The metaverse: is it just another buzzword or is it a business opportunity not to be missed? Often deemed as the next potential stage of our social and technological evolution, the metaverse has become a trending topic wider than just the tech sector. But what opportunities does it offer to businesses? What risks does it present? As the conversation continues to evolve, early adopters must begin to consider potential strategies to prepare for doing business in the metaverse.
What is the metaverse?
The metaverse is an immersive digital reality where life is mirrored in a digital universe. Today, there is no single "metaverse" as such, but instead we find a number of metaversale platforms – such as Decentraland, The Sandbox and many others. The term originates from the science fiction novel Snow Crash by Neal Stephenson, set in a dystopian future where the main character splits his time between a real life reality and a metaverse.
In the metaverse, an avatar or "digital twin" that interacts with either one or multiple virtual worlds where you can work, socialise, play and shop. While there is still much work to be done to develop metaverse technology, we are already beginning to see elements in our day to day lives with gameing platforms such as Roblox and Fortnite taking players into shared digital worlds. The metaverse, hailed as a successor to the internet, pushes the boundaries further and bring the likes of shopping, social media and workplace training into a fully customisable virtual reality platform.
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What sectors are affected by the metaverse?
The metaverse is likely to provide endless opportunities for brands when it comes to advertising. From billboards within the virtual world to branded clothing for avatars, new virtual approaches to advertising will change how businesses target their audiences. However, regulation is often never far behind innovation and brands will need to be mindful of new frameworks that they may need to consider when leveraging opportunities.
While virtual reality (VR) enables new benefits for the real estate sector such as bringing architectural concepts to life and the ability to easily tour properties, a new sub-sector is likely to emerge as parcels of land and property become available to purchase in the metaverse as non-fungible tokens (NFTs). Virtual properties could then be used for providing experiences, hosting events or advertising space or even opening an office in the metaverse. With the price of land in the metaverse already on the increase, businesses looking to "build" or invest will need to be sure they receive legal advice related to both real estate and cryptocurrencies throughout the property life cycle.
While the pandemic accelerated the transition from traditional bricks-and-mortar stores to online shopping, the number of people returning to stores expect more tailored and engaging experiences following lockdowns.
The metaverse will offer opportunities to create a hybrid model where shoppers are able to have in-store experiences with the convenience and additional information that comes with online shopping. Clothing and accessories will be easily tried on, FAQs answered and reviews consulted while still having the traditional experience and engaging "physically" with the brand.
The entertainment and sports industries are already seeing the benefits of the metaverse with users engaging socially within virtual gaming worlds, yet the scope within the entertainment and sports industries is far reaching. Live events such as concerts and sporting matches can now to be attended virtually, with dramatic impacts on the engagement between fans and performers.
With the metaverse we will no longer be bound within the confines of our geography, the technology will allow for virtual visits to historical sites and cultural landmarks without having to leave your own home. Experiences will become far more accessible but also possible as new locations and attractions become dependable on code and design rather than construction and engineering.
Online learning became particularly prevalent during the pandemic, paving the way for the metaverse to further expand the way we approach education. By 2028, projections anticipate that the market share of educational services in the metaverse will be $32 billion. From witnessing historical events to 3D simulations for training vocations such as firefighting or surgery the metaverse will be able to create educational experiences in safe, controlled environments.
Members of Gowling WLG's team have already attended professional educational sessions, conferences and exhibitions conducted in part-through metaverse platforms.
As the metaverse develops, software and hardware need to be developed to bring the virtual world to life. As major tech companies continue to invest in their metaverse strategies, a whole new world of opportunity is opening up within the tech sector.
The metaverse is likely to accelerate the use of FinTech. NFTs and cryptocurrencies will drive the economy in the metaverse. The ownership of digital assets will become a natural part of doing business in the virtual world. Meanwhile, cryptocurrencies will enable transactions to take place and drive the economy. Regulations surrounding financial services will need to evolve alongside FinTech in the metaverse and businesses will need to anticipate and prepare for potential changes.
What are the benefits of the metaverse for business?
Collaboration - While the pandemic forced the world to embrace hybrid working, there is still a continuing conversation around the benefits of the office versus home working. The metaverse is set to push the boundaries of hybrid working further, transforming video calls to replicate office experiences and enhance the levels of collaboration possible for businesses outside of the traditional office environment.
