Since humans began trading, up until 1774 when Benjamin Franklin introduced the world’s first mail-order catalog for scientific and technical books, business models were based on physical person-to-person interactions.
The internet radically changed trading from the physical and mail/phone ordering to enabling persons to virtual models. Since then, one-click payments, next- or same-day delivery and free returns have redefined commerce. By 2026 online sales will make up nearly a quarter of total global retail salesi.
One of the most fundamental changes the internet introduced is near-zero cost business models. For example, in the classic model of selling books, each copy costs money to produce, store and distribute. However, an online sales model with books in digital form enables books to be reproduced and distributed millions of times. And after the initial investment, there are almost no costs at all – resulting potentially in huge profits.
What will happen in the metaverse if we can monetize experiences or services in a similar way?
So, what will the metaverse mean for business models? Are we entering an era of virtual-to-virtual business models? Will the metaverse just adopt existing digitalized business models, or bring about completely new, ground-breaking models?
Business models of the metaverse
Firstly, we should clarify definitions of “the metaverse” as they relate to business models. We see the metaverse as a natural development of the internet. Going from 2D to 3D visualization by adding new layers of experience in virtual platforms by combining one or more of three main technology pillars: Extended Reality (XR), AI and blockchain. The main three categories of these types of platforms are:
- Consumer metaverses – i.e., the gamified platforms that can either be public and decentralized or private but open for anyone to build. The public platform, run by a Decentralized Autonomous Organization (DAO), is built on an open-source platform code and is useful for creating spaces where avatars can meet and interact. Decentraland is one example. The private platform can be open for anyone to build, like Roblox which has more than 60 million daily users.
Enterprise metaverses – i.e., where the platform is used for conducting internal enterprise business training or educational purposes. These platforms are normally privately controlled and can also be used to facilitate internal meetings, etc. Interpol is one such example of an organization that has delivered a training course in a metaverse classroom.
Industrial metaverses – i.e., platforms that are being used in relation to production and manufacturing efficiencies, developments, security measures, etc., often by combining it with Digital Twins, IoT, and also XR technologies.
Business models for each of these will differ, and each requires a different strategy, but consumer metaverses have the most commercial relevance for business models. Enterprise and industrial should also be seen in context with this and be included in an overall metaverse strategy plan.
Can you trust your wallet?
There once was a concept of everyone owning their own virtual assets in the metaverse with no outside control. But in reality, it’s too risky because assets are vulnerable to theft, so they have to be kept in a secure way – in your wallet.
The wallet is one of the most fundamental components of the metaverse. Assets are technically stored in a blockchain and accessed via a private key or seed phrase. The wallet is an interface to see what users have. But lose the access key and it’s all gone.
To make the metaverse viable for mass participation, we actually need trusted – and importantly, physical – third-party intermediaries to handle wallets and help users if they lose their access key. And we will have to pay for this trust. Physical banks could capitalize on this by offering disaster-proof storage of flash drives containing access key information, or open marketplaces and act as custodians.
The future of banking is likely to be tokenized with central bank digital currencies in combination with privately issued tokens. Hence, both governments and private companies are exploring wallet structures. Banks and finance institutions in particular will likely address this market after the EU MiCA (Markets in Crypto-assets) regulation comes fully into force in 2024, which will add regulatory clarity that previously has been lacking with regard to offering these types of services.
However, the leading wallet provider of the future could be any kind of business – even a life science company that could inject or physically imprint access key information into the body.
Will assets work across the metaverse?
One of the biggest question marks around metaverse business models is how to port assets between realms or spaces. Interoperability is arguably one of the biggest challenges to widespread adoption of the metaverse – if you’ve bought a piece of virtual clothing or an accessory, why shouldn’t you be able to wear it wherever you want?
Again, this is where wallets will likely come in. Wallet providers could charge to enable portability much like credit card companies charge for overseas payments. But it will likely be years before interoperability is totally mainstream.
Virtual ownership
In media and entertainment, the primary model of business has evolved from ownership to subscription. In the past, most people bought CDs and DVDs to build a collection – today, owning vinyl is booming in popularity again. But for the majority of people, the accepted model is accessing songs, films and TV series online and building your own virtual library. The difference is that if you stop paying the subscription, you have nothing.
Will it be the same in the metaverse? We’ll have to wait and see. But it’s safe to assume that people will want ownership of their assets without paying a subscription (except for the wallet that protects them).
To complicate things, there is the question of what role content from Generative AI will play in metaverse business models. Today, it’s generally accepted that no one owns work created by Generative AI. But won't this change? In fact, this assumption may even be wrong – in the UK for example, the law implies that the creators of the AI platform own anything wholly created by it. While in the US, copyright will not be given to work created purely by an autonomous AI tool, instead assigning copyright to human creators only. It’s safe to say that laws will be challenged and changed in the coming years.
We will also see fragmented ownership much more. For example, groups or consortia purchase virtual as well as physical items such as artworks or other collectibles represented by Non-fungible Tokens (NFTs). In addition, fans will be able to buy tokens in metaverse-based organizations like football or baseball clubs. Banks would also likely loan against assets like these.
Of course, owners want to protect their assets. But most insurers will not cover non-material things like NFTs yet (although they may well do soon). With this in mind, for organizations looking to create spaces that customers can visit, it may be better to diversify their risk by renting space rather than buying a public property in a public and decentralized space run by a DAO.
