Contents

• How to make money in the metaverse 
• Virtual real estate
• Advertising in the metaverse
• Live events
• How to invest in the metaverse: Gaming
• Final thoughts
• FAQs

From virtual real estate being snapped up in Decentraland for a record $2.4m in 2021, to Sotheby’s hosting virtual non-fungible tokens (NFTs) auctions, to Facebook renaming itself Meta, the metaverse has attracted significant hype in the past year. With Bloomberg forecasting that immersive online worlds could balloon to an $80bn industry and with investors, artists, entrepreneurs, and all kinds of businesses jumping on board, the meta hype, some would argue, is just getting started.

But is it more than just hype? Is it possible to make long-term profit on the metaverse? Is it something more than a “terminological land grab” , as articulated by Gideon Lichfield, writing in Wired magazine? Are companies building a metaverse which people will flock to? Or are companies and investors, fearful of missing out, keeping the buzz alive by jumping on board a train that is going nowhere?

The metaverse is not, after all, a new concept. As a term for the concept of an immersive virtual reality (VR) life, it was invented 30 years ago by the American science fiction writer Neal Stephenson in his novel Snow Crash. Thirteen years before that, in 1979, programmers at IBM had used the expression ”virtual reality” to describe what the Oxford English Dictionary defines as "a computer-generated simulation of a lifelike environment that can be interacted with in a seemingly real or physical way.” Second Life, basically a metaverse without crypto, was hugely popular from its inception in 2003 until around 2013. Gamers have for decades lived part of their lives in the virtual worlds of popular computer games.

It is no surprise that interest in the metaverse, populated by start-ups such as Decentraland, Axie Infinity, The Sandbox and Fortnite, exploded again in 2021, as the Covid-19 pandemic constrained hundreds of millions to their homes, and left them reliant on technology to communicate with friends, family and work. With global restrictions easing and signs that the virus has loosened its grip, the world has opened again, making the idea that vast swathes of society will invest their valuable time walking around virtual worlds as an avatar less likely. Gamers, however, are clearly an exception to this argument.

How to make money in the metaverse 

When attempting to gauge whether profit can be made in the metaverse, whether it is a good long-term investment and whether virtual footfall is a requirement for the metaverse to remain a compelling investment proposition, it is important to distinguish between the different types of ways of extracting value from a virtul world.

For example, while online events or educational classes being streamed in the metaverse are only of value should people be interested in spending time in the virtual reality, virtual real estate, if considered of value by enough people, could be a good store of value, regardless of whether there is anyone populating these worlds.

After all, NFTs, digital assets which people rarely see, have sold for tens of millions of dollars. Similarly, some real-world art collections are kept in storage houses, viewed purely as a store of value, never seeing the light of day. So, is virtual footfall a prerequisite of flipping profit in the metaverse?

Let’s look at the ways of making profit.

Virtual real estate

From flipping"unreal estate", which means buying virtual real estate for low prices and selling them for higher prices, to buying up virtual property to rent out to advertisers or event organisers, there are a myriad ways to make profit in "land" in the metaverse.

One is to become a broker where you help investors buy and sell property in the metaverse, or a 3D designer to bring these properties to life.

As a store of value, provided there is enough cheap money floating around, enough investors searching for high yields and a continued interest in crypto, it makes sense that something like virtual real estate flipping could continue to be profitable. By flipping virtual real estate, investors can make metaverse passive income. In turn, if there is continued interest in flipping real estate, by proxy the need for virtual real estate brokers is not an alien concept.

Saying this, given how the macroeconomic climate is changing in the real world, where interest rates are being raised, in turn making investors increasingly risk averse, whether a risky asset like virtual real estate will continue to attract as much interest is dubious.

Other kinds of virtual real estate-related profit extracting activities are much less of a sure-fire bet. If I, for example, am attempting to make money as a virtual real estate manager I need virtual footfall to make it work, through event hosting, for example, or advertising. If you want to rent out the façade of your property to an advertiser to put up a billboard, the advertiser relies on virtual footfall for their campaign to be in any way profitable.

But is advertising one of the major metavere opportunities? Is advertising a good way to make money in the metaverse?

Advertising in the metaverse

Advertisers and brands alike, unsurprisingly, identify significant untapped potential in the metaverse. In these virtual worlds, people can be targeted with specific content, as they are on social media. In metaverses, adverts can be enhanced with brands hosting immersive experiences and campaigns.

