Companies have worked on metaverse-related technologies – augmented and virtual reality (AR and VR), or extended reality (XR) – for years, if not decades. In 2021, commercial and consumer interest finally caught up. While technologies and applications are in the spotlight, the developing industry structure deserves attention, too.

Miikka Rosendahl, founder and CEO of virtual-world creator ZOAN, believes that the metaverse at this early stage offers many ways to become successful in a marketplace where legacy rules don’t apply in the same way as they do in mature markets.

He concedes the need for big players’ infrastructure technologies and components, but sees ample opportunities for a wide range of smaller players. The metaverse could create thriving companies seemingly from nowhere, similar to the way the internet allowed unknown startups to become today’s household names.

Geoff Bund, head of software partnerships for headset manufacturer Varjo, notes that smaller companies already create business opportunities for his business. For instance, he cites virtual-prototyping company ESI Group, which develops applications to simulate component behaviour and manufacturing processes. The company is working with Audi to simulate assembly operations in a virtual environment. The company’s IC.IDO software can virtually represent “inertia and gravity and collision and sliding when handling parts”, says Bund.

He also mentions ITI Systems, an audio-visual integrator that designs and builds command centres for large companies and governments. ITI previously mainly worked in the hardware space, but now is working on AR and VR systems and implementations.

Vesa Koivumaa, head of growth for industrial-equipment provider Wärtsilä, foresees growing value chains or value webs in the future. He says that a decade ago, nobody would have expected Wärtsilä and Varjo, for instance, to work together. “Why would they?” he says – their industries were galaxies apart.

Training, meetings and design applications were handled from a very traditional point of view in the past. Now it is becoming clear that all these applications can benefit from XR. Suddenly, a collaboration between Wärtsilä and Varjo and other AR/VR companies seems very natural.

“I believe there are overlaps and partnership opportunities that we don’t even know about and that we still have to discover,” says Koivumaa. “There are emerging use cases that never existed before, new opportunities that we still have to explore – there is a lot of future potential.”

Leslie Shannon, head of ecosystem and trend scouting for Nokia, points to many of the companies that showcased their products and services at this year’s SXSW. These companies are agile and creative, but Shannon also offers a cautionary tale of working with big players.

What promises rapid success initially can quickly turn into a nightmare because large companies have a slow procurement process and startups tend to require instant cashflow. Often, smaller companies play better with other small players.

Rosendahl agrees, pointing out that ZOAN is cutting $100,000 deals, even $1m deals, via WhatsApp using cryptocurrencies. Startups will prioritise fast and agile players, and big companies might have a hard time adjusting to the new business environment.

Koivumaa adds that future big metaverse players are likely to be born in the metaverse. These companies are part of this new environment, and they are able to learn the fastest, he says.

One audience member at SXSW was wondering whether it might be possible to monopolise the metaverse, given the money and commercial power of some industry behemoths. Small companies and developers have worked on the metaverse for years, but suddenly there is a lot of financial interest in the concept.

While Rosendahl concedes that some firms might be trying to monopolise the metaverse, he does not believe that substantial amounts of money will necessarily lead to success. Google clearly has financial power, but its social platform Google+ did not become successful, for example. Rosendahl doesn’t think that any one company can monopolise the metaverse – just as one can’t monopolise the internet – but big platforms and major metaverse players will emerge.

Bund adds another consideration, though. Many small companies follow a strategy of monetising their efforts through acquisition by big players, so Bund makes the point that smaller players contribute to market consolidation as much as bigger players will try to gain larger market share.

Shannon shifts attention to the potential of individuals playing an important role in the emerging commercial space. She mentions intriguing examples from the creator community. AR and VR empower individuals to develop novel applications that could perhaps even establish entirely new markets for AR and VR.

For example, Lucas Rizzotto. When playing the game, users wear Snap Spectacles to see virtual bananas that players can collect and get points for. Also, the app leverages the glasses’ built-in sensors, so the more that players move like monkeys, the more points they will get.

Such an application obviously is entertainment, but Shannon focuses on the opportunity to measure physiological movements and behaviour as an enabler for many applications, including professional training and medical diagnostics.

Voxel Guy created an application in which he gamified vacuuming his apartment. The app places virtual euro coins across the floor. Collecting the virtual coins via a vacuum lets him clean his apartment in a fun way. Voxel Guy provides a glimpse into the potential of gamifying mundane tasks. Rewards for achieving chores could make life more intriguing. Such use of the technology also points to future applications that nudge people towards adopting desirable behaviour.

Similar to the way that a couple of decades ago, digital natives – people who grew up with digital technologies, rather than those who had to get used to it – had an advantage in the emerging internet environment, now metaverse natives – people who grow up in a world of virtual environments – will have an advantage in the developing marketplace. After all, Second Life will turn 20 next year and Minecraft will clock up 12 years – an entire generation of metaverse entrepreneurs and business leaders already exists.

Smaller countries with highly skilled professionals also might fare well in this new market. Bund points to Finland’s high percentage of gaming and technology skills as part of the country’s overall talent pool and GDP per-capita contribution. The small size of the country’s economy makes it easy for entrepreneurs to connect.

Rosendahl singles out Slush as a great opportunity to connect with Finnish companies and learn about the existing and developing ecosystem. Slush is a big startup event with up to 25,000 participants. The next event will take place in Helsinki, Finland, on 17-18 November 2022. Rosendahl notes: “If you want to connect with Finnish companies and startups, Slush is the place to be.”

Koivumaa views the small size of Finland’s ecosystem as a crucial advantage. He notes that some of the technologists at Wärtsilä, for example, went to school with their counterparts at Nokia – so can easily get in touch to work on pilot projects. What might take six to 18 months to set up in the US can be initiated over a coffee in Finland.

Koivumaa also relates that Finnish companies’ CEOs make their cell phones available, so entrepreneurs and business partners can connect with them directly. In this way, small companies can easily engage with bigger players.

SXSW participants agree that Finland’s small population and interconnected technology landscape cater to leveraging talent and corporate networks. Historic parallels are worth noting. The late Steve Jobs, co-founder and CEO of Apple, once told a story to highlight the power of networks and regions that facilitate interactions among technologically minded people.

At the age of 12, Jobs called up Bill Hewlett of Hewlett-Packard fame, whose phone number at the time was still in the public phone book. Jobs asked for spare parts to build an electronic device. Hewlett gave him the spare parts and a summer job on top of it – illustrating the ability to leverage small communities’ impactful networks.

So the emerging metaverse will require an entire ecosystem, and many players will need to be involved in creating the various layers of infrastructure, computing hardware, platforms, content, applications and interfaces.

Martin Schwirn is the author of Small data, big disruptions: how to spot signals of change and manage uncertainty (ISBN 9781632651921). He is also senior adviser, strategic foresight at Business Finland, helping startups and incumbents to find their position in tomorrow’s marketplace.

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