Metaverse 2022: the year of PoCs!
As a start-up founder and CEO, I regularly must take a step back and try to make sense of the market I am playing in: Extended Realities, Gaming and the Metaverse.
Talking with prospective clients over lunch last week in Paris, I caught myself telling them “anyway don’t even try to make something outward-facing…2022 is the year of POCs!”…and then I continued “funding for this project will have to come from an innovation budget, this is no longer a marketing or operations budget line this year”.
Before I said this we had exchanged emails on a long list of questions they had as they tried to gather all the data they needed to make their case to the executive team. As we continued exchanging emails, it became clear sharing our recent experiences in the space might help some customers figure out what to do next, so I thought about writing this short article.
Since XR sparked my interest, I have seen a few different stages and changes in the market:
2012 the Year of Oculus…this video has now become an official part of history
2016 the Year of Hype when I did my first investment in the space, and failed miserably (see below down curve…).
2018 the Year I Founded Immersionn. Below was my hype curve prediction and why I thought this was the right timing. Obviously I thought it could only get better from that point on, as by 2020, everybody would have 5G phones and connectivity with a VR headset…right?
Apple had announced working on an AR headset due to launch in 2021 - meaning they had forecast mass market adoption by then.
2019 Trough of Disillusionment… late in the year, it became clear Immersionn (and many other VR start-ups) had to pivot into something the market could access right now. Augmented Reality (AR) as a technology was the hero and if a start-up pitched to any investor the 2 words “Virtual + Reality” the opportunity was instantly struck dead!
There was still a shot with “LBE” (Location Based Entertainment) delivering VR experiences in physical locations (Events, Museums, Company trainings, Arcades). But I am a big believer in digital (continuous fast product improvement) and the internet (access for all). So I did not have much appetite for LBE. We did explore it though, it also meant lots of work for relatively small deals…
Peer VR founders who did not pivot when Immersionn did died either in 2019 or the following year with the big hammer on the nail: Covid.
2020 Year of Product Market fit = XR for impactful results!... Covid confinement 1.0. Everybody becomes fully digital very quickly.
Forget about 5G, VR…
Infrastructure providers are focusing on delivering large capacity broadband services, fibre and 4G.
Our clients wanted to find solutions to engage customers digitally, and for Immersionn it was all about disrupting quickly and delivering impact. We love that!
We pivoted from:
B2C. VR headsets, 360 degrees scenes, 6DoF (Degrees of Freedom, maximum motion), VR video content discovery
To:
B2B, Desktop 1st , 110-180 degrees scenes, guided 3DoF (Degrees of freedom – limited motion) and multimedia content discovery.
This is of course an entirely new product (Prototype, PoC…), business model, go-to-market, and we had to make changes in the team to make that happen.
2021 Product Market fit ++: Covid continues and I am not sure what happened to every other start-up in our market that year, because we did not meet with anyone in real life and Immersionn was absorbed by one pioneering customer in the Middle East that wanted what we had in a bigger way. We took that moonshot because our combined mindsets and visions were aligned. It was challenging and ambitious the way we love it. Our solution started to become more and more like a platform, which could have many different use cases and host lots of 3D content to be discovered.
In October, Mark.Z announced “Meta”. At first we had to pinch ourselves, some acquaintances reached out and congratulated me for being a visionary “how did you know the metaverse was going to be the next big thing?”… As you could see from my hype curve prediction from 2018, there is no genius on my part. The answer that matters is WHEN this will be a real market.
2022: plateau of productivity or a new hype?
According to the BCG The Immersive Technologies Market will be valued at US$ 47B by 2025, and among all the traditional and digital content formats, XR is expected to grow at 30% CAGR. The metaverse market - which also includes NFTs, Crypto and the hardware devices - is much bigger. But all in all it means it shall be a no brainer for our customers to start producing XR content and learn.
