Ready Player None
After the big reveal by Mark Zuckerberg, Web2 megacorporations began historic acquisitions and started developing their own solutions. Promising Web3 projects skyrocketed in market cap like Decentraland or Sandbox.
There was one common denominator between these businesses: they all approached the Metaverse from a gaming perspective. Let’s create a 3D environment where people can run around, do things, be creative and connect, and assume that users will flock to the platform and stop using other parts of the internet. They were driven by what’s called the Attention Economy - the core business model of the Internet as of today where those companies generate more revenue that can capture your attention longer because they can show you ads and manipulate you into spending more money.
A year and billions of dollars later it looks like that this strategy has been a mistake. Meta is still struggling to achieve their breakthrough with Horizon while their shareholders are growing uneasy. They put themselves into a competitive deadlock through their strategic decisions - i.e. taking almost 50% commission from creators within their Metaverse - because shareholder interest sits above all others - including the interest of users.
In the meantime Sandbox and Decentraland launched many programs and toolboxes to attract creators, yet their video game-like environments measure only a dozen or so active users. Disturbingly nominal numbers for multi-billion dollar market cap businesses. In the meantime Next Earth - with our seemingly unorthodox strategy - has become the largest Web3 Metaverse despite the havoc wreaked by the bear market.
The 2022 bear market has proven what we’ve been saying all along: that the first wave of Metaverse businesses got it wrong when they tried to develop everything themselves. Make no mistake, the future of the Metaverse does include 3D and VR environments, but rushing ahead and trying to be the first to create Ready Player One is premature and a mistake. Not until you can solve the most fundamental problem of the internet that’ll make it worth switching over. One of the common misconceptions of the Metaverse is that +people say it’s being developed. In reality we’re already living in the post-Metaverse era. The internet, as we know today, is already the most important part of our lives, that’s where we work, where we love, where we laugh, where we cry. This “proto-verse” has the same characteristics but it’s fragmented, unorganized and imbalanced.
According to decades of research, there are three core criteria that make a Metaverse: a feeling of presence, interoperability, and standardization. According to Dashlane, the average internet user has over 150 online accounts that connect to digital services with overlapping features. But most of these accounts are being hosted on only a handful of services. While some level of all these three criteria is already present, there is one big caveat: digital markets are dominated by a few winners with no digital ownership rights or accountability whatsoever.
This is why we argue that there is a fourth requirement for the Metaverse: equity.
Without true digital ownership we’ll end up recreating the same power structures and interdependencies of our physical world. Our digital avatars today are slaves to large corporations who are free to monetize them as they see fit. We’re living in a neo-feudal age where attention is the new land and we’re all exposed to the whim of our digital overlords.
We believe that the unit economics of the internet must be challenged in order to avoid a dystopian future where digital users have no social mobility, agency or ownership over their lives.