The potential for this space to be profitable, however, remains far from certain.

In Second Life, it is worth remembering how brands initially flocked to the virtual reality, spending a lot of money buying up shop fronts. However, with the lack of footfall (most people never returned after one visit), advertising became pointless, and advertisers packed up shop.

Many brands, from Coca-Cola to Gucci, have dipped their foot in the metaverse. It is interesting to question, however, whether these campaigns have more to do with the fear of missing out, and with brands wanting to present themselves as ahead of the curve and engaging in new frontiers, rather than believing any presence in the virtual world will raise their exposure in a meaningful way.

VR-related immersive experiences have long been touted as the next frontier for advertising. Given the fact that VR has never completely taken off in the mainstream, in part as most individuals do not want to pay high prices for the technology, the idea that the metaverse can suddenly engender a shift is dubious.

According to data from last year less than a quarter (23%) of Americans have tried a VR headset. Of those, less than a third (31%) own a headset. Overall, Americans interviewed by Morning Brew, only 10% were very excited by the technology, and 18% were somewhat excited.

Live events

From education to sports to fashion shows, the idea that the metaverse will become an important space for event hosting has been well publicised.

Attendance at virtual events and meetings surged during the pandemic. The creation of metaverse promises an improved experience to virtual event-goers with more immersive elements than it is possible in reality. In order for people to have an effective enhanced experience extra technology such as VR headsets, haptic gloves and game controllers are often required.

Consequently, when thinking about how to make a profit in the metaverse, event organising, and event management seems like a potentially lucrative endeavour. The purported benefits of the metaverse for event organisers include unlimited attendance and imaginative ways of curating spaces that would not be possible in the real world.

With Samsung launching its new range of new Galaxy smartphones on Decentraland this week and Meta hosting a series of virtual events celebrating US Black history earlier this month, it is clear there is increasing traction. Furthermore, while many events have returned to be held in person, it is highly unlikely, especially in terms of meetings and conferences, that the world will go back to how it was pre-Covid.

The extent to which an average person who needs to attend a conference will invest in the required equipment, probably quite expensive, in order to enhance their experience is questionable. Without the expensive equipment, it is questionable how immersive or enhanced the metaverse experience will be. Furthermore, most adults going to a work conference, for example, are probably not that interested in how lifelike their avatar is.

As with the advertising issue, are the events being held by big brands in the metaverse publicity stunt which will dry out as the metaverse loses its hype, or will the appeal continue? The profitability of virtual event hosting depends on how many companies and people see its appeal and value. It also depends on macro themes. If, for example, environmental issues stop people from travelling as freely, or if a different virus emerges or Covid re-emerges, metaverse events could become widely used.

Still, for most people, as innate social beings, the feeling has to be that going to a live music, fashion or sports event will always be entirely preferable to attending virtually. This could remain, once the hype has subsided, a challenge in yielding profit from this area in the future.

How to invest in the metaverse: Gaming

Gaming-related endeavours are potentially the most fertile and arguably the most concrete means to make profit in the metaverse. In gaming, the metaverse finds individuals already used to spending extensive time on their screens and in other worlds. With a willingness to spend on expensive technology to enhance their experience and more incentive to spend on say, expensive designer clothes to dress their avatars in the metaverse may certainly take off among gamers.

Brands targeting gamers could well be onto something, as gamers are a known demographic sure to participate online. In other words, there is a real draw to the metaverse. Gaming cannot be done in the real world. Various brands have exploited this territory, including the Burberry and Blankos Block Party collaboration as well as Valentino and Animal Crossing partnership.

According to data compiled by 3Dinsider, almost 60% of VR-related experts believe gaming will dominate the VR space over the next couple of years, while 64% thought that gaming has the highest potential to benefit from developments in the VR space.

Final thoughts

On the surface there are plenty of ways to make money in the metaverse. However, it is worth differentiating between the possible potential of the metaverse and the current reality of this burgeoning sector. While digital assets that are good stores of value may buoy up metaverse companies in the long-term, many ways to make profit in the metaverse do rely on virtual footfall. Aside from gamers, most people, unless pressed to attend a work conference or meeting, are not going to go out of their way to spend time in virtual worlds when they have the option of spending it in real life.

FAQs

Further reading

Convex Finance price prediction: What next for the platform?

Livepeer price prediction: Will the surge continue over 2022?

WAX price prediction: What’s in store for the NFT ecosystem?