Russell Waite, group director at Affinity Private Wealth, looks at the metaverse and how the way people work, rest and play in this space will affect society and the economy
IT will soon be two years since Facebook announced it was rebranding to Meta and would focus its future on the upcoming ‘metaverse’.
In the time since, the term seems to have eroded into near meaninglessness for many.
Moreover, big tech money has subsequently moved into the artificial intelligence space and there is a perception that a lot of marketing hype and cash has been wrapped up in selling the idea of the metaverse, without much to show for it. Meta itself lost US$13.7 billion in 2022 and then spent the first half of 2023 making more than 10,000 employees redundant.
Contrary to this downbeat message, the metaverse is alive and kicking, albeit the term itself is vague.
This is partly because it does not refer to any specific technology but instead refers to the shift in how we interact with it (the internet?).
In this vein, McKinsey defines the metaverse as the emerging 3D-enabled digital space that uses virtual reality, augmented reality and other advanced internet and semiconductor technology to allow people to have lifelike personal and business experiences online.
We believe the ways in which the next generation ‘works, rests and plays’ in the metaverse will have a significant impact on society and the global economy. In terms of the latter, this will include contributing to a decarbonised and more sustainable world, while potentially driving up to US$5 trillion in value creation by 2030.
To provide an insight into this, let’s first consider how Generation Z is pioneering new trends within beauty and fashion – ‘barometer’ sectors for the metaverse – and how this is driving innovation and reshaping those industries.
The future is ‘phygital’
It may seem odd that an industry like beauty – rooted in sensory experiences, where personal touch and physical treatments are paramount – is being transformed and re-invented for a virtual world where you cannot feel, smell or literally touch what is in front of you. Nevertheless, it is happening and brands are quickly having to adapt and learn how to establish themselves in the digital realm.
The French firm L’Oreal is a good case study. In a recent interview, the firm’s chief digital and marketing officer explained that the mantra was to seize something as soon as it starts.
The company is purposely making inroads into Web3 and metaverse beauty because it recognises that digital transformation and consumer behaviours are fast evolving. L’Oreal advises that it is moving from products to services, from digitalisation to virtualisation, from 2D to 3D beauty, as well as from ‘look-down’ smartphones to ‘face-forward’ devices (think of Apple’s recently launched augmented reality headsets), which are growing and getting better in terms of technology.
As well as being in the eye of the beholder, beauty is about self-expression. L’Oreal has undertaken studies to understand how Gen Z is approaching the metaverse, with 57% reporting they can express themselves more openly through customisable digital identities, or avatars. Digital influencers or key opinion leaders have an important role to play too.
Prada has a long-term licence agreement with L’Oreal for the creation, development and distribution of luxury beauty products for the Prada brand. In 2021, it revealed the new face for its famed perfume, Candy. The ambassador is not a celebrity, nor a supermodel but a computer-generated avatar, named Candy.
Notwithstanding the rising importance of avatars, it appears that metaverse-based beauty and fashion consumers are most excited about experiences augmenting and complementing their physical-world experiences, especially those helping them with the fitting process. The case for virtual try-ons goes beyond just metaverse engagement: helping customers find the perfect fit also helps ease the cost and complexity associated with record-breaking numbers of product returns. This is a huge waste of resources and provides a glimpse into how the metaverse can contribute to a more sustainable economy.
This leads us on to ‘digital twins’
The concept of a digital twin – a digital representation of a real-world entity or system – emerged from the NASA Apollo space programme, where, helped by constructing, and experimenting with, a replica model of the lunar module, mission control was able to safely return the crew of Apollo 13 to Earth.
Today, digital twins typically exist in the industrial metaverse which aims to create a virtual environment where engineers, designers and other stakeholders can collaborate in real time, regardless of their physical location. Users can access virtual representations of products, machinery – and even entire manufacturing facilities – and simulate scenarios to optimise designs, identify potential issues and make informed decisions. This has the potential to significantly improve efficiency, lower costs and reduce environmental impact. Still in its early stages of development, the industrial metaverse has the potential to revolutionise the way we design, build and maintain.
Faster adoption of digital twins will no doubt be inextricably linked to the utilisation and application of AI. Through data mining and machine learning, AI creates ‘thinking’ digital twins which can proactively support value chain and product optimisation, emissions reductions and the maximising of profit margins.
By the end of this decade, the metaverse is expected to be a multi-trillion-dollar market with a significant share of industrial applications. Even more importantly, it could be one of the greatest forces driving both sustainability and the digital transformation of businesses and entire industries. It will make innovation easier, progress faster, time to market shorter, reduce waste and help us to use fewer natural resources. It will help to develop better products by empowering people to explore many more design options in a much shorter time and at considerably lower costs. As well as more efficient methods of production, it will facilitate better integration of recycling and circular economy principles into the design process, paving the way for greater efficiency and dematerialisation of our economies.
Interchanging between where and when we spend our time in the real world and the virtual world may sound ‘dystopian’ to some but for the next generation, it is fast becoming the new normal.
As for the rest of us, it may be time for us to get phygital.
