- The “Metaverse” has become a new eye-catching buzzword, not only bringing about a host of fresh and exciting business opportunities but also reshaping our behaviour and lifestyle. Although the concept of the metaverse remains vague and extremely vast, the fast-evolving industry could see high market growth in China in the future.
- The Chinese government’s control and regulatory frameworks have led to the development of virtual products and services in the metaverse with distinct Chinese characteristics. Despite the regulatory hurdles and uncertainties, there still is ample space for creative exploration and lucrative opportunities.
- While most explorations within the metaverse are focused on visual immersion, the unique context of the Chinese metaverse may inspire the industry to develop novel functionalities such as a new interaction model by collaborating with virtual idols thereby fostering more creative human connections.
As one of the most headline-catching tech developments in recent years, the metaverse has been described as many things: “the future internet ecosystem”, “the next evolution of social and digital connection”, and “an unprecedented portability and interoperability of identity, data, and digital assets”. These definitions underline the huge expectations that are projected onto the metaverse. The reality, however, is still vague and the metaverse is still very much a work-in-progress. Nevertheless, it has the potential to bring about a host of new innovations and opportunities. It also has the potential to reshape our behaviour and lifestyle. In China, we are already witnessing the development of an insulated version of the metaverse with distinct Chinese characