Credit: CFP

BEIJING, January 25, 2024 (TMTPOST)— China's Ministry of Industry and Information Technology (MIIT) convened 60 experts to form a new working group to formulate standards for the metaverse field last Friday. Members of the working group come from MIIT, academic institutions, and leading Chinese tech companies, such as Huawei, Tencent, NetEase, Baidu, Ant Group, and Lenovo Group.

In September 2023, MIIT issued the "Three-Year Action Plan for the Innovation and Development of Metaverse Industry (2023-2025)", which charts the course for the development of the metaverse industry, including how to improve the industry standard system, enhance innovation capabilities, and build world-class infrastructure.

The hyping up of the business aspect of the metaverse has backfired to some extent, according to MIIT. The Chinese government expects that the metaverse can find more applications in industrial scenarios, so as to facilitate the deep integration of the digital economy with the real economy, thus expanding new growth spaces for various industries.

However, metaverse is being overshadowed by the increasingly prominent status of artificial intelligence, one of its underlying technologies. Since 2019, Meta's Reality Labs department dedicated to the virtual universe, has registered a loss of $47 billion. Apple stopped mentioning the term "metaverse" in the keynote speech for its Vision Pro headphones. Market intelligence company Canalys announced at the end of 2022 that most metaverse-based business projects will end up in failure by 2025.

Metaverse—More Than a Hyped-up Concept 

The "metaverse" lays out a vision for the next generation of the internet: a single, shared, immersive 3D virtual space where humans and machines, data interact with each other, to some extent replacing and augmenting the real world.

In other words, the work scenarios dependent on video conferencing, the popular short video and live streaming interaction methods may all be disrupted and replaced by new models in a virtual world.

That being said, the development of the metaverse depends on the further development of emerging technologies such as Web3, blockchain, NFTs, cryptocurrencies, the Internet of Things (IoT) among many other things, especially closely related to generative artificial intelligence technologies. It is fair to say that the booming of generative artificial intelligence has presented an opportunity for the metaverse to transition from a mere hype to the reality.

NVIDIA is one of the companies engaged in artificial intelligence and the metaverse, offering applications that convert 2D images into 3D assets to help with virtual training simulations. The integration of generative artificial intelligence and the metaverse can create dynamic virtual environments where AI-generated content can adapt and respond to user actions, thereby creating personalized and engaging experiences. It can also realize new forms of art, entertainment, and communication, potentially transcending the boundaries of the virtual and the real world.

According to a recent study by S&P Global Market Intelligence, the emerging virtual world opportunities in video games, hardware, commercial software and services, e-commerce, advertising, and other sub-sectors will generate an annual revenue of $52.39 billion by 2027.

In December 2023, the South Korean government launched a $48.3 million fund to develop and support mergers and acquisitions of various startups, as a way of building the metaverse ecosystem. The Dubai government in the UAE has also launched the Dubai Metaverse Strategy, aiming to become one of the world's top ten metaverse economies by 2030 and to become a hub for the global metaverse community.

In China, several local governments have also put the metaverse industry on top of the development agenda. The government of Tongzhou District, the "sub-center" of Beijing, has pledged to attract more than 100 virtual universe-related companies by the end of this year. Shanghai plans to set up government-supported projects and private equity funds dedicated to the development of the metaverse.

Upcoming Opportunities: Various Scenarios for Metaverse

One of the major challenges in the development of the metaverse is the potential breadth of application scenarios. The following image shows the potential ecosystem development and the impact of the metaverse on various sectors. It represents digital interaction ranging from high-end industrial simulation, such as digital twin factories, to community art installations or fantasy experiences.

Source: S&P Global Market Intelligence

For example, industrial "metaverse" applications involve creating precise digital simulations for new factories, including their appearance and operation. This virtual environment can be used to validate designs, train employees, and even include training for automated robots. Once the actual construction is complete, most of the training and operational plans can be in place, so they can be immediately applied to the actual factory. Digital twins can assist in workshop processes, provide a place to record or rehearse maintenance, and project machine data in AR during actual maintenance.

Moreover, the metaverse can provide sustainable and ethical business practices for brands and retailers in terms of the environment, society and governance (ESG). By curating virtual events and educational opportunities, the virtual world enables brands to reinforce corporate values, brand image, consumer awareness, and transparency, while significantly reducing the resource consumption of traditional channels such as print media. For example, at the International Consumer Electronics Show in 2021 and 2022, Procter & Gamble launched two immersive virtual worlds, LifeLab and BeautySphere, where visitors could explore numerous interactive areas showcasing P&G brands and products, while introducing consumers to P&G's efforts in sustainability.

The Regulation of the Metaverse Requires a New Paradigm

The MIIT noted that the Metaverse standard-setting group will develop general and technical standards, covering areas such as Metaverse terminology, reference architecture, identity systems, digital content creation, and cross-domain interoperability. During the standard-setting process, special attention will be paid to issues such as the use of sensitive personal information in the Metaverse, the proliferation of digital identities, pyramid schemes and cyberbullying.

Matthew Ball, in his book The Metaverse: And How It Will Revolutionize Everything, points out that "the Metaverse will exacerbate many of the challenges that exist in our digital lives today."

The regulation of virtual universe requires a new paradigm—not the voluntary yet powerless self-regulation, nor the top-down and rigid directive regulation. The new era calls for a new participatory supervision model: the government identifies problems, then collaborates with companies and representatives of civil society to develop acceptable and enforceable standards.