[NEWS IN FOCUS] The world gets a dose of virtual reality as metaverses loom
When Netflix said in a 2019 report to shareholders that its competitor is “Fortnite more than HBO,” it was a bit of a head-scratcher. Fortnite is a game. Netflix is known as a purveyor of films.
The musings by the Scotts Valley, California-based streaming company make more sense when the metaverse is added to the equation. This virtual world, where users play as avatars, allows for a potent combination of entertainment, sports and competition that threatens to consume just about everything we do.
Fortnite as a metaverse could be a real challenge for the likes of Netflix.
Today, Netflix’s outlook makes even more sense, as games that provide metaverses have been doing especially well since the outbreak of the coronavirus.
And while metaverse games— which include Minecraft, Fortnite and Roblox-- have been popular for years among teens, even non-gamers are starting to realize the real-life impact of these services.
Roblox and Zepeto
The IPO of San Mateo, California’s Roblox has helped. On its first day of trading earlier this month, its market cap hit $38 billion, which it has maintained.
In the role-playing game, users can live as avatars that resemble Lego figures. According to the company, one out of two American teens are present on Roblox.
This way, 1.25 million creators on Roblox made $330 million in cash last year. The top 1,200 each raised more than $10,000.
“The Roblox platform is not just an online playground, it’s another reality where they can engage in economic activities,” according to a March 10 report from Eugene Investment & Securities.
The most famous metaverse service in Korea is Naver’s Zepeto. Started in 2018, Zepeto is not a game but more like a social media network where users can meet as avatars. What’s unique about Zepeto’s avatars is that users can have them made based on their actual faces. Naver’s augmented reality technology converts them into their virtual selves with a single photo.
Players can also make money inside the community by selling clothes and accessories to decorate the avatars. According to Naver, more than 500,000 Zepeto avatars were engaged in this business as of late 2020. Among them, one prominent user that goes by the account name lenge, made three million won in one month.
Zepeto is now one of Naver’s youngest and most international services, where 90 percent of its 200 million users are based overseas and 80 percent are in their teens.
Because metaverses provide for economically active societies, this not only benefits individual users but also provides an opportunity for companies to cash in on the virtual world.
Non-IT firms also want “in”
As the real world recognizes the value of metaverse services and their impact on the young, companies outside IT and games are showing avid interest in being a part of that virtual space.
Over the past year, Big Hit Entertainment, YG Entertainment and JYP Entertainment have all invested billions of won in the Zepeto platform.
In September, more than 46 million Zepeto users flocked to Blackpink’s virtual fan sign event to receive an autograph from avatars of the members and photos with them. That same month, BTS chose Fortnite to unveil the choreography for “Dynamite.”
KB Securities noted in a March report that K-pop content was a driving force behind Zepeto’s growth.
“Entertainment and the metaverse have an unbreakable link [because] users on that platform are looking for light, fun relationships to enjoy themselves,” it said.
“And the more metaverses grow, so will the amount of content provided by entertainment companies. As these platforms provide tools for players to be creators of their own, the intellectual property these firms own will become even more important […] and naturally, chargeable.”
Fashion brands have picked up on the metaverse.
In September last year, Christian Louboutin showcased its summer-spring collection of heels and sneakers through a virtual showroom on Zepeto. In February, Gucci started a Zepeto store, making 60 fashion items available to the virtual characters. Converse, Nike and Disney are among brands that sell products on Naver’s megaverse.
LG Electronics on Sunday announced it would start the marketing of an organic light emitting diode (OLED) television on Nintendo’s Animal Crossing. The effort is intended to increase contact with younger people, the company said.
Inside the virtual space where players can participate in an animal village, the company will set up an OLED island to showcase products and introduce its technology.
Will it last this time?
The metaverse is not the first IT service where users can build a virtual life through their avatar-selves.
Started in 2003, Second Life started offering a service where avatars can communicate and engage in economic activities to raise money within the platform. Around that time, Cyworld was trending in Korea. It allowed players to decorate avatars using cash. The services withered in the 2010s as they failed to make a quick transition to the age of smartphones.
Some analysts believe the metaverse trend is here to stay and will outlive the coronavirus pandemic.
One factor is the lock-in effect that comes from metaverse services encouraging user-generated content and incentivizing it.
“Roblox enables users to develop games without coding knowledge and profit from it,” said Kim Joong-han, analyst of Samsung Securities. “For the company, that means it doesn’t have to worry about content shortage because supply of games is always on the way.
Lee Dong-ryun of KB Securities points out that this virtuous relation also exists in Zepeto, where users creating items not only benefits them financially, but also vitalizes the community and increases content available on the platform.
Another factor that backs the claim metaverses will become mainstream is that younger people are driving their use. They grew up in a digital world, and for them life in it is as real as in the outside world.
“The older generation were born without personal devices, so we feel real-life acquaintances come first and online relations are secondary and fake. But for these kids, the digital world feels much closer,” said Kim Sang-kyun, professor of industrial engineering at Kangwon National University.
“I’m not saying we should just leave everything as is. But I think it is our role is to understand their nature and solve the problems that occur in the metaverse.”
Tech development to support metaverse services is also on the way, as companies like Facebook and Microsoft are pushing development of augmented and virtual reality headsets to become better and cheaper.
“At the moment, metaverses are rapidly increasing services like games and social media, but the technologies used to realize this virtual platform are reaching out to industries other than games as well," said Lee Seung-hwan, researcher of Software Policy & Research Institute.
"As more developers enter this field and platforms evolve, growth will be even faster.”
BY SONG KYOUNG-SON [firstname.lastname@example.org]