The Biggest Problem Facing Blockchain Metaverse Companies

Last week we published our latest market sizing research for The Metaverse, announcing that unique monthly active users have now reached 400m. That's a hugely impressive number and as a sector overall, this number is expected to increase rapidly over the coming months.

But, there's a chasm in the market that could present major hurdles to the 10 companies already operating virtual worlds on blockchain and the 41 currently in development. The chart below shows unique MAU numbers by age for The Metaverse.

As clearly seen, the largest user group by age is currently 12 and 13-year-olds.

This is the largest age cohort of users, driven heavily by the Metaverse monoliths of Roblox, Minecraft and Fortnite.

Why are these worlds so popular? Well, they are fun places to be. Users can create content in the form of virtual goods - an activity hugely enjoyed by the creators of this content and heavily consumed by the other residents.

This creates a thriving and ever-growing in-world economy. These platforms are also built towards the target market from a visual perspective.

Roblox and Minecraft use block-style graphics as opposed to attempting realism - and this is fine because the sweet spot user age cares more about functionality than form. They're not concerned with having avatars that look like them or a world built in high-fidelity.  Fortnite has more realistic avatars and environments but it's the gameplay that brings the users in and retains them as opposed to the visuals.

Why don't older users visit the Metaverse as much as younger users? Well, older users are to a degree put-off from the larger virtual worlds because they are full of kids. That's fair enough.

Another reason is that there's currently a low number of virtual worlds aimed at older audiences. Second Life and IMVU are two of the market leaders in the older user segment for browser-based VWs with Rec Room, VRChat and Alt Space currently holding the baton for virtual reality worlds.

So let's get into the biggest problem facing all of the virtual worlds built on blockchains. These companies rely on users having a crypto wallet in order to register an account and engage in the primary mechanics of their worlds - namely land purchase, NFT trading and virtual goods exchange. Users without a crypto-wallet either have a limited user experience or are not allowed to enter the world at all.

The typical minimum legal age to have a crypto wallet and purchase cryptocurrency is 18.

Now take a look at the chart on the right. This shows the 400m total user count on a cumulative age basis.

83.5% of the current 400m unique monthly users are under 18 years old. This represents 334m users. The balance, 13.2% accounts for 66m users.

This is the major hurdle facing blockchain metaverse companies. The vast majority of the active market user base are not legally allowed to use the tools required (crypto wallets) to actively engage and participate in the platforms being built.

So, the biggest risk here is the creation of dozens of blockchain virtual worlds that are empty. The people that want to use them legally can not and the people that were expected to use them are not interested.

What can be done to overcome this market chasm? In essence, there are three alternative strategies...

Option One: Virtual Worlds don't need to be built on a blockchain

Sure, having NFTs attached to virtual goods and assets is an interesting and in some cases valuable use-case but it's not a show-stopper.

The key aspects of a 'Metaverse' experience are presence, persistence and social interaction - being inside a virtual environment with the ability to engage and interact with other people in real-time. You don't need a blockchain to facilitate these key elements.

So, for companies looking to create Metaverse platforms that address the largest target possible, it's more important to think about the user experience and 'reason for being there' as opposed to the integration of NFTs. By insisting the users can only join a virtual world if they have a crypto wallet a massive part of the current market is instantly excluded.

Option Two: Allow dual entry for registration

By this we mean allow under 18s without crypto wallets full or as much access as possible to the in-world features.

A lot of companies developing new blockchain virtual worlds appear to be more focused on the revenue generated by initial land sales rather than developing compelling and unique user experiences. This is worrying because the end product is an empty virtual world that no one wants to visit and then as a result of this the value of land plummets. Everyone loses.

So, let the kids in, make the experience unique and interesting, have gaming and gamification mechanics in place wherever possible and make the crypto and non-crypto experience as close as possible.

Option Three: Build for the older market

If the question of a virtual world being built on a blockchain is not up for debate then the developers of the platform need to get creative and build for the older market, but what does this mean?

Firstly, don't be a clone of other existing virtual worlds. We do not need another Sandbox or Decentraland. Those two companies already own that part of the market being first entrants and proactively putting barriers to entry in place. Saying your upcoming virtual world will allow land sales and content creation is not good enough. What is the compelling reason to join the world?

Secondly, think about the graphical treatment and visual strategy. Avatars need to be fully customisable, higher fidelity and more realistic. This doesn't just mean having lifelike human styled avatars. It also means that if someone wants to be a realistic-looking dolphin or dragon then let them. Also, create an ownable and stylised brand identity 'look and feel' inside the world.

Thirdly, choose your genre or theme and build everything else around it. The reason there are several companies developing music-themed virtual worlds is that it's a popular genre with both creation and consumption elements plus real-world artists and brands willing to participate. The experiences and mechanics of these worlds are being built exclusively around the theme of music.

So we need virtual worlds themed to fishing, history, tourism, sports, book reading, debate, the environment, relaxation, language learning, movies, TV shows, architecture, new technologies, ok you get it - they need to be based around a genre, topic or interest.

This will be the critical success factor for upcoming blockchain virtual worlds.

Read more:

The Metaverse Reaches 400m Users

The Five Rules of Virtual Brand Management

Metaversed Consulting Services

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