The Metaverse Universe Q2 2022 update
Blockchain Virtual Worlds Have a Problem
Proponents of a web3 Metaverse will tell you that web2 virtual worlds are old-school, redundant and not an option for brands looking to reach new demographics online. This is tech-marketing nonsense and this article will lay out the facts and options for marketers at the media planning stage of their Metaverse (ad)ventures.
Now to be clear, we are fans of web3 virtual worlds. Some of the underlying blockchain infrastructure makes ownership of virtual goods more straightforward and undoubtedly interoperability is assisted by web3 protocols. But, from a media planning perspective - i.e. 'where are all the users hanging out?' a wider view of the market is needed that is less technology buzzword driven and more audience and result driven. Let's start by looking at this topic from a user (gamer, player, resident, person) perspective. First up,
83.5% of the current Metaverse population of 440m MAUs is under 18.
This is a major issue for the slew of blockchain virtual worlds live and in development. These companies are mainly creating platforms that require a loaded crypto wallet in order to create an account and this throws up the minimum legal age issue.
But do these younger Metaverse users currently inhabiting virtual worlds like Roblox, Minecraft and Zepeto actually care about web3? Is decentralisation important to them? Are they campaigning for NFTs Do they even know what a DAO is? The answer is No, No and No.
They don't care about the underlying technology of their favourite virtual world because the only things that matter to them are the ability to socialise, create/consume content and experiences and generally just have fun. That is it and don't be fooled by anyone that tells you otherwise. The tech infrastructure driving a virtual world platform should be invisible to the user and shouldn't inhibit or influence the gameplay or user experience. This point is being blissfully ignored by many blockchain virtual worlds. Limiting access to crypto wallet holders is an issue in its own right and they are even examples of some worlds limiting access to specific regions of their maps unless the user pays to enter. Play-to-Earn gaming mechanics present another swathe of issues and we'll explore this in another article.
In summary with respect to users and web3 platforms, media planners and marketers should not get carried away with trying to be cutting edge. As shown in the graphic below, MAUs in blockchain virtual worlds are currently very very low.
Over 99% of the current Metaverse population are in 'boring and outdated' web2 virtual worlds with Roblox being the behemoth. Do not trade-off addressable audiences against the type of tech platform.
But of course the related argument here is that new users to the Metaverse will be older demographics with access to crypto wallets (and disposable income) and therefore will inhabit web3 virtual world platforms. This in turn should make web3 platforms a more viable choice for media planners as the MAU numbers start to increase.
This is in theory correct but there's another set of issues that will cause adoption friction for web3 VWs. These relate to areas such as graphical quality, the user journey/experience and methods of user acquisition.
Grown-ups (us adults) need higher degrees of realism within virtual worlds compared to younger users. We need more human-looking avatars as opposed to the pixel block style in order to distance ourselves from kid platforms and environments need to be slicker. So, the web3 virtual worlds that will have a higher chance of success will be the ones building to a higher graphical denominator. Media planners have the responsibility to protect their brands values and reputation so should be more focused on higher fidelity platforms because this gives their creative executions a better starting position.
The user journey and experience are also super important. Older VW users are less interested in gaming and questing and more interested in UGC, socialising and discovery. Web3 virtual worlds have to ensure their platforms encourage and nurture all three of these activities, without paywalls. Allowing user-generated content is a key part of creating virtual economies with loyal and active market participants and web3 VWs should not seek to monetise UGC at the creation point.
Many web3 virtual worlds in development are launching with Play/Move/Create/Socialise to Earn gaming mechanics as the key backbone of their planned user experience and journey. This is a flawed approach that ultimately creates unsustainable economies. Grown-ups are less motivated than younger users to be told what to do and have their in-world experience governed by grinding, leveling up and points-based activities. There is also the Ponzi-scheme element for Play-to-Earn that will see more casualties in the coming months. Web3 virtual worlds need to balance an open experience vs. a more controlled one.
User acquisition is the lifeblood of any platform and virtual worlds are no different. With so many web3 VWs coming to market, all effectively chasing the same target user, the platform operators need to radically change their mindset on 'who is their customer?'.
We recently worked with three recently launched web3 virtual worlds to analyse and benchmark their user acquisition flow. Our findings supported our hypothesis going into these projects, namely that a typical Discord Channel member or Telegram Group member is not the same person as a typical virtual world user. People join Discord or Telegram groups because they're interested in crypto airdrops, NFTs, ICOs and land sales - i.e. the motivation to join is financial. Plus, these people are typically members of many other different web3 groups.
We found that on average only 17% of the associated community channel (Discord or Telegram) users created an account in their respective web3 virtual world within one month of launch.
This begs the question 'Why isn't this number higher?'. It's pretty obvious really, - why should they? That's not their area of interest and that's not why they came in the first place. They have different motivations and more airdrops to track down.
So, web3 virtual worlds can not rely on the migration of community channel members as their primary user acquisition method. Instead, they have to focus much harder on the areas already highlighted in this article, namely graphical quality and the user journey/experience. Make a great product and the word will spread. Think less about NFTs, land sales and other short-term financial gains and more about a sustainable and enjoyable virtual economy and experience.
Real-world brand partnerships are another useful user acquisition tool if done correctly. Web3 virtual worlds have to understand the types of brands that would be attracted to their platform and not just think it's good enough for a media planner simply because they are web3. As seen in our master Universe chart below, marketers have a lot of choices in the Metaverse. To that end, web3 platforms need to understand how their platform, mechanics, experience and user profile are relevant to a brand.
And there's another question - Where will Roblox users go next? Due to the sheer audience size in this cohort, this is actually more of a critical success factor in the short to medium than addressing the penetration of grown-ups into virtual world experiences. This is a difficult question to answer and we will tackle this question in greater detail in an upcoming article.
But what if it's web3 or the highway? We speak to some marketers and media planners who are insistent on taking their brand into a web3 Metaverse. As shown below, it's a smorgasbord.
Our primary advice when considering this topic relates back to several of the points explained already. Don't rush in just because you think it's cool as there's nothing worse than a branded virtual venue that's a ghost town. Sure, you'll get a web3 press release but that will be about it. Remember - the MAUs are very low at present.
Media planners should dig deeper into the different genres of virtual worlds available such as music, education, fashion and sports. We called these 'Vertical Worlds' because they're themed to specific genres. This is much better for user retention and overall user base growth. Also compared graphical styles and environmental design. The more generic activity virtual worlds with lower quality graphics will struggle to maintain their users once more Vertical worlds come to market offering more tailored and engaging user experiences.
To conclude this article and topic, media planners shouldn't rush into the Metaverse and follow the press releases. Instead, they should look at the market more holistically and think just as much about their own brand values as they do about the potential platforms available.
Size also matters. Don't be misled by the web3 goldrush just yet. 99% of the Metaverse population are perfectly happy in web2 virtual worlds and many of these platforms have multi-million MAUs. Go where the action is in order to get meaningful campaign results and audience exposure and then carefully choose additional entry points into relevant web3 platforms.
Metaversed is a full-stack virtual worlds agency that's been taking brands into the Metaverse since 2006.
The Metaverse Universe Q2 2022 update
Blockchain Virtual Worlds Have a Problem
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