What is the metaverse and why does it matter?

The metaverse, a digital space that allows users to communicate and move virtually in their three-dimensional avatars or digital representations, is being seen as the future of business and human interaction.

Last month, Chipotle Mexican Grill offered free burritos to customers who visited the restaurant virtually on Roblox – an online gaming platform.

Each day from October 28 to 31, the first 30,000 Roblox users who visited the virtual Chipotle restaurant in a Halloween-themed costume received a code for a free burrito.

“As a digital innovator, we are always experimenting on new platforms to meet our guests where they are,” said Chris Brandt, chief marketing officer at Chipotle.

“Roblox's popularity has boomed over the past year … and we know our fans will be excited to celebrate the next evolution of burrito in the metaverse,” Mr Brandt said.

Here is a look at the history of the metaverse and its potential opportunities.

What is the metaverse?

The term was coined by Neal Stephenson in his 1992 sci-fi novel Snow Crash, which covered subjects such as computer science, politics, cryptography and philosophy.

Hailed as a successor to the internet, the metaverse is a set of immersive spaces shared by users, where they can interact, innovate and engage other people who are not in the same physical space. They do it by creating 3D avatars.

Based on augmented reality principles, it merges physical and virtual existences in a shared online space.

How does it work?

It is a mix of work and play.

With the metaverse, users can create their digital representation and use it while attending virtual family gatherings or office meetings. They can also attend the virtual streaming of a music concert where their 3D avatar will appear among the audience. Their digital representation can shop online, lend their belongings to colleagues or friends, try new products, such as clothes and shoes, at virtual shops and pay for them using digital currencies.

But we are still in the initial stages of the development of the metaverse. Industry experts say it might take 10 to 15 years to fully realise metaverse products and it will work well when all stakeholders create a compatible digital ecosystem.

An underappreciated innovation opportunity for Facebook

Social networking site Meta, formerly Facebook, plans to spend $10 billion this year on Reality Labs – its metaverse division – despite the platform facing controversies that have led to calls for tighter regulation.

Industry analysts say despite the recent hype, the metaverse is Facebook’s “most potent and underappreciated innovation opportunity”.

“About every decade we believe companies need to reinvent themselves to address large new markets and satisfy investors for the long term,” the US venture capital company Loup Ventures said in a note to clients.

“For a company the size of Facebook, with an expected $150 billion in revenue next year, maintaining growth requires a massive, greenfield opportunity … we believe the metaverse is a sufficiently large opportunity for a company the size of Facebook to chase.”

Who else is eyeing the metaverse?

Technology giant Microsoft aims to allow avatars to share PowerPoint presentations and Excel files in Teams – an app that offers workspace chat, videoconferencing and file storage – next year.

Software maker Unity is developing a concept called “digital twins” – a virtual copy of the real world. Graphics chip maker Nvidia is developing a technology called Omniverse that will link 3D virtual worlds in the metaverse.

Tencent Holdings, the world's largest gaming company by revenue, is reportedly developing an advanced gaming studio to focus on the metaverse.

In September, the Chinese company filed to register nearly 100 metaverse-related trademarks. They include QQ Metaverse, QQ Music Metaverse and Kings Metaverse, similar to the names of the company’s messaging app, music-streaming service and mobile game Honour of Kings.

In March, Gucci released branded virtual trainers, allowing users to wear them on social media only.

UK start-up Auroboros has launched what it calls a “biomimicry digital collection”, which allows users to buy looks to wear on Snapchat. Buyers submit an image of themselves, on to which high-quality sci-fi fantasy digital wear is added. This image can then be uploaded to Snapchat through a filter.

How safe is the metaverse?

While building the metaverse, companies need to minimise the amount of data that is used and build a parallel digital world that gives users control over their data.

Industry experts say developers need to make sure these technologies are designed inclusively and in a way that is accessible.

It is essential to keep people safe online and give them tools to act or get help if they see something they are not comfortable with, Facebook said.