some metaverse real estate predictions
metaverse ecommerce will be big
Hello everyone, it’s been a while since I’ve published something here!
That doesn’t mean that I haven’t been writing though- I’ve been continuing my work with DOKO, a protocol working to bring defi into the metaverse. You can find my latest article for them here. Today’s article is also sponsored by DOKO. I spent a lot of time thinking about how what kind of content I want to go on this Substack- I don’t think it would be fair to publish articles that are essentially ads here. I’ve decided that general metaverse topics like today’s article will go here, and articles that talk mostly about DOKO will be published under the DOKO brand and not this newsletter. Lastly, thank you for reading/subscribing to this newsletter! Although I don’t charge for this newsletter, your support allows this newsletter to remain free. I’ve built a small brand as a writer thanks to you guys, and can pursue paid opportunities in the crypto space as a result. Thank you again for you continued support- I hope you enjoy today’s article!
I’ve been thinking about the metaverse a lot lately, and have been pondering what it might look like in the future. I’ve come to the conclusion that metaverse real estate economy will have a large focus on e-commerce and business, whereas in real life the real estate industry is housing dominated. I’ll outline my reasoning and logic in this article.
Perhaps the strongest argument behind this idea is that I believe real life housing problems will not translate over to the metaverse. Real world housing problems are mostly caused by problems that do not occur in a metaverse, and this is due to a multitude of reasons. The first one is quite obvious- people need somewhere to live. This naturally creates a massive demand for housing. Although rent and housing prices have continued to skyrocket, people are choosing to move into whatever housing they can afford instead of giving up housing completely. Another reason for expensive housing is zoning laws. Zoning laws limit how much housing can be built within a certain area, helping make houses artificially scarce. Zoning laws aside, houses are obviously limited by available land, and unfortunately they aren’t making more land. Additionally, wages have failed to keep up with prices of houses, making buying a house harder and harder. Finally, construction materials and cost of labor have been on a steady rise, so the supply of new houses is insufficient to satisfy demand. The housing problem is a very complex one and this is a gross oversimplification of the issue, but I think the points I’ve listed paint a good enough picture for the sake of this article.
That being said, I will throw in a caveat. Gaming or similar metaverses where houses requires raw resources that must be gathered in game as material costs, requirements such as some sort of construction skill, and artificial scarcity through restrictions such as limiting the areas where houses can built will lead to pretty much the same issues in real life. In these metaverses I imagine houses will become a status symbol of the wealthy. Perhaps these rich players could publicly flaunt their wealth by adorning their digital houses with expensive items and rare cosmetics. This is the metaverse equivalent of building your Minecraft house with diamond blocks I suppose. I think metaverse houses will still be valuable, just that people don’t need them the way they do in real life.
Now let’s talk about why I think metaverse real estate will be commerce and business focused.
Digital “land” is theoretically infinite. An infinite amount of metaverses can be created with an infinite amount of land in each. That said, not all metaverses are created equal. No one will want to buy land in a metaverse with no active users. I imagine that the most active metaverses will be the ones that appeal the most to users, and I can think of a variety of reasons. Maybe its a game-fi world and there’s money to made. Maybe it’s a metaverse focused on social interaction, and you want to buy a plot of land in one of the busiest streets in the metaverse to build a virtual club in. You’re going to get the best artists in the world to perform there and create the best metaverse music live experiences. Trust me, if Frank Ocean does a metaverse set debuting a new sound, die hard fans who have never entered the metaverse before will show up for the first time. Regardless, popular metaverses are analogous to LA/SF/NY, and no one wants to hang out in middle of nowhere Arkansas (sorry). Thus, I expect money to flow to the busiest metaverses.
Businesses will pop up in the metaverse, quite similar to Runescape traders back in the day. Savvy entrepreneurs bought food and potions in bulk, then stood by the Edgeville bank (the closest bank to Runescape’s PVP area) selling their items to players. PVP players happily paid a premium on these consumables so that they didn’t have to leave the area to restock; they could instead quickly get back to what they loved doing most, killing each other. Any metaverse that implements some sort of restrictions on movement will see a similar sort of business pop up around saving players time traveling. The greater the restrictions, the more players will be willing to pay for convenience, and the more value that businesses can potentially extract off human laziness.
I expect some sort of trade hub/exchange/platform to pop up in most metaverses. While there’s inherently nothing wrong with P2P transactions, the ability to put asks on an aggregated trading platform is incredibly convenient. It also leads to better capital efficiency by granting clarity on the how much each item is worth at any given moment. Metaverses will have one built in, or someone else will build it and charge a small fee. Currently the closest thing we have it is OpenSea. Decentralized Metaverse NFT AMM Marketplace wen?
I think another reason metaverse real estate will be big is because of the enormous potential that metaverse advertising holds. I strongly believe advertising will be big in the metaverse because it’s one of the easiest ways to monetize a metaverse. Once enough people are spending time in the metaverse, you will see major brands begin to start advertising there.
Advertisers have always gone where the people are. In the medieval era, we had town criers roaming village streets. With the invention of paper we started making flyers. Highways led to giant billboards. The printing press led to newspapers. Telephones led to spam callers. TV led to television ads. Emails led to email marketing. Search engines led to businesses bidding to appear as the first search result. Social media led to promoted posts in your feed. Many social media networks died because they failed to monetize properly, which advertising fixes. TikTok is simply Vine with ads and a better algorithm. Facebook was vastly unprofitable for years. Then in 2008 they hired Sheryl Sandberg as COO, focused on advertising as their main source of monetization, and quickly became profitable in Q3 2009. Similar to social networks, metaverses that fail to get their economy going and accrue value to participants will also fail.
The metaverse will eventually be filled with ads. I see a couple ways for this to materialize. Owners of prime plots of land can use their land as billboards and charge customers to advertise on them. The amount of available advertising space is heavily dependent on player movement in individual metaverses. Metaverses that force players to walk around will see advertising spaces in anywhere places people frequently walk through. Contrast this to a metaverse with unlimited teleportation to any specific location. Advertising space in such a metaverse would differ because people don’t walk through places when they could teleport. If teleportation was linked to portals, then portal entrances where players pass through will be where the ads are.
Metaverse worlds can be built with advertising in mind. Users could spawn in a metaverse location that is not owned by anyone, but has visible advertising space that anyone could pay for. Charging for this advertising space in a metaverse’s native currency would be an easy to way to give said currency value. Additional value can be created by burning these payments, introducing a deflationary mechanism to the token. The possibilities are endless.
In conclusion, I think commerce and advertising will be big in the metaverse. Maybe I’ll have to start promoting this newsletter in the metaverse?
-ct_zpy