A Step Toward The OASIS (4/5): Business Model
Who are capitalizing on the OASIS? And how? Everything is changing at a terrifying speed. During the past two months, it seems as if the term ‘metaverse’ has begun to parallel the ‘the 4th Industrial Revolution’. Major publications are featuring ‘the metaverse economy’ (or the virtual economy) as their cover stories and the Wall Street professionals are eyeing on the ‘metaverse stocks’. Even the most conservative financial sector is now seriously discussing how to react to the newly emerging ‘metaverse’ trends around the world. I wonder if I have anything new to add to the hype around the ‘metaverse business model’. Have the experts already surpassed the business model predicted in the novel <Ready Player One>?
In spite of the growing interest around the ‘metaverse’, the majority of people still wonder how a company like GiiÖii would ever make money out of our XR content production in connection to the metaverse. We often receive similar questions when it comes to money: How do you make profits? Where do you get your income from? Especially those who are personally close to our GiiÖii team members worry about our business model. These personal encounters show how the metaverse industry is still an exclusive field, distant from the majority.
In contrast to the innovative and futuristic public image, the infrastructure of the XR ecosystem is not much different from the capitalistic system that we are familiar with. The emerging XR platforms such as the Oculus, SteamVR, PlayStation VR and VIVEPORT operate quite the same way as the Apple App Store and Google Play have been for years. Once you upload your content on these platforms, you can sell it to international users.
Some have already succeeded in the market. Last year alone, HALF-LIFE: ALYX, praised as the best VR game in 2020, made a record of 2 million downloads and over a hundred million dollars in revenue. Oculus reported that approximately 30% of the Oculus Quest titles (around 60 contents in number) have surpassed over one million dollars in revenue last February. The market is open and running. There is no need to question the demand.
One may ask if the situation is the same for the national (South Korean) market. It is not as active as the global XR business, but if your target audience is global, then you can make much profit abroad. Considered as the most successful national VR content, REAL VR FISHING (MIRAGESOFT) made 3 million dollars in sales last year and 99% of its sales profit comes from abroad.
As the rapid sold out of the “Oculus Quest 2” has shown in South Korea, the number of customers, as wells as the size of the national market is growing at an unprecedented speed. Such trend reminds me of the early 2010s, when countless programmers and entrepreneurs dreamed of making a big shot in the online application business.
The stage is set for a positive future for the metaverse and the XR community, but a full-fledged enlightenment is yet to come. The last post of the series explained how the OASIS experience (=metaverse experience) is a 6 Degree of Freedom (DoF) experience, which removes the boundary between the online and offline experience, thus inviting the users into a 3D experiential space. The 6 DoF experience is the revolutionary (paradigm shifting) change envisioned in the metaverse.
However, using the current XR store is still closer to experiencing 2D media in a 3D space. The 6 DoF experience is still a step away. You can now enter into your customized room once you put on your VR headset and select the contents by clicking small rectangular screens and pay for the products. Such payment process that does not apply the 6 DoF experience may be used as an interim substitute, but a new UI suitable for a 3D experience will have to be created for a real revolution.
What would a ‘suitable UI’ look like? Transforming an online experience into a 3D spatial experience leads to an expansion of offline space, which means that habitable ‘land’ will also expand. The new UI will have to provide an opportunity to explore and experience the expanded land in the metaverse. It will require a new kind of sensitivity, which the new UI design will have to respond to. Simply put, the spatial development in the metaverse will be similar to that of the real estate or tourism industry.
Where anyone can become a ‘landlord’
Any business that wanted to set up shop inside the OASIS had to rent or purchase virtual real estate (which Morrow dubbed “surreal estate”) from GSS. Anticipating this, the company had set aside Sector One as the simulation’s designated business zone and began to sell and rent millions of blocks of surreal estate there. City-sized shopping malls were erected in the blink of an eye, and storefronts spread across planets like time-lapse footage of mold devouring orange. Urban development had never been so easy.- Ready Player One
Virtual event production is currently one of the trendiest business in the XR industry. While the Covid-19 pandemic impacted the entire offline event business, the incidental timing was ripe for the advancement of 2D events. Conferences migrated to ‘Zoom’ and the emerging XR platforms became the social venues for 2D virtual concerts and performances. These virtual events came to substitute for offline events for the moment, but they were only temporary remedies for those who longed for physical events in 3D spaces. There is a continuing effort in finding a more effective platforms and interfaces to substitute for real events. More are diving into utilizing the 3D online space for virtual events.
There have been multiple event-making attempts in virtual sites. Fortnite, Zepeto, Roblox, Minecraft, and Animal Crossing used their existing 3D online space to curate real-time events. Social VR platforms such as VR Chat, Sansar, Altspace VR became event venues for live festivals. Some have created customized 3D online spaces specific to certain events, instead of using the existing platforms. Virtual events often prefer the WebXR for practical reasons because it allows the users to log into the event without downloading any particular executable file, using various devices, from VR headset to mobile phone to one’s PC. The 2021 Sundance Film Festival and the recent Secret Sky Fest in celebration for the Earth Day are a few examples.
