Why Your Kids Buy Digital Goods in Virtual Worlds — Business Models of the Metaverse

Introduction — Too late, we’re already in it

What the F is the Metaverse?

High Score — The Beginning

Crowds at an arcade playing Mortal Kombat and Street Fighter II.

Bringing it home

Kids playing 3 and 4-person Goldeneye 007 for Nintendo’s N64 console released in 1997. Goldeneye was one of the first simultaneous and independent 4-player console games. Image Source: lower right— Robert Triggs, Android Authority

The birthplace of live streaming

Quad Damage — The big bang of multiplayer experiences

People playing Quake on a LAN. Source Killersinc.com
Counter-Strike Beta(2000), a squad and objectives-based first-person shooter modification for Valve’s Half-Life. Source Twitter.com
People playing Quake 3 Arena(1999) on LAN. Source Twitter.com

People pay to watch other people play games?

Twitch revenue estimates. Data source: businessofapps.com, twitchtracker.com

Uh-Oh! Technology

Connection and Communication

The mIRC client(1995) provided one of the original ‘3rd spaces’ for people to form communities and pursue interests. mIRC offered similar channel or room instances as we’re familiar with today in Discord and Slack.
Roger Wilco(1996) provided one of the earliest VoIP applications allowing anyone with an internet connection and microphone to communicate. The combination of mIRC and Roger Wilco was used for competitive and cooperative gaming experiences. The combined functionality of persistent group messaging and voice created the most popular community application — Discord.

Access and Interoperability

Open Ecosystems — Access

Linked Accounts

Monetizing the Metaverse

Real World Observations — Metaverse Opportunities

Derivatives of Identity — Status and Signaling

Global gaming revenue by platform. Mobile spending is often on in-game purchases to improve player performance or cosmetics. The growth in mobile spending, its accessibility, always-on status, low barrier to entry, and global adoption make competing for the next major device platform (glasses) irresistible. Data source Sensortower.com

Developing and Monetizing Communities

  • Minimal hardware requirements (Access)
  • Ownership and customization of digital representation (Identity)
  • Shared multi-person experiences (Community)
  • Engagement with others (Communication)
  • *emerging property* Leveraging identity across communities (Interoperability)
NBA TopShot total transaction sales, July 2020 — July 2022. TopShot has surpassed $1 billion in total sales as of May 2022. Data source: cryptoslam.io

Infrastructure Enabling the Metaverse


Access Devices


Old challenges — New Technologies

The Path Forward

Facebook → Meta

Devices Dictate Defaults

Layered Up

iPod ads from 2005 were everywhere, TV, billboards, and plastered on public transit. image source billboard.com
RTFKT x Nike AR hoodie and associated NFT. XR glasses provide access, visibility, and engagement with digital goods enabling people to signal their digital status in ‘real-life’. Source: opensea.io





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