Open vs Closed Metaverse

Open v Closed Metaverse

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The metaverse is going to transform lives, delivering fresh experiences through augmented and virtual reality technology. The form in which it will exist, or in which numerous branded versions of a metaverse will exist, remains years away. However, an ideological battle over an open v closed metaverse is already underway.

Billions of people connect through the internet, sharing all types of content. We can work, buy and sell goods and services, gather information, source our news and entertainment, and contribute our opinions. To do this, we continually switch between platforms within siloed channels which are mostly owned by a few large, publicly owned tech companies that are worth more than the size of many national economies. Their objective is to deliver maximum profit and returns for shareholders. They all sell our personal data.

The transactional relationship between users and the tech companies evolved as free use of their portals in exchange for ownership of our personal data. We have to play by the tech company rules or we’re excluded from using their shiny toys.  There is no option to use a data collection-free version of Google, Facebook or any of the rest of them.

The transition from 2D internet to a more immersive 3D metaverse provides an opportunity to recalibrate these rules of engagement. In simplistic terms, a decentralized open metaverse could accommodate all varieties of portals, and enable users to move freely between them, taking their metaverse assets with them. No-one would own it, it would exist on blockchain. The large ecosystem of a device-agnostic metaverse (accessible via personal computers, game consoles, and smartphones) could create a market worth between $8 trillion and $13 trillion by 2030, with around five billion users.

The alternative is a series of closed metaverses, each uniquely owned and controlled by a tech giant, possibly with separate identities and sets of assets required in each one. And the tech companies would continue to farm and trade our personal data.

What can e-gamers teach us?

It is commonly accepted that online gamers are already at the forefront of metaverse users, enjoying 3D virtual worlds and experiences in platforms such as Roblox and Fortnite. Around 70 million gamers a month engage in Fortnite’s “Battle Royale” fights. Beyond gaming, the provision of talk shows, virtual concerts and places to just hang out with friends have transformed Fortnite into a preview of what combined real and virtual worlds will be like in the metaverse.

The opinions and insights of Tim Sweeney, the CEO of Epic, Fortnite’s parent company, thus have some relevant substance. He open v closed metaverseis concerned that Apple and Google could exert a stranglehold to dominate smartphone commerce taking place in augmented and virtual realities. He points out that Apple forces all its smartphone users to have to go exclusively to the Apple Store for their apps and digital content. This completely obstructs free market competition and is likely to be a disadvantage for those consumers. There could be a wider range of material and apps available, in an open market, and at lower prices. Mastercard and Visa charge 2% transaction fees, and PayPal charges 3%. Apple Store charges suppliers a 30% fee based on their customer prices.

Meta has said it will charge creators around 47.5% on sales of digital assets.

Other downsides of a closed metaverse

In a closed metaverse, each major player would create their own version. Google is well placed to do this, with its array of Google glasses, FitBit, Google Assistant, and Street View that already help merge the digital and physical world.

Zuckerberg’s switch of the name Facebook to Meta was clearly an attempt to claim a swathe of territory. They have also purchased the Oculus VR headset company which gives them some leverage of the hardware entry point to the metaverse.

Each branded version of the metaverse, if it goes that way, could have their own dedicated crypto currency, requiring metaverse users to either tie up cash in a range of cryptos, or continually pay crypto currency exchange fees that the issuer could control.

Other assets may be non-transferable, and exist only within each individual version of the metaverse. The range of assets extend way beyond  currency, and include property buildings, clothes and accessories, cars, boats, aircraft – anything that someone believes would enhance the perception of their avatar. This is why luxury brand names and high end retailers are entering the space with goods and stores. Morgan Stanley analysts estimate that by 2030 the virtual luxury goods market could be worth as much as $50 billion.

User benefits of an open metaverse

An open metaverse would enable assets, built on blockchain technology with immutable proof of ownership, to be transferred between different platforms.

Individual creators and artists would enjoy economic possibilities for the monetization of protocols and art like ICOs, DAOs, and NFTs on a D2C basis, monetizing and trading virtual goods at will, no longer depending on VCs and corporates to fund and finance them.

Users’ data would not belong to any organization for it to be collected, processed and traded, thus providing greater personal privacy.

There would be more diversity of content, with wider freedom of expression. Real discussions could reappear, rather than algorithm-led echo chambers that repeat what they know certain users want to hear.

An absence of algorithms designed to feed us tidbits to make us stay longer and boost audience sizes available to sell to advertisers.

But then again…..

Without commercial organizations making money from our personal data, what would be the mechanism or the business plan for creating a decentralized metaverse that is accessible for all? Governments? Recent history shows that many government attempts to even just grasp IT fundamentals, let alone implement digital policies and practices, can end in expensive failure.  As an example, the UK government’s attempt to digitize the country’s National Health Service was abandoned after spending exceeded £10 billion with no satisfactory completion of the project in sight.

Perhaps the answer is “The Crowd.” “The world of open source is a prime place to build a metaverse,” according to Josip Almasi, a 25 year IT professional in Ireland. He says virtual worlds can be built now, using only existing standard web technologies and free software and content.

The Sandbox, a decentralized gaming metaverse, has committed $50 million to its Sandbox Metaverse Accelerator Program, which will target 100 startups startups that can enhance the open metaverse. Pioneering blockchain startups in the fields of art, collectibles, culture, entertainment, gaming, media, content, and streaming, are encouraged to apply for an initial investment of up to US$250,000 each.

The man who gave the metaverse its name 30 years ago, Neal Stephenson in his book Snow Crash, is launching a blockchain project to realise its potential. “Its alternative, integrated Web3 community and ecosystem is seen as the first building block for a truly open Metaverse.” Numerous high profile investors are backing this initiative.

The Hong Kong- based Australian NFT and blockchain company Animoca Brands has raised US$358 million funding to invest in creating its vision of an ‘open metaverse’ based on blockchain technology. Investors include Soros Fund Management and Winklevoss Capital.

There are numerous other open metaverse development projects being funded, though by comparison, Meta spent $10 billion in 2021 on designing its metaverse. It has readied itself to lose significant sums for up to five years.

The final result could be a number of branded metaverses, mainly controlled by the existing global tech companies, and with regional equivalents in “the West,” Russia and China, maybe India as well. They will presumably reap user data as they do on the internet. Alongside them could be a “People’s Metaverse” developed as an open source model, with greater respect for personal privacy, and presumably blocked in Russia and China.

Content and entertainment providers, including the likes of Epic Games which has raised its own $2 billion budget from investors for metaverse development, would have to deal with an array of platforms to access each of their users. Users would face unknown difficulties and added costs due to a potential lack of interoperability between metaverses.

But who knows? Okay, over to you – what’s your take on this topic? We want to hear from you.

Clive Reffell

Clive Reffell

Clive has worked with Crowdsourcing Week on sourcing and creating content since May 2016. With knowledge and experience gained in a 30+ year marketing career based in London, UK, he operates as an independent crowdfunding advisor helping SMEs and startups to run successful crowdfunding projects, and with wider social media and content marketing issues.

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