Virtual event agencies find the best matching platform for the requested event and design a customized online space or build an independent 3D online space for the event. Through the WebXR, the event space is made available for prospective visitors around the world. The demand for virtual events soared during the pandemic. However, the existing event agencies responded too late, while a new business sector quickly emerged using game engines and popular web solutions to meet the demand. The number of new companies specializing in virtual exhibition, performance, festival and conference is growing exponentially.
WebXR and game engines are reacting to the market demand by providing more advanced graphics and diverse templates, assets and functions (online streaming, real-time voice chat, data communication, user interaction). I predict that more people will be able to participate in the business by curating their own virtual events online.
Once the virtual event production becomes easier and less expensive, land/estate development will take the next stage. In the real world, most people cannot invest in real estate or buy buildings because of the lack of both land space and money. In the online space, however, anyone can own one’s virtual estate and construct a virtual building. Similar to how the popularization of smartphones launched the era of ‘private broadcasting’, the forthcoming metaverse space will introduce a new era where anyone could become a landlord or even manage one’s own theme park.
Anyone may become an estate owner or a landlord, but not everyone will get to make profit from leasing. You can easily find empty buildings on the streets. Not every apartment, shopping mall, theme park and other public space can be popular. Your space has to attract people to earn profit. Ultimately, the competition will be on for creating the most popular spot for the metaverse users.
Being ‘the Creator’
GSS had also licensed preexisting virtual worlds from their competitors, so content that had already been created for games like Everquest and World of Warcraft was ported over to the OASIS, and copies of Norrath and Azeroth were added to the growing catalog of OASIS planets.- Ready Player One
On what basis do people choose their next holiday destinations? What makes a place popular? Popular places may be the so-called “Instagrammable” places, where you can take photos to share on your SNS. I assume that a place that gives a special meaning to its visitors, also known as the sites of ‘fan tourism’, will be popular in the metaverse. ‘Fan tourism’ sites may be specific places that you have read about in novels or seen in the movies. Or they can be places where you can follow your idol’s traces. By visiting these sites, you can experience the stories behind them and spend memorable time.
In the OASIS, you can visit fictional places where you have only dreamed about. The ‘middle-earth’ in THE LORD OF THE RINGS, Hogwarts in the HARRY POTTER series, and the Wall in the GAME OF THRONES are a few examples. Once the OASIS becomes a reality, those who own such virtual sites for ‘fan tourism’ will have a better chance in making the most revenue profit. The value of the IP including these sites will soar.
Not only the imaginary places inspired by novels/manga (webtoon)/movies/TV series, but a unique place based on an artist’s world view or a specific brand advertising space can become popular among the global users. For example, Binggrae, a South Korean food company most popular for its banana-flavored milk, created a fictional character ‘Binggraeus’ with its own imaginary world view and became the first Korean food company to receive the silver button from YouTube in February this year. The sites mentioned in the Binggraeus’ fictional world can turn into ‘fan tourism’ sites online. Soon, the company may earn more revenue from the virtual Binggraeus world than its food merchandises.
Binggrae is only one example. I predict that more companies will have to invest in creating their unique brand worlds to advance their revenues and company values. This change will ultimately impact the recruitment. New recruitments will look for employees who can maintain and further develop the virtual brand world in the OASIS. The recruitment opportunities for physical merchandise production and distribution will dwindle. Soon, the virtual space will require more human resource.
Where everyone may be a VIP
Then, one glorious day, our principal announced that any student with a passing grade-point average could apply for a transfer to the new OASIS public school system. The real public school system, the one run by the government, had been an underfunded, overcrowded train wreck for decades.- Ready Player One
Once virtual spaces begin to coexist with physical spaces, unpredictable business opportunities can come around. For example, a virtual school independent from the education system in reality can launch a new virtual ivy league. What if the Hogwarts opens in the metaverse Harry Potter world? Let’s imagine that that only Hogwarts graduates could practice magic to produce virtual products and build virtual buildings in the OASIS (you may even create your own Harry Potter system). Or what if the virtual money one earns from doing a labor in the OASIS Harry Potter World could be exchanged for real money? Then, more people would be able to make living in the real world by becoming a wizard in the virtual Harry Potter World. Consequently, the demand for attending the Hogwarts will escalate. The competition will become fierce. If such imaginary scenario becomes a reality and if the magic school can guarantee better jobs, more students will prefer going to the Hogwarts than the existing universities.
