Tencent and Fudan University Release Major Report on the Metaverse

Recently, Tencent partnered with Fudan University School of Journalism to release the report "2021-2022 Metaverse Report," which delves deeply into the concepts, application scenarios, and development trends of the metaverse. In particular, the report introduces the concept of "Metaverse Ratio," which uses multiple core dimensions to measure the "remote presence" created by metaverse technologies, including computing power, responsiveness, realism, immersion, interactivity, user autonomy, digital property protection, and digital currency payments.

What exactly is the metaverse?

The connotation of "metaverse" is rich, but its main components are omnipresent networks, cryptocurrencies and encrypted networks (such as Bitcoin and Ethereum), VR and AR technologies, and NFTs (Non-Fungible Tokens).

In a broad sense, we can say that the internet has long been a metaverse. Our indispensable remote video conferences during the COVID-19 pandemic already contain some "metaverse" elements. The "metaverse" is an ever-receding horizon; we can keep approaching it, but never fully realize it.

Zuckerberg describes the metaverse as an "embodied internet." But the ideal metaverse is a network space based on augmented reality, virtual reality, and mixed reality technologies, integrating user avatars, content creation, social interaction, online gaming, and virtual currency payments. In the metaverse, users are not just content viewers but can fully immerse themselves physically and digitally in a complementary and transforming physical and digital world, embodying the yin and yang of Chinese culture.

Real World and the Metaverse

Just like today’s internet, the metaverse is not a single technology but an ecosystem gradually built by many companies providing various technologies. Specifically, the metaverse has four main characteristics: realism, immersion, openness, and collaboration.

Users in virtual spaces will experience a sense of "shared embodied presence," perceiving the environment from a first-person perspective and interacting with other users. At this point, we are no longer simply outside the medium but are living within it.

The parts of the metaverse ecosystem will be interconnected and interoperable. In the metaverse, various people and objects will have fixed identities, allowing individuals and digital goods to move from one virtual world to another, and even enter the real world through augmented reality. This means that information can flow seamlessly across platforms and worlds (including between virtual worlds, and between virtual and real worlds).

The metaverse aims to create an imaginary world beyond the physical reality (fantasy), a pursuit that has existed since ancient times and takes various forms, each with a different "Metaverse Ratio."

Metaverse Ratio

Each Chinese character that is a phonetic-semantic compound is like a 3D experience package created and shared by metaverse users, or what Zuckerberg calls holograms in the metaverse (which can be a book, a movie, a game such as chess, racing, KTV, or betting).

Chinese Kunqu opera, such as the first real scene garden Kunqu "Peony Pavilion" co-produced by renowned musician Tan Dun and "Kunqu Prince" Zhang Jun, uses garden scenery as the stage, presenting the masterpiece of Ming Dynasty literary giant Tang Xianzu "Peony Pavilion" with immersive sound, light, and physical effects, transporting audiences remotely (teleporting) into the most authentic and pure dream of peony as depicted by Tang Xianzu.

From Digital "Embodiment" to "Twins"

In the metaverse, users will have one or more "avatars" in virtual space. The term originates from Sanskrit "avatar," meaning the incarnation of a deity. In Hinduism, gods exist in multiple incarnations among humans. The Hollywood blockbuster "Avatar" (2009) popularized the term in new media, referring to digital representations.

In video games, "avatars" have different types across various historical stages

But overall, despite many iterations and improvements, the human-computer interaction mode remains: users outside the game facing a computer screen, with speakers on either side, interacting via keyboard, mouse, touchpad, or game controllers with the environment and other players. This is vastly different from the scene depicted in "Snow Crash," where players are fully immersed, using all their senses to interact with others in the game environment.

With the advent of Web 2.0, information dissemination became democratized. Now, "anyone can have their own space online in just 5 minutes" (blogs, personal homepages), enabling individuals to migrate from offline to online, creating a digital avatar (blog/personal homepage, termed "digital soldier" by Negroponte). As technology further develops, this "avatar/blog/personal homepage" evolves along three directions:

Expression forms of media, from pure text to include images, GIFs, audio, and video;

Content length, from long articles to micro-content;

Interconnection of media content (from independent personal pages to interconnected ones);

Mobile apps, bringing the internet into the mobile era.

Web 3.0 is an internet evolution based on Web 2.0, better reflecting the labor value of netizens and achieving more balanced distribution of value. Web 3.0 addresses the weaknesses of Web 2.0, where content creators are numerous but business models are fragile.

One manifestation of Web 3.0: digital game players invest time through avatars to pass levels, earning reputation and virtual currency, which can be exchanged for real-world value. Blockchain, cryptocurrencies, and property rights protection technologies (like NFTs) are crucial here.

