The commercial opportunities offered by the metaverse are potentially ground-breaking, with first estimates claiming that the metaverse will likely be a $8 trillion to $13 trillion opportunity by 2030 – across all sectors and industries. The challenge? Capturing this value. For leaders considering getting started, experts from Simon-Kucher & Partners outline the steps to capture the metaverse opportunity.
While the concept of the metaverse has been around since the 1960s, and the term coined in a 1992 science fiction novel, it wasn’t until recently that advances in technology like virtual and augmented reality, internet connectivity, and blockchain allowed people to imagine how a metaverse might look like.
There is no standard definition of what the metaverse is, and much about where the metaverse is headed still remains unclear. However, there are a few key – and generally agreed upon – characteristics of what defines a metaverse.
Advocates of the emerging physical-digital technology are convinced that the metaverse has the potential to change the way the world and society operates.
From a commercial perspective, the metaverse will create new products, new business models, and new sales, marketing, and monetization approaches. It will extend how organisations engage with consumers, enhance how they conduct business within their ecosystem, and redefine how they build brands.
With high stakes up for the grabs, companies are wondering how to get started, with those turning their heads taking the risk of falling behind the market. At Simon-Kucher & Partners, we have distilled our own view on how business leaders can create sustainable commercial growth in metaverse, and how to realise this potential.
Successfully laying the foundations for growth in the metaverse requires clarity and flexibility across commercial growth levers.
1) Dynamic metaverse strategies
Business models will be transformed, extended, and reshuffled as the metaverse evolves. We already see signs of these shifts in a variety of industries. The music industry, for example, will soon need to think about how digital ownership primitives will change their future monetization model – after just having lived through a significant shift from CDs to digital music and streaming.
Those companies which take the leap and decide to explore the metaverse will find success by linking their overall corporate vision and brand identity to clearly defined use-case opportunities. With the ongoing technological evolution predicted, companies must align their existing physical world strategies with future virtual world dynamics to create a holistic strategic roadmap.
Business leaders will need to systematically define how they expect the metaverse to impact their business, which opportunities and risks exist for them and how they want to position themselves in the short- and long-term.
In the short-term, we expect most brands to focus on building a presence in the metaverse to support and engage existing product sales. Longer-term success will be found by strategically venturing into new virtual offerings, markets and business models as well as exploring NFTs and other tokenized assets and services.
Three questions for your strategy team to kick-start the conversation:
- Why do we want to be part of the metaverse?
- What does it mean for us and our business?
- Which opportunities exist and what are the risks?
2) Integrated metaverse sales
The metaverse will supercharge the way we do sales. The route-to-customer will become increasingly phygital – accelerating the trend of physical and digital touchpoints through virtual connections. Online communities will extend traditional sales approaches, allowing teams to create new sales models and channels both for existing (physical and digital) as well as future virtual offerings.
Being able to reach prospective customers in new places and channels enables sales teams to deliver better and more holistic selling experiences with better outcomes. Also, being able to interact with audiences in more immersive environments allows sales teams to create stronger relationships and communities with people through shared topics, passions, or pain points.
Classic trade shows can become virtual events, fashion players can explore virtual try-ons via AR and VR and machine manufacturers can demo their product in fully remote but immersive settings.
These types of initiatives will enable the metaverse as a significant sales channel for existing portfolios. In parallel, and as companies expand their offerings towards new virtual metaverse products and services, new approaches for sales will emerge. Raffles for mint allow-lists or airdrops of virtual goods as a reward for product usage are already common practice across the emerging NFT ecosystem and capabilities to evaluate and execute such sales approaches will need to be developed.
Three questions for your sales team to explore metaverse growth opportunities:
- Which role will the metaverse play in our omnichannel sales strategy?
- How will we use the metaverse to drive sales of our existing products?
- What will our sales approach for virtual goods and metaverse products look like?
3) Immersive metaverse marketing
New channels, immersive formats, engaged audiences: Significant opportunities will exist to engage with and market to customers across all elements of the marketing funnel, both by extending current marketing practices as well as through the creation of entirely new marketing formats.
For example, extended and augmented reality developments will increase the convergence of digital and physical marketing practices. Approaches so far reserved for digital environments – such as deep targeting and personalized messaging – will spill over into physical settings, driven by AR layering. Entirely new virtual marketing formats will likely emerge and iterate on or revolutionize current marketing practices.
We are already seeing many brands from a variety of sectors execute innovative marketing approaches in virtual environments. For example, Hyundai launched a mobility adventure in Roblox that lets users meet and experience their mobility offerings. Similarly, Gucci created an interactive virtual exhibit where initially neutral avatars absorb components of the exhibition rooms they journey through.
B2B players, such as Cisco, have already moved a portion of their trade marketing into virtual conference settings. These are just a few examples out of many that will emerge as the metaverse develops.
In addition, NFTs and tokens will enable brands to rethink customer loyalty, brand engagement and customer retention practices by turning customers into stakeholders and communities. In the long-term, these new marketing approaches will most likely be relevant for all customer segments. Short-term, they will be especially powerful in reaching younger generations.
Gen Z already spend or are planning to spend significant time in the metaverse and using the metaverse as a channel will be an effective way to market to this demographic.
Three questions for your marketing team to build engaged communities:
- Which virtual environments do we plan to communicate in?
- How can we create meaningful communities around our products?
- How can we use digital assets to drive awareness and loyalty?
4) Innovative metaverse monetization
Two key influence streams of the metaverse will change, extend, and potentially disrupt current monetization models: increased digital connectedness and Web 3.0 ownership paradigms.
Firstly, increased convergence between physical and digital worlds will reinforce current trends towards more innovative price models. Better connectedness and digital integration of physical products will enable more companies to move away from a simple one-time purchase of their products and enable them to explore novel monetization models closer linked to value provided – such as usage- or data-based pricing.
This novel monetization mechanics will not only apply to existing products. Players will also be able to create new revenue streams and business models enabled by better digital/physical integrations (such as data monetization).
Secondly, Web 3.0 ownership paradigms and tokenization will drive significant change to existing monetization models. Tokens and royalties will shape and drive business models for virtual goods. NFT memberships could replace or extend subscription models while also creating incentives for product and service co-development.
In addition, token-based business models will change how marketplaces function and how they capture and distribute value across participants from buyers to sellers to platform providers.
Players stand to gain a lot from the innovative monetization approaches enabled by the metaverse. Those that build on the opportunities while successfully managing new pricing dynamics in relation to existing monetization approaches, existing channels and existing currencies stand to capture significant growth opportunities.
As more use cases are created and the technology becomes more accessible, the metaverse will become a key revenue source for many individuals, brands and creators who understand the growth opportunities it presents. Increased adoption will drive growth, generating more value for everyone involved — including the developers who build on top of it, the brands that monetize it, and the users who participate within it.
Companies should start exploring and implementing the building blocks for a metaverse strategy. At Simon-Kucher & Partners, we suggest a six-step approach:
Starting point is an exploration of strategic baseline parameters, potential use-cases and ideas for potential metaverse applications.
From a long list of ideas, identifying the commercial potential, technological and ecosystem requirements, and feasibility to deliver drives the short list creation.
Creating organizational consensus on strategic orientation and initial use-cases is critical to move from the decision phase to development.
Once alignment has been created, selected use-cases across sales, marketing and pricing should be designed and iterated.
First experiences in metaverse applications should be piloted, reviewed, and integrated to creating organizational learnings and improve strategic parameters.
Use-cases that have gone through pilot and iteration phases should be scaled to move from short- to long-term growth.