A new business model may also emerge when virtual world can solve the problems in the existing education system. Education is heavily influenced by the limits of space (both physically and in number). Prestigious schools (universities) have to limit the enrollment in their limited campus space to maintain their value. Competition is inevitable in the existing system.
However, the OASIS is free from physical limits. The education system in the OASIS will be different. If prestigious education becomes available for everyone, other social and economic sectors related to college admissions (private education, discrepancies in school districts, real estate etc.,) will also change. (*South Korea is known for its competitive college admissions system) Perhaps, a business model that could bring us a happier life will start this way in the OASIS.
But my primary source of income was my full-time job doing OASIS technical support… Now I worked forty hours a week, helping morons reboot their OASIS consoles and update the drivers for their haptic gloves.- Ready Player One
So far, I have discussed the hopeful future of the OASIS business model. I have mentioned the new world envisioned by the OASIS, where anyone could become a landlord or even the Creator. The OASIS and its new business opportunities are pregnant with the utopic hope that we could all become rich only if we could attract enough users to our virtual spaces.
But <Ready Player One> predicts a different, less utopic future. The novel talks in a great length about the majority of the OASIS players who cannot live in the hopeful future. Most of the OASIS players have to labor for others, doing things that they do not want to do to pay for their living.
The worst case in the OASIS is ‘indentured servitutde’. In the novel, if you have been determined as incapable of paying back your overdue credit, you immediately get enlisted as a candidate for indentured servitude. Once you become an indentured servant for the IOI, the company gains authority over your labor and can force you do any kind of work until you pay back all your debt. (Anyone can become an indentured servant. Such process is legal in the OASIS)
The IOI (Innovative Online Industry) takes over the indentured servants and assign each laborer to a particular task after one completes a series of OASIS software/hardware/networking tests. The annual income for an indentured servant is 28,500 dollars. One’s housing, food, tax, healthcare, dental and ophthalmological care, and even cultural activities are covered by the contract. But the rest of the income is taken for the debt payment. One can only become free after paying off one’s debt. Each indentured servant must wear a security bracelet (a GPS device) and an OCT (a surveillance camera and speaker) in one’s ears. Each servant lives in a 2x1x1 (m) sleeping capsule where daily food, game console and a touch screen device (which prohibits OASIS, and can only log into IOI Intranet) are provided.
How much are these ‘indentured servants’ different from the laborers in our society? Perhaps, these social classes are satiric metaphor for the contracted employees in reality.
New business opportunities in the OASIS does not guarantee a better deal for contract labor. I hope to warn that depending on how the OASIS develops from now on, we many welcome a new world where anyone could become a landlord or confront a different world where anyone is in danger of becoming an indentured servant.
Is the OASIS for private entrepreneurs?
The OASIS was an online utopia, a holodeck for the home. And its biggest selling point? It was free.. GSS only charged a onetime sign-up fee of twenty-five cents, for which you received a lifetime OASIS account.- Ready Player One
The future of the OASIS depends on who becomes the ultimate service provider. The emerging XR ecosystem can make everyone a landlord or an indentured servant. In fact, the central plot of the novel <Ready Player One> deals with the conflict between the two companies that signify the two possible futures for the OASIS. If we consider the metaverse as the next online platform, the winner in the platform war will ultimately become the metaverse service provider.
In the novel, GSS, the original company that created the OASIS, makes the most profit in the world while providing the OASIS for free. The company does not require any type of paid membership, but can still make money by providing diverse paid contents within the OASIS. On the other hand, IOI (Innovative Online Industry), the global conglomerate that wishes to take over the OASIS, has a different business model. The IOI aims to expand its service from contents sales in the OASIS to transforming the OASIS as a paid platform once the company overthrows the GSS from the ownership.
We often debate about who will be leading the new XR ecosystem. Facebook, Apple, NVIDIA or sometimes Sony come up as potential candidates. However, no one can predict either which one of them would be the future leader or if that leading company would be similar to the GSS or the IOI. The question becomes, is it safe to entrust our future to a company that may lead everyone into dystopia? Shouldn’t we be more proactive in taking the next step in building our own future?
EP05. OASIS for Good? (Other factors that influence the success of the OASIS) Ep05. 성공을 좌우하는 그 밖의 요소들
The next post will be the last of the series. Even the most advanced technology and definite business model cannot always guarantee a success. If the industry encourages unethical social wrongdoings or if there is too much risk for its participants, the most promising business can easily disappear into the shades. Examples of such shady business include drug cartel and gun business.
Is the OASIS safe from these shades? The final post will discuss the factors beyond its industrial infrastructure, particularly the ethical and administrative issues in the metaverse, that will influence the future of the OASIS development.
Ep04. (original title) Who are capitalizing on the OASIS? And how?
Written by Sooyoung Choe
Original article: ixi (April 26, 2021)
Translator: Da Ye Kim
Cover: Mina Hyeon