Because Web 3.0 applications are niche and covert, they are not widely known to the general public. However, they form an essential infrastructure for building the metaverse.

Web 3.0, one of the foundational infrastructures of the metaverse

The metaverse democratizes experience dissemination. Therefore, the advent of the "metaverse" can be viewed as a second revolution in internet transmission technology. We can illustrate the relationships among Web1.0, Web2.0, Web3.0, and the metaverse as follows:

Relationships among Web1.0, Web2.0, Web3.0, and the metaverse

In the metaverse era, user avatars are essentially digital twins. Through various technologies, we publish information about ourselves in cyberspace, ultimately achieving mutual replication between the real world and virtual space. Our digital avatars evolve into "digital twins." This process includes three stages:

1. Digitalization of people and the world: The real self offline continuously and consciously publishes micro-content (text, images, audio, video) to digital space, gradually building an avatar, or "digital soldier," serving the real self offline.

2. Datafication of people and the world: Technologies such as RFID, GPS, LBS, Google Glass, Apple Watch, Facebook Ray-Ban Stories, and basic AR/VR/MR enable uploading spatial data, behavioral data, physiological data, and non-verbal symbols, enriching the digital avatar.

3. Digital twin of the metaverse: Users, via metaverse infrastructure and advanced VR, fully become part of the metaverse (cyborgs). Supported by mixed reality, increasingly humanized human-computer interaction interfaces lead to the merging of offline and online spaces—where virtual space is the real space, and vice versa.

Metaverse application scenarios and leading companies

The metaverse is not just a profit-driven dream of tech executives like Zuckerberg but also a major technological and engineering innovation. If applied correctly, it can be a beneficial tool bringing real benefits to our world.

Based on current development and future trends, we can roughly divide metaverse application scenarios into three layers: core, technical, and environmental.

Metaverse Application Scenarios

The core layer includes work, social, and entertainment. The technical layer covers commerce, scene experience, and medical treatment. The environmental layer involves virtual characters, education, tourism ecosystems, and international communication.

Core Layer Application Scenarios

Technical Layer Application Scenarios

Environmental Layer Application Scenarios

The emergence of the metaverse is driven by numerous innovative companies across various fields, forming a vibrant and rapidly developing ecosystem. In 2021, newzoo.com released the "Metaverse Ecosystem Map," which includes the following categories and main participants:

Metaverse Ecosystem Map

Founded in June 2021, Roundhill Ball Metaverse ETF focuses on the metaverse industry. It launched the "Ball Metaverse Index," the world's first index aimed at tracking the performance of the metaverse sector. The index is generated after tiered weighting of listed companies actively involved in metaverse development worldwide.

These metaverse companies are divided into seven categories:

Metaverse Ecosystem Classification

Based on these seven categories and their potential, the following ten leading global metaverse companies are listed (note that since metaverse technology is still evolving and the market is not fully segmented, the classification is not entirely mutually exclusive or stable):

1. Roblox: An online video game platform, arguably the closest to a true metaverse today. It has 43.2 million daily active users, aged from 6 to 30, with 9.7 billion hours of user online time in Q2 2021. Fashion brand Gucci even launched new fashion shows on it.

2. Unity Software: A 3D game design software company. Game designers use its rendering engine to set interaction modes; 71% of the top 1,000 mobile games are built on Unity; over 50% of all video games across PC, mobile, and consoles are created with Unity.

3. Fastly: A provider of solutions to reduce data transmission latency. Fastly has an edge computing "infrastructure-as-a-service" platform capable of 145TB/sec data transfer across 28 countries, helping to reduce delays caused by data transmission. Many innovative companies across various fields are driving the arrival of the metaverse.

4. Autodesk: A software company, listed since the 1980s, famous for AutoCAD. It has become an industry standard for industrial pipelines, infrastructure, transportation, architecture, and industrial design, serving engineers, architects, designers, and students.

5. NVIDIA: Has long produced graphics and video processing chips for high-end computing and AI, widely used in servers and supercomputers. NVIDIA plans to acquire ARM Holdings from SoftBank. ARM holds numerous patents and software related to chip configuration. If successful, NVIDIA could embed its GPUs and high-end chips into more computing systems, boosting computing power.

6. Meta: A leading global metaverse company with diversified investments.

7. Shopify: The underlying architecture of metaverse commerce. Content creators want their own business models, making digital assets, digital currencies, and monetization essential. Shopify launched a new NFT platform allowing creators to sell art directly to consumers. The Chicago Bulls first tested this by selling limited edition NFTs of their 1991 NBA championship rings.

8. Microsoft: Launched new metaverse tools enabling users to create AI avatars, set up virtual studios, and participate in virtual meetings—such as using Microsoft Dynamics 365 Connected Spaces to instantly access factories or retail stores, communicate with workers or clerks, test products, experience environments, troubleshoot issues, and enhance understanding.

