Facebook CEO Mark Zuckerberg is seen fencing in the “Metaverse” with an Olympic gold medal fencer during a live-streamed virtual and augmented reality conference to announce the rebrand of Facebook as Meta, in this screen grab taken from a video released October 28, 2021.
Facebook | via Reuters
If 2021’s word of the year was “NFT,” Avery Akkineni says 2022’s will be “Web 3.0.”
As president of VaynerNFT, Akkineni spends much of her time consulting with brands looking to get a piece of the metaverse action. The notion of a “corporate metaverse strategy” is new — VaynerNFT itself was founded less than 6 months ago — but it’s building momentum. The company’s first client was Budweiser, and Akkineni foresees plenty of other major brands following its lead.
In fact, the baseline, widely agreed-upon prediction for 2022: more major brands will get involved in Web3 projects.
“2022 will be the year major brands embrace NFTs in a big way,” says Lin Dai, CEO of music NFT platform OneOf. The Quincy Jones-backed start-up is behind the near $1 million auction for an NFT of a never-before-heard Whitney Houston song, and has collaborated with The Recording Academy for an exclusive Grammy Awards partnership.
But this year, digital assets built on the blockchain will likely continue to expand well beyond the music and art industries.
Luxury fashion brand Balenciaga has already teamed up with Fortnite to deliver to users designer “skins” to wear inside the game. Gucci has done the same with Roblox, and Louis Vuitton and Ralph Lauren have launched their own Roblox experiences. Brian Trunzo, metaverse Lead at Polygon Studios, which focuses on gaming, NFTs and Web3 efforts linked to the polygon digital currency and ethereum blockchain network, says nimble, smart streetwear brands are already in the space as well. “The players have finally taken the field, and the game is about to truly start,” Trunzo said.
Akkineni says that the focus for brands, at least at this point, isn’t to win but simply to get involved. So far, brand engagement with blockchain projects has been about building community and staying relevant. The Nike and Adidas NFT drops, for example, generated more buzz than cash, but they lent legitimacy to a still-nascent space.
More direct commercialization strategies could be coming. Cathy Hackl, CEO and chief metaverse officer for the Futures Intelligence Group, a metaverse consultant, points out that for luxury brands in particular, the metaverse could be an access point for a secondary market. “When someone sells their Birkin bag on The RealReal, Hermes does not see a cut of that. But through blockchain and NFTs, they are eventually going to get a cut of the secondary market,” Hackl said.
As more companies seek a foothold in the digital universe, hiring opportunities for candidates comfortable with Web3 will grow. Hackl says her title may become more common.
“Even if you look at job boards, you’re increasingly seeing demand for Solidity developers and Discord managers,” Akkineni said.
Solidity is a computer language used in conjunction with the ethereum blockchain to build and deploy smart contracts. Discord is a social media platform favored by many gamers and the crypto community.
Big brands will naturally help drive Web3 job creation, but a new kind of employment might take center stage. The play-to-earn gaming model gained popularity in the Philippines with Axie Infinity four years ago, and now the game has over 1.8 million daily active users, some reporting an income of about $10 a day, and up to $1,000-$2,000 a month from solely playing the game.
“It’s kind of like a universal basic income experiment mixed with an e-sport,” says Vance Spencer, a DeFi venture capitalist and co-founder of Framework Ventures.
There has been controversy within the gaming world about virtual monetization, but the math that supports more investments linking the metaverse to gaming is simple, according to Spencer.
Gaming is the biggest segment of the entertainment industry, with nearly 3 billion regular participants. Sky Mavis, Axie Infinity’s developer, was the first to monetize NFTs in a gaming environment, but it won’t be the last. Investors are recognizing the potential in crypto-gaming crossover. In October, Sky Mavis raised $152 million from the likes of Andreessen Horowitz and Mark Cuban. Developers looking to do the same are likely to be successful, although for Spencer, the most upside is for developers making AAA-quality games that can be played on PC, like Take-Two Interactive‘s Grand Theft Auto and EA‘s FIFA. Roblox, though, and even Minecraft, have found substantial success despite not being AAA games.
Brands are likely to tap into the gaming revenue streams, too.
“There’s a direct commercialization opportunity in the gaming space. … People are very used to paying $20, $50, $100 per skin,” Akkineni said.
And gamers are indeed willing to shell out for their virtual avatars: the digital version of Gucci’s Dionysus bag sold on Roblox for more than the bag’s IRL retail price.
The bigger the corporate plans for the digital world, the more computing power we’ll need. As more brands leverage NFTs to build their communities in virtual worlds and as more consumers follow them in, technological and physical infrastructure moves into the foreground of the metaverse landscape. At the end of 2021, Intel estimated that Web3 metaverse projects will eventually demand at least 1000x the computing power we have now.
Another prediction for 2022: advancements in infrastructure.
“The amount of concurrent users online within a single server or ‘node’ in all virtual worlds will continue to increase,” Trunzo said, and with that, advancements in the physical components to make the kind of consistent traffic possible and reliable. It’s a natural and necessary part of tech’s maturation, and it keeps the semiconductor mainstays like Intel and Nvidia in a solid position, whatever becomes of the metaverse.
The world of NFTs and blockchain-based digital assets is, for now, a hot one. But winter could be coming. Akinneni said, as demand will likely cool off and by the end of 2022, we may find fewer projects and fewer drops.
“This probably won’t be the year where we have a 90% drawdown in teams that are working on projects, but this will be the start of the end of the beginning,” Spencer said.
Not every blockchain project has the team to push it into the mainstream, and Spencer expects a maturation shift, and healthy consolidation. This consolidation could emerge in legacy brand M&A strategies. Akkineni points to Nike’s acquisition of RTFKT as a pivotal moment in blockchain legitimacy beyond the crypto-native crowd. For big Fortune 50 or Fortune 500 brands, it’s not too early to consider making similar deals, Hackl said.
The biggest hurdles for the digital worlds of 2022 are scalability, in the form of computing power and interoperability between discrete metaverses, and security. Both of which, Akkineni points out, are typical for emerging technologies.