The Metaverse Standards Forum was recently unveiled, combining the efforts of major tech leaders and standards organizations to facilitate the creation of standards and bring interoperability within the metaverse. While the listed goals appear complete and well aligned to most visions for the metaverse, the blockchain was notably under-represented at launch. Whether this was intentional or not, the Forum needs to take a more holistic approach to the market and this should include better representation within the blockchain community. However, care must be taken to balance the needs of the value chain players and idealistic visions for a more equitable marketplace.
Tech Powerhouses Come Together to Create the Metaverse Standards Forum
Just a week after the Metaverse Standards Forum (the Forum) was announced (June 21, 2022), the list of principal members has expanded quite considerably from the original sub-50 companies to 150 and growing (daily). The already impressive list at launch, which included notable companies like Adobe, Autodesk, Epic Games, Huawei, Khronos Group, Meta, Microsoft, NVIDIA, Qualcomm, Sony, Unity, and the World Wide Web Consortium (W3C), has since added China Telecom, D-Link, Google, Intel, Lenovo, MediaTek, Trend Micro, and Verizon, among many others. Collectively, the Forum is expected to, in its words, “coordinate requirements and resources” to facilitate the creation of standards and interoperability within these key areas (among others):
- Interactive Three-Dimensional (3D) assets and photorealistic rendering
- Human interface and interaction paradigms, including Augmented Reality (AR), Virtual Reality (VR), and Extended Reality (XR)
- User-created content
- Avatars, identity management, and privacy
- Financial transactions
- Internet of Things (IoT) and digital twins
- Geospatial systems
To this end, the Forum brings together tech leaders with standards organizations like Open AR Cloud, Open Geospatial Consortium, Khronos Group, Spatial Web Foundation, and W3C. All of the listed target domains are certainly critical to addressing the main core tenets of the metaverse (standards/interoperability, decentralization & accessibility, enabling tech/interfaces, and crypto/blockchain), but one segment of the market was notably lacking at launch—blockchain and crypto.
Other key companies were missing, like Apple, although given its current views on the metaverse and tighter controls on its ecosystem, this is not a surprising omission. The close ties to blockchain and Web3, however, created some uncertainties regarding how the Forum would handle competing visions of the metaverse and Web3. While some crypto and blockchain companies have been added to the list (e.g., Candle Labs, OP Games, The NFT Brewery, Vaulted Ventures, and Criptocountry), the big names like Coinbase, IBM, Binance, OpenSea, Animoca Brands, Chainalysis, Republic, RECUR, Alchemy, Infura, etc. are still notably missing. It is very possible that many of these companies will be added to the Forum in time, but the near universal omission of these Web3 companies at launch is noteworthy.
This is notable because the vision promulgated by metaverse companies means Web3 and the metaverse, while not the same thing, are inextricably connected. It is further notable because early conversations conducted by ABI Research suggest a number of blockchain companies (some larger players as well) were not included in the early discussions of the Metaverse Standards Forum—they found out about the Forum along with the general public. This boils down to the big debate, if the collective tech industry is willing to move beyond its current structure, which is dominated by massive key players, to one that is decentralized and more open—many are still dubious Meta is true to its word about building toward this future. To be clear, this future isn’t black and white, and is certainly not being written in stone as we navigate our way forward.
Expectations for Web3, for example, differ, with some viewing it more as a semantic web, where AI enables an automated contextually-driven experience, and others taking a position that pushes a blockchain-driven “Internet of value” where value transfers between users as freely as data, shifting the concentration of wealth from several large key ecosystems/companies to the user base. In light of these different perceptions, the metaverse will likely adopt a combination of these views, but without wider representation from the blockchain community, the Forum will be perceived as pushing an agenda that favors the current market structure, one dominated by large companies/ecosystems versus a decentralized and democratized economy.
What incentives would these large tech companies have to give more control and value to the users? Perhaps the Forum is taking a diminished role in blockchain? While it is possible the Forum may have taken a more measured approach to blockchain, this analyst expects broader representation from larger blockchain players sooner rather than later.
The reason? A decentralized and more open market can expand the overall market opportunity and this would benefit all players within the value chain. As an example, a parallel can be drawn to the automotive industry—the large tech companies like the major automobile manufacturers will produce the main products (e.g., vehicles), but the users can modify them to their liking; for example, repainting the car, changing the wheels/tires, suspension tuning, adding in aftermarket parts, etc. Relatedly, a range of services and products targeting these vehicles also develops (service stations, aftermarket parts, customizers, ridesharing services, etc.), none of which are directly controlled or monitored by the Original Equipment Manufacturers (OEMs). An open market structure would similarly engender new opportunities for more players in these virtual spaces; for example, services to customize digital goods, new products, customized assets, etc. Some, however, envision a future that pushes to the extreme where everything is fully democratized and in the hands of the users/community; however, controls and guidelines are still necessary and this is where the Metaverse Standards Forum needs to place most of its efforts.
Metaverse Needs to Be Open with Controls in Place
It may be alluring to envision a radically different future where the metaverse and Web3 are the great equalizers that work to redistribute wealth and value, but in practice, such idealistic views would be difficult to bring into existence. Granting the communities of users extensive control and self-regulation would still lead to inequities—this is already the case with play-to-earn services like Axie Infinity where wealthier users could buy the best Non-Fungible Tokens (NFTs) and recruit less affluent individuals to use these NFTs to play the game, taking a small cut of the revenue, but with most value flowing up to the wealthier NFT owners (similar to a pyramid scheme). People will still work to maximize their greatest utility and accumulation of value. Structure and guidelines, therefore, are still necessary.
For the metaverse to reach its fullest potential, however, some level of decentralization is necessary. While blockchain underpins most of the conversations for decentralization, it does not have to be “the solution,” it is simply the best one available right now. The runway toward this merged virtual and real future is long, so it is too early to say the future must be blockchain or to view current problems with cryptocurrencies in isolation without considering what improvements and advancements will come in time. These conversations go beyond just expanding the pie, they are also a way to bring more value and opportunities to the widest breadth of people.
Imagine if the automobile manufacturers could restrict how their vehicles were used after the point of sale—they could restrict the aftermarket industry, how and when the vehicles are used, etc. This would limit the opportunities for third-party parts suppliers, services, and industries (e.g., ride sharing, delivery, etc.) that have developed around our vehicles. Emphasis needs to be placed on “our vehicles” because after the point-of-sale, buyers “own” their vehicles—ownership is a key element of the metaverse and Web3, whether we are talking about digital assets or personal data, which is why blockchain receives so much attention.
Ownership engenders a paradigm shift that can create massive new opportunities, just like those afforded to the range of companies that support the automotive industry. This also speaks to concerns around job replacement (e.g., robots replacing some humans) and growing gaps in necessary technical skills. Part of the efforts by these early metaverse companies is to create platforms that support low- or no-code content creation. Accessibility, coupled with decentralization and ownership of digital assets and personal data, would help create these needed new opportunities. However, it is important to reiterate that there still needs to be some level of control or framework to conduct business.
A defined taxonomy, for example, needs to be created, much in the same way the advertising and video industries have defined metadata and taxonomies. Rules need to be established that address how, when, and where digital assets can transition to different virtual platforms. Standards also need to establish how digital assets are visualized in different virtual environments and follow up with upgrades to graphics engines. Many focus more on the tech side, but digital identity and privacy will be a critically important area for the Forum to address and this needs to have equal prioritization. If Web3 and the metaverse do, in fact, represent the future of compute, work, entertainment, etc., then these types of standards bodies need to take a holistic approach that helps redefine a better future for as many as possible.