Insurance Lead – International and Emerging Risks
The term ‘metaverse’ has become increasingly present in the common vocabulary in recent months, whether you work in technology or otherwise.
In this article we’ll explain what the metaverse is, the opportunity it represents for businesses and how governance will play an important role in the future of these digital environments.
So, what is the metaverse?
In October 2021 Facebook announced it was renaming as Meta, with CEO Mark Zuckerberg commenting “I believe the metaverse is the next chapter for the internet”. This led many to ask, what is the metaverse?
In simple terms the metaverse refers to a highly immersive, three dimensional virtual world where people gather to socialise, play, or work.
This may sound like a futuristic concept, however thanks to new technologies not only is the metaverse very much a reality, these virtual environments will become increasingly immersive, allowing us to expand our reality and go beyond what we’re able to experience in the real world. There are already metaverses in existence, such as Roblox, although the environments are far from the vision of what a metaverse could be.
At a technical level, metaverses provide an environment for the confluence of emerging technology enabling an enhanced version of a user's digital lives.
These technologies include the following:
- Artificial Intelligence (AIs the player interacts with as well as machine learning for a player’s prefence)
- Internet of Things (sensors connected to the individual)
- Cryptocurrency (for purchases within the mataverse)
- NFTs (for ownership of digital assets)
- Self sovereign ID (for data integrity and privacy)
It’s not difficult to imagine that we will soon be spending long periods of time in these new virtual worlds. Just consider how long you are already spending in a digital environment, be it taking part in video calls or online gaming.
How could businesses use metaverses?
As the popularity of these environments grows, there will undoubtedly be opportunities for businesses to contribute to, engage with and indeed enhance the metaverse. Here are a few ways businesses may embrace the metaverse:
An obvious opportunity for businesses as more people spend time in the metaverse will be to reach them with advertisements. As with most advertising channels you can expect to be able to target ads to specific audiences in the metaverse based on the information they share. Executions similar to digital out of home, sponsorships or brand collaboration could also be an effective strategy.
As an advertiser you would essentially rent digital space to show your ad, be it on virtual real estate that you lease from someone else or on your own building.
Events and experiences
Hosting or sponsoring events within the metaverse is another way businesses could reach and cultivate an audience in the metaverse. We have already seen unique events, particularly by musicians in the online gaming world such as Fortnite, draw large audiences. The opportunities for hosting events in the metaverse are infinite and limited only by the imagination of brands and artists.
Perhaps the most recognisable incarnation of the metaverse as it currently stands, online gaming offers brands and businesses a whole range of opportunities. From advertising and events as mentioned above to in game purchases and gaming hardware.
As a business you may well already be experiencing some degree of remote working. The metaverse ramps up the opportunity for remote working as businesses could create whole immersive offices which would allow staff from all over the world to spend time working and collaborating. The metaverse could also provide an ideal environment for on the job training, similar to how pilots train on a simulator for example.
Be it purchases that exist entirely in the metaverse (think outfits and accessories for your avatar) or a showroom where you can try out a digital version of a physical product before you buy, product purchasing and ownership will create many opportunities for businesses in the metaverse.
Software, hardware and services
A significant opportunity as these metaverses grow will be in the software, hardware and services that enable the metaverse. Whether that’s the tech that allows us to access the metaverse, the infrastructure that underpins these environments or indeed consultancy and outsourcing for companies and brands who are seeking to capitalise on this opportunity.
Who will govern these digital environments?
These are just some of the opportunities the metaverse could represent for businesses. But as more people and businesses begin to use and rely on the metaverse, investments of time and increasingly money into these digital environments will raise questions as to the security and ultimately the risk they represent.
Who then will be responsible for the governance of these digital environments? If you envision the metaverse as essentially another Earth, the question is whether the entire Earth should be governed by a single entity? Should one company have sole control of how billions of future people interact with each other? As with most things in emerging technology, the answer isn’t so clear cut as there are sacrifices for both decentralised and centralised forms of governance.
Just like any jurisdiction there are three main ways these digital environments could be governed.
The first would be similar to a national/state level where elected or impartial entities govern the rules, regulations and rights of those who use the metaverse.
Second would be the corporate approach, where the companies who ‘own’ the respective metaverse would have the power to set the rules, and impose or change them as they see fit. At present, Facebook are building their Horizon metaverse intended for the social VR experience and Microsoft are building what they call the ‘enterprise metaverse’, focused on business users. As these two entities grow, we can envisage corporate governance being a prominent factor in our experience of these environments.
The third option would be a more decentralised approach to governance, whereby the users of these environments work to collectively govern them. This may be the approach most aligned to the spirit of early adopters of the metaverse, but when up against established governments and large corporations implementing this approach in a meaningful way will require a collective effort to fulfil.
At Superscript, we already have a number of clients that are supporting metaverse innovation and we’re building insurance products to help spur on this important next step for our digital lives. If you’re building technology or services in this space and would like to learn what insurance options look like, you can book a call with one of our experts here.
Ben Davis has over a decade of experience in the insurance industry, with a career that spans broking, underwriting and consulting. He has a particular specialism in blockchain and crypto assets and wrote the first ever UK consumer Bitcoin theft insurance policy.
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