Indeed, customers are scratching their heads and together we are exploring many different use-cases for leveraging our platform as a metaverse project. Examples include:
1. Consumer Loyalty programs
2. Job fairs to attract engineering talents in high demand
3. Properties assets hosting and visualisation
4. Hybrid events
5. Employee onboarding
6. PR activity / brand activation or “Buzz”
7. Service partners and suppliers onboarding
8. Proprietary metaverse marketplace to generate new revenue streams from GenZ.
9. Audience engagement through cloud gaming
While all these use-cases are good ideas we are experiencing extended sales cycles, even for small projects. And most projects are “PoC” (proof of concepts).
Customers are faced with a lot of questions from their C-suites this year and so there is plenty of extra research work done and business cases before a decision is finally made.
Once a decision is made the project is a “PoC” with budgets coming from innovation teams. The Metaverse field is considered a must-do, but at the same time many critics consider it a speculative market.
While last year we were selling 3D Web experiences as a readily consumable digital product with proven ROI - 4 times the engagement and 30% conversion – we are now engaging in long conversations educating our clients about us and all of our competitors and beyond...
To surf that ride and help accelerate our sales cycle we have started to provide consulting services to our most ambitious clients including:
1. project framing
2. audience targeting
3. market research
4. solution design
5. software architecture blueprint
6. business case / financial modeling
My view is we were in the midst of a productivity curve in 2021 that was interrupted by a massive hype. The announcement by Mark Zuckerberg of the Facebook rebranding to “Meta” last October 2021 has created a tsunami of PR activity and funding interest into the industry.
But selling a lot of POCs, is the exact opposite most institutional investors (VCs) want. POCs are before-Product Market Fit and certainly it is hard to secure long term contracts with predictable MRR (monthly recurring revenue) in this market. But there is no doubt the Metaverse will become huge, scale rapidly and consolidate in the next 5-10 years. Hello Angel investors…how are you?
2022 what’s next?
Have you been assigned to deliver a Metaverse project this year…what to do next?
1. Remember COVID, focus on personal devices: experiences that require a device other than a PC or a mobile phone is a risky business as they are by default shared devices at this stage. Shared devices were not very popular during Covid - with good reason. The worldwide installed base of VR devices is 19,55 Million in 2022 according to Statista.
2. Device Accessibility/Reach: In contrast the installed base of mobile phones, PCs, tablets is 6,2 Billion in 2021 according to Gartner. Consider also the OS mix and Browser mix if you deliver a WebXR experience that is accessible from an internet link. And also consider loading time / wait time of your experience…make it clear to the “player” why it will be worth her/his wait.
3. Custom platform/experience or join an existing metaverse platform? The largest platforms today have “very few” users, it really depends first and foremost if their user base is of interest to you, and meets your audience-reach objectives. Are you looking to acquire new audiences, or to increase loyalty of your existing audience? The Sandbox & Decentraland, Facebook Horizon (Meta) have around 0,3M active users each, Roblox has 43,2M active users. How big is your current audience and what is the value of your brand?
If you have a large incumbent base and partners access, you should consider hosting customers in a world of your own. Depending on your goals and existing base some choices may be more relevant than others.
4. Target audience: GenZ, 2 Billion youngsters worldwide and some much smaller number of older geeks. Incorporating gamification will be a key aspect.
5. Use cases: To keep it low profile consider internal audience projects such as opportunities for young employee talent acquisition, onboarding, training, networking. For more publicly visible projects, deploy a piece of content with brand activation over a limited timeframe. Or if you have higher aspirations, build or license your own metaverse marketplace or package your entire offering into a world.
6. Interoperability: look for WebXR / WebGL solutions if this is a key topic for you. At least your content will be accessible, and connected to anything on the internet such as your website, your youtube channels, your social meeting web apps etc…Otherwise be clear that interoperability is not for anytime soon...
7. Branded 3D assets: Also make sure you own your 3D assets if they have been made custom for you. There are a few standard formats already that allow you to repurpose your assets to another 3D environment or metaverse later on. You could also decide to monetise the assets by making them an NFT.
8. Finally, do contact us! The Immersionn team has been in the industry for a decade. We can help!