As the world continues to recover from the negative impacts of the Covid-19 pandemic, companies are exploring new tools to better engage with consumers.
One area that is gathering much attention is the metaverse, which enables users to interact in a virtual world by using VR headsets. Meta (formerly Facebook), for example, has seen its virtual world platform Horizon Worlds grow its monthly user base 10-fold since its launch in December 2021.
With China strictly adhering to its dynamic zero Covid-19 policy, implementing localized lockdowns and mass testing at any time, there is a golden opportunity for businesses to reach out to consumers via the metaverse.
"In China, businesses and investors are actively seizing the great opportunities opened by the metaverse. China's Big Tech companies are venturing into this new virtual world by developing VR/AR products, investing in metaverse-type apps, and ramping up their VR/AR patent and metaverse-related trademark filings," explains Zhenyu Ruan, a senior corporate/M&A and regulatory compliance lawyer at Baker McKenzie FenXun (FTZ) Joint Operation.
"Still, with the government's tight control on the technology sector, businesses are advised to take into consideration the existing rules and regulations concerning data protection, cybersecurity and content compliance, as well as the Chinese regulators' policy tendency toward new technologies such as cryptocurrencies. In addition, the legal regime concerning virtual assets is still quite nascent in China. This would add another layer of complexity and uncertainty around metaverse-related business activities."
Despite the regulatory grey areas, law firm Baker McKenzie believes that the Chinese metaverse market could reach US$8 trillion in size, driven by interest and capital investments from both conventional and innovation-driven investors. Chinese technology giant Baidu has already made a beta version of China’s own domestically produced metaverse called XiRang, which can support up to 100,000 users interacting in real time.
Outside of China, interest in the metaverse is likewise gaining momentum. Since the metaverse Decentraland launched in early 2020, a number of multinational firms such as Walmart, Nike and Gap have started to craft their respective metaverse strategies. In the financial services space, J.P. Morgan turned heads earlier this year for being the first bank to set up a bank in Decentraland.
“One of the great possibilities of the metaverse is that it will massively expand access to the marketplace for consumers from emerging and frontier economies,” the US bank states in a whitepaper on the metaverse. “The internet has already unlocked access to goods and services that were previously out of reach. Now, workers in low-income countries, for example, may be able to get jobs in western companies without having to emigrate. Educational opportunities will also expand, with VR worlds being a low-cost and effective way to access training. With these developments there will also have to be clear governance.”
It was a similar take from a report published by research firm CB Insights, which offers the possibility of a deeper customer relationship with a banking presence in the metaverse. “Additional opportunities include metaverse-specific financial products, such as mortgages to fund virtual real estate or business loans to get digital-only ventures off the ground. If the metaverse evolves to become something closer to a fully functional economy, then financial service providers might also need to build out new metaverse-centric approaches to insurance, asset custody, payments infrastructure, and more,” according to the report.