However, this will bring additional considerations for businesses when it comes to HR and employment law, particularly with the lack of geographical boundaries and a likely need for an increased duty of care. Data protection, employee wellbeing, bullying and harassment risks and diversity & inclusion are all factors that employers will need to take into account when exploring the metaverse.
Accessibility - One of the biggest benefits that the metaverse brings to consumers and businesses is the accessibility that it offers to people with disabilities. Social media has long been seen as a benefit in helping people with disabilities and the metaverse will only enhance this as they will be able to interact without the obstacles they may experience in the physical world. Barriers in education and work settings will also be less of an issue, as people gain access to career paths that traditionally may not have been as easy.
Data - The metaverse is arguably a solution to combining the best of both worlds: online and real life. By shifting real life experiences such as learning, training, shopping and work to the metaverse there will be a vast amount of additional data available to enable efficiencies and provide insight.
However, this brings the need for additional levels of compliance, security and assurances to consumers and companies in how their data is being used, protected, monetised and processed. Consumers will want to know that use of their data is transparent, proportional and legitimate. Our report 'The Immaterial World' identifies data privacy as one of the biggest concerns for consumers regarding the metaverse.
Customer Experience - Enhancing customer engagement is not just something to be gained by the likes of retail and entertainment, all businesses have the potential to benefit from using the metaverse in a customer experience setting. From transforming the traditional phone call when there is an issue to testing products and services from the comfort of the customer's home, the possibilities to create tailored, memorable experiences are endless.
What issues does the metaverse present to businesses?
While the metaverse presents many opportunities, it is important to acknowledge that with any form of evolution there will always be new risks and legal issues to prepare for. Regulation and infringement will exist in both the physical and digital worlds and it is critical that businesses entering the metaverse put strategies in place to protect their assets as well as pursuing potential opportunities. The fact that there are many metaverse platforms, brings with it choice and further consideration as to which platform(s) to use and how to monitor the numerous other platforms.
Intellectual property (IP) - As with all new technologies, the metaverse promises to challenge existing intellectual property mechanisms, laws and regulations. With relatively few guidelines specifically designed for virtual worlds, the way trademarks, copyrights and other intangible digital assets will be used and protected will be thoroughly tested in the coming years - with new questions of ownership, monetisation and enforcement emerging as the metaverse develops. As new technologies emerge to allow the creation of and operation in the metaverse, an important consideration will be the patent protection of these innovations. Our IP team advises brand owners and content creators on all aspects of IP rights in the metaverse.
Data protection - Data protection is a significant issue in the metaverse as large amounts of personal data are collected, stored and processed. The risks include unauthorised access, theft and manipulation of data. Brands must ensure that they map and secure their data, and comply with governing legislations. trust i at stake for the quality and integrity of the brand and work product.
Cyber security - Hacking, fraud and the spread of malware are just some of the potential issues that businesses will need to consider when utilising the metaverse. It will be critical that robust security measures are implemented such as encryption, secure authentication and regular software updates to mitigate potential risks.
Blockchain - The high transaction volume and different protocols will make it challenging for blockchain to efficiently handle the demands required of a large-scale metaverse. The lack of regulation and decentralisation could also potentially lead to further legal issues and security threats that businesses will need to consider.
How can we help?
As a full-service international law firm with a particular focus in the tech and IP sectors, we are well-placed to support you as you explore the potential the metaverse poses for your business. Our lawyers and professionals are well-versed in guiding our clients in emerging technologies to ensure they mitigate potential risks while benefitting from new opportunities.
We are experienced in advising those on the blockchain on a wide range of issues from experiential marketing activations to anti-money laundering provisions and securities regulation. We work closely with content creators and brand owners on their marketing strategies and IP rights related to the metaverse including enforcement against infringing NFTs and advising on trademark applications for digital goods and services.
We advise on licensing of IP rights for use on or in connection with the metaverse, as well as IP ownership considerations, including audits and reviews of underlying copyrights for works which may be digitised for use on metaverse platforms. We routinely advise on patent protection related to innovations driving and operating in the metaverse.
We also work closely with our non-IP colleagues to support clients in other areas of their metaverse strategies/metaverse activations, such as regulatory considerations, corporate set-up, data privacy issues, buying and selling "land" on metaverse platforms and many other areas of legal support.
For further advice on beginning your business' journey in the metaverse, contact a member of our team.
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