- Blockchain-based metaverses are in their infancy, but there already is a race to acquire lands within these worlds
- To purchase land in the form of NFTs, buyers must adhere to the rules and limitations of each metaverse
- Land opportunities vary from rent, advertising, commission, resale, and extension of neighboring plots
- Land value is measured by location, size, and of course the specific metaverse hosting the space
- For users, virtual lands offer spaces where they can connect online with other people, for socializing, gaming, selling, or buying NFTs, and attending events such as meetings, classes, or virtual concerts
- For brands, owning virtual land is an opportunity to use the space to offer services, launch products, use the space as an extension or replica of their real-life brick and mortar locations, and most importantly it is an opportunity for brands to design their own unique virtual customer experience
Metaverse – the term – like “internet” is not singular, it encapsulates all 3D digital cities where users can simulate real life. However, not all metaverses are born equal, while some are hosted on the blockchain, others aren’t. And the virtual world’s existence on the blockchain is the deciding factor on whether or not you can purchase virtual real estate within it. Each of the blockchain-based metaverses has a limited supply of lands that are sold as unique NFTs.
The “Big Four” blockchain-based metaverses are:
The earliest pioneer in metaverses on the Ethereum blockchain, this platform is a VR space where users can buy and sell digital real estate while interacting with other users and playing games within this world.
One of the most popular blockchain-based metaverses on the Ethereum blockchain, popular for creating, buying, and selling digital assets, and empowering a play-to-earn gaming economy.
A user-owned virtual reality world built on the Ethereum blockchain, that consists of a city called Origin City. The streets of Origin City are owned by corporations, whereas the individual parcels are owned by people.
Perhaps the lesser known metaverse out of the Big Four, this virtual reality world is advertised as open, social, and present. The platform is available in 2D from any device, or via VR from desktop and mobile.
VIRTUAL REAL ESTATE
There have been a lot of discussions around virtual real estate recently. The boom happened in November when Facebook announced its rebranding to Meta, focusing the company’s efforts on its own metaverse. Following this announcement, during the same month, Tokens.com spent $2.4 million to buy land on the Fashion Street Estate in the Decentraland metaverse – to host virtual fashion shows – renting the space out to brands like Tommy Hilfiger, Dolce & Gabbana, and others. Shortly after, Republic Realms dropped $4.2 million – the largest virtual real estate deal to date – on 792 parcels amounting to 3 square miles of land in Sandbox.
By the end of 2021, the total amount of sales of virtual real estate totaled a whopping $501 million, sold on the “Big Four” large-scale metaverses: Decentraland, The Sandbox, Cryptovoxels, and Somnium. According to MetaMetric Solutions experts, the metaverse real estate market could reach $1 billion by the end of 2022. However, in March this upward trend was reversed, metrics reporting an 18% drop in the average price of land across the space, with Decentraland and Sandbox most affected.
OPPORTUNITIES FOR OWNERS
Holding land in the metaverse opens the door to an array of opportunities:
- Rent: A landowner could rent the space and charge a rental fee.
- Advertisement: They could erect banners to display ads for revenue.
- Commission: They could host games and receive a commission from game revenues.
- Resale: They could resell the digital land for profit, or build experiences on it and resell it for an even bigger profit.
- Extension: The parcel could act as an extension of another busier parcel.
INFLUENCING FACTORS OF LAND VALUE
Just like property in the real world, virtual plots of land differ in price depending on:
- Location: Proximity to one of the main plazas where players respawn, a busy road, or near a popular experience will attract a lot of foot traffic and be considered a premium plot of land.
- Size: Owning a larger plot of land which allows you to build bigger more elaborate experiences is also valuable to buyers or renters.
- World: Most importantly, the value of the asset is determined by the success and popularity of the metaverse hosting the plot of land.
EXPERIENCES FOR USERS AND BRANDS
These virtual worlds offer plots of land where users can connect online with other people around a myriad of experiences that vary from spaces for socializing, gaming, selling or buying NFTs, attending meetings, classes, and virtual concerts.
Brands can use these properties to advertise, offer services, launch products, use the space as an extension or replica of their real-life brick and mortar locations, and most importantly it is an opportunity to design their own unique virtual customer experience.
Today, the blockchain metaverses look trivial compared to other metaverses. According to Gartner, we are currently in phase 1 of the metaverse, which will last through at least 2024.
The technology is likely a few years away from catching up to other virtual worlds like Fortnite, and expert opinions vary. While some compare buying virtual real estate similar to buying pixels on the Million Dollar Homepage back in 2005, others speculate that the metaverse is a fertile ground for investment, much like New York 250 years ago.
There has historically been a race to get into every major disruptive technology, some even act on FOMO without understanding the technology itself. Investing in the metaverse today entails big risk, but also a potential for high returns, so you must do your due diligence before embarking on that journey.
As VR technology matures rapidly, and renowned architects start getting involved in these worlds where design can break the barriers of the physical realm, one can only wonder what experiences will soon be possible through the lenses of VR headsets, and which industries will be most impacted.