How Gaming Provides a Window into the Metaverse

We are yet to see a fully realised version of the Metaverse, but the technology and communities forming in the world of online gaming present us with the best example of what it could look like, and what we need to do in order to make it a reality, writes Garron Chaitowitz, Partner and head of the media and entertainment division at BDO South Africa.

The Metaverse is a term we are familiar with. But what it is and how exactly its set to change our lives remains unclear. Before we can address these points, though, we first need to ask a fundamental question: does the Metaverse currently exist?

In short, the answer is no.

This is if we go by the definition outlined in author Matthew Ball’s recent book, The Metaverse And How It Will Revolutionize Everything. In his book, Ball argues that for the Metaverse to be fully realised, we need what he calls an ‘interoperable network’, which refers to the ability of unlimited users to seamlessly transfer data across real-time 3D rendered virtual worlds.

As things stand we don’t have the available computing power to host such a network. Look no further than recent reports of the poor performance of Meta’s flagship “metaverse” app, Horizon Worlds, due to technical limitations. And so, while we do have an unlimited number of users able to access the internet, the closest thing we have to imaging the Metaverse at present can be found in the world of gaming.

The Gaming Industry as a Proto Metaverse

Online open platform games such as Fortnite, Roblox and Minecraft exist as independent 3D worlds that are building the underlying technologies that will serve as the precedent for the Metaverse.

The industry is also driving big business. In 2021, consumers spent nearly $100 billion on in game purchases. This revenue is shared among the various big companies that host these platforms, which stand independent from each other. The high profitability of these games is also why these different platforms remain separate — and herein lies the challenge.

The fact that these various online communities are not interlinked means they cannot qualify as the Metaverse with their number of users trapped in a limited virtual world. So, what happens within those games, stays within those games and cannot be moved or used across the platforms.

In order for the Metaverse to successfully proceed, each of these virtual worlds would need to talk to each other, and a user would need to be able to transition from one virtual world to another.

The Challenge of Ownership

The concept of ownership rights is another critical component for a functioning Metaverse. The envisaged Metaverse needs to be “a parallel plane for human leisure, labour and general existence.” In order for that to succeed, there needs to be a thriving economy, which requires competition, and profitable business and a trust in the rules. This is why the concept of ownership rights is so important.

Within the gaming industry, most of the profits are currently earned from purchasing outfits for avatars, or other items within those games. But because the virtual worlds are not connected, these items are restricted to use within each separate game.

In-game purchases are also licensed items, meaning they can technically be repossessed at any time and aren’t really owned by the purchaser. This creates a big issue around ownership rights and presents another challenge to creating the required interoperable network and continuity of data for the Metaverse to exist.

The concept of “NFT’s” represent an opportunity for ownership to become a reality but in relative terms, we are still very early in terms of adoption of NFT’s but could represent a solution to digital ownership rights that can then become interoperable.

The Payment Hurdle

Another challenge that needs to be overcome in order to fully realise the potential of the Metaverse is the ability to make payments across networks.

At the moment, there are various ‘payment rails’ that enable online transactions. But, these payment rails remain quite restrictive, largely controlled by big companies such as Apple and Google which leaves different games set within these different payment realms. It is in the interest of these organisations to maintain this control as it’s critical to maintaining their profits.

For the Metaverse to succeed, however, we need agnostic payment rails that can operate across various virtual worlds. To make this happen and create better consistency, there is a requirements for regulators to break down, or unbundle, these operating systems — a measure which seems unlikely to happen anytime soon.

But there is a possible technology that could allow payment rails to provide support across various platforms: A blockchain enabled network powering cryptocurrencies.

Blockchain and the Metaverse

Blockchain offers a potential solution to existing payment obstacles by virtue of its technology that is “trust-less” and “permissionless”. The open-ledger manner in which blockchains operate mean the information stored within is decentralised and not subject to the normal rules that confine centralised databases.

A major implication of this is that if blockchain technology were to be used for the Metaverse, no company or government would ever be able to exercise control. Bearing in mind the fact that there are various blockchains currently in existence, and one would need to emerge as the dominant choice, if implemented, this technology would help entrench the Metaverse as its own truly separate, parallel world.

The spirt of the blockchain is also likely what will help overcome the challenge of computing power required to realise the Metaverse. As Bell notes in his book, to create the interlinked 3D worlds of the Metaverse, we may need sharing agreements with consumers volunteering excess capacity available through their home computers to power the parallel universe. If that sounds ambitious, it is. But then so did the internet once upon a time.