How Would the Metaverse Use NFTs?
The metaverse would employ technology, including NFTs (Non-fungible tokens), to bridge the gap between the physical and virtual world. While today's metaverse contains humanoid avatars meeting in a multitude of different virtual reality environments (namely, virtual spaces such as Fortnite, Roblox, and World of Warcraft), the future metaverse will span across many more use cases and would be driven by the ease of transportation and connection between virtual spaces.
Within this environment, NFTs would provide record of ownership and a means of transacting virtual goods and services. In a closed centralised platform (such as Fortnite), the platform can define its unique system of ownership. However, in the metaverse, in-world goods would need to demonstrate proof of ownership in an open and verifiable manner, to allow users can port these across digital platforms and worlds.
What Does the Business Case Look Like?
The metaverse acts as an enabling platform for a variety of new business models, along verticals including real estate, video games, virtual experiences (eg. music concerts) , and fashion, alongside well-established verticals such as art and collectables.
Within these channels for monetisation, NFTs provide a comprehensive record of ownership. Creators and artists of NFTs will receive royalties from secondary markets, while marketplaces, metaverse platforms, and other digital spaces will be able to charge platform fees on top of each transaction - similar to how app stores operate today. In this instance, the digital content created via NFTs within the metaverse and its associated virtual worlds, and the means for how this NFT content is transacted on the secondary market, are essentially infinitely scalable.
As users spend more and more time in the metaverse, consumer behaviour will shift towards adopting digital personas, and in doing so, drive new revenue models for digital assets such as clothing. Indeed, this form of digital expression is already being seen. When luxury fashion retailer Gucci sold a virtual version of their Dionysus bag for $6 on Roblox, the bag later reached prices of over $4,000 on the secondary in-game market - a higher price than the 'real' physical version of the bag.
What’s Juniper Research’s View?
The future metaverse could be a revolutionary platform, or it could fall flat. Unfortunately, it is simply too early to tell.
However, one thing is certain: if firms wish to embrace a metaverse future and pivot their contemporary physical products-based operations into a digital format, that they will need to develop digital competencies now and make the associated changes to their strategic objectives. This will inevitably involve making hiring decisions weighted towards expertise in blockchain technology, virtual economies, and software development - and for those firms that struggled to adapt to today’s eCommerce-driven digital age, a complete restructuring of their culture and identity.
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Our latest whitepaper,
NFTs ~ Seizing the Metaverse Opportunity, examines the significance of the metaverse on the future of the NFT market - including a deep dive into the technologies involved, the new business models being created, and the significance of interoperability to long-term growth.
It also provides a detailed summary of our market forecast for the total number of NFT transactions in the metaverse segment in 2027.
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► NFTs Market Research
Juniper Research has found that the global number of NFT (Non-fungible Token) transactions will rise from 24 million in 2022 to 40 million by 2027. This is based on our medium scenario for adoption, with brands leveraging the metaverse to boost digital growth.
- We predict that metaverse-linked NFTs will be the fastest growing NFT segment over the next five years, growing from 600,000 transactions in 2022 to 9.8 million by 2027. This will be largely attributable to a rising demand for immersive experiences.
- To capitalise on this growth, the we urge consumer-facing businesses to create NFT-based content to meet changing demands from a younger, tech-savvy demographic who are more ready to purchase novel forms of online and digital content.
- However, while NFTs present a new channel for growth, vendors must be cognizant to the risks of operating in an unregulated environment home to fraudulent activities and scams.
- Vendors who partake in the NFT space may risk brand damage by association due to the role NFT have had in illegal activities such as money laundering, scams and fraud.
- Environmental issues were also raised as a major concern, as the current way transactions are facilitated on the blockchain creates massive energy usage.
- There is a need for regulators to work with industry bodies to standardise processes with reduced environmental impact and built-in consumer protections to enable vendors to utilise it as a medium to further engage with consumers.
FIND OUT MORE: NFTS: FUTURE OPPORTUNITIES, SEGMENT ANALYSIS & MARKET FORECASTS 2022-2027