9. Matterport: A software and video capture company whose software allows users to generate digital twins of physical buildings simply by photographing them with a smartphone.

10. Roundhill Ball Metaverse ETF: Focuses comprehensively on the entire metaverse field, covering infrastructure, interface development, and content creation, with 50 listed companies. Nearly 70% provide cloud solutions, gaming platforms, and computing components, including NVIDIA, Microsoft, and Chinese gaming giant Tencent. By November 2021, it had accumulated assets of $100 million and an average daily trading volume of 250k shares.

Development Trends of the Metaverse in 2022

An emerging field with vastly different imaginative possibilities, but with current technology and information transparency, the differences may not be obvious. As 2021 marked the first year of the metaverse, how will it develop in 2022? This remains a question of trial and error, with no definitive answer yet. However, based on existing conditions and social phenomena, we can make some phased reflections and possible future directions.

From a macro perspective, the concepts, technologies, hardware, software, content, and applications of the metaverse will undergo reconstruction and reorganization.

Metaverse Transformation

A schematic of the ten major future trends of the metaverse

On a micro level, all sectors—government, industry, academia, research, and application—will take action.

Micro Trends of the Metaverse

The concept and scope of the metaverse are still unclear, with many opinions and debates. Apple CEO Tim Cook, in an interview with Time magazine, was asked, "Is what you’re talking about the so-called metaverse?" He replied: No, we just call it augmented reality (AR). Some netizens pointed out, "All this metaverse hype—those doing games and video content call it AR/VR; those doing industrial software simulation and design call it digital twins; social ones call it virtual communities. Now, with some blockchain and digital art added, it’s been hyped into a lofty new term called the metaverse—kind of nonsense..."

As a concept-driven phenomenon, the market and related enterprises are key players in the metaverse layout. But excessive fabrication, hype, or even demonization of the metaverse can distort its development direction, leading to a chaotic carnival of capital where "anything can be a metaverse."

Fully realizing the metaverse may require years of effort and billions of dollars of investment. Facebook has invested heavily in technology, such as Portal video call devices, Oculus headsets, and Horizon VR platform. With a daily login user base of one billion, if Zuckerberg chooses to focus on metaverse entertainment services, success is likely. But Zuckerberg admits that current VR headsets are "a bit bulky," and the ideal metaverse is still far off.

Compared to social media, the technological leap of the metaverse is mainly turning the internet of text, audio, and video into an embodied internet where users can participate fully. However, its business model will not fundamentally change—shifting from personal web pages to "personal embodied presence," and social platforms becoming "embodied participatory public spaces." Therefore, the metaverse will still involve issues of user privacy, a fundamental human right.

The metaverse is seen as a future medium that can help humans break through existing social boundaries. While this optimistic view imagines technological progress, in reality, the invisible space of the metaverse is also constrained by physical national borders and sovereignty, as its spatial constructions and products are inevitably subject to the physical world's territorial limits.

From current developments, international companies and major platforms are actively exploring metaverse products, establishing their own metaverse systems. Microsoft, Meta, Baidu, Tencent, and others have developed their own metaverse spaces, each with independent operation systems and rules, or with different focuses on social, gaming, and commercial fields. How humans will switch freely and seamlessly among numerous metaverse spaces remains a challenge. The "open world" concept is only open to users; achieving full openness and interconnectivity among multinational rule-makers is still a significant challenge.

There are differing opinions on what kind of future the metaverse technology will bring. For example, Liu Cixin believes, "Humans face two paths: one outward, toward the stars and the sea; the other inward, toward virtual reality." The former is the "spaceship faction," exploring the vast universe; the latter is the "metaverse faction." The metaverse is highly alluring and intoxicating—a kind of "spiritual opium."

Another view argues that, although developing the metaverse consumes resources, space exploration is even more costly and uncertain, citing the US and Soviet space programs as precedents. Moving inward or outward is not mutually exclusive; humans need material resources, learning, work, communication, and entertainment, all of which the metaverse can support.

Whether optimistic or pessimistic about the metaverse, extreme views are ultimately rooted in "technological determinism," with skeptics fearing it will lead humanity into a dystopia, and optimists believing it will usher in utopia. Such attitudes are insufficiently balanced. We should maintain a cautious optimism toward all technologies, including the metaverse.

2021 was called the "Year of the Metaverse," with disruptive and transformative keywords at the technological level, and innovation and imagination at the societal level. It also prompted reflection on the relationship between humans, media, and technology. However, capital involvement has also led to hype and controversy. For such a new phenomenon, a correct understanding requires time to develop.