; retailers and other businesses can also offer goods and services for online avatars that people own, dress, and adorn. Even in real estate, people can (and are) buying virtual plots of land, with the JPMorgan report noting that “virtual real estate is a growing market.”
If the thought of living in a digital universe sounds somewhat extreme to you, fear not. The metaverse is not meant to take over our lives but merely complement them. After all, perhaps you can see the advantage of going to a rock concert without leaving your living room or meeting up with faraway friends without taking a plane.
Of the endless possibilities that exist in the digital realm, one of the areas that is already producing high returns is blockchain gaming. From one of the first to pioneer the “play to earn” model like Axie Infinity to up-and-coming blockchain-based games like Splinterlands and the Sandbox, the blockchain gaming industry is gaining in value, with Hong Kong alone already reaching a valuation of over $5.4 billion.
Blockchain developers are constantly seeking how to improve the metanomics of their games. Axie Infinity, for example, now has quite a high barrier to entry, requesting around $600 for an Axie for players to get started. This is leading many games to consider ways of leveling the playing field for new players.
Blockchain gaming has vast potential to take off in the coming years when you consider the already popular gaming industry is estimated to reach a valuation of $300 billion in the next five years. Blockchain games turn gaming on its head, giving power to the players to monetize their recreational activity rather than paying game creators for the experience.
With the concept of the metaverse not yet set in stone, one aspect that most people agree on is that there will be multiple metaverses rather than one unified digital world.
These many metaverses will occur in different ecosystems, such as Decentraland, Axie Infinity, or the Sandbox. A large challenge, then, for a seamless experience moving into the future will be interoperability and how easy it is for people to move from one ecosystem to another, taking their avatar to a concert, playing a game, interacting with friends, or carrying out a business transaction without having to unplug and reconnect.
Further, as initiatives in the metaverse progress, it’s clear that this digital realm may not be for everyone. While proponents of the metaverse like Facebook’s Zuckerberg and Ark Funds Cathie Wood see it as a multi-trillion-dollar opportunity, naysayers like Tesla’s Elon Musk have called it nothing more than a “marketing buzzword.”
It will certainly be interesting to see how the metaverse (or metaverses) take shape and the many metanomic models that emerge. With JPMorgan becoming the first major financial institution to highlight the potential of the metaverse, it’s pretty clear that it won’t be going away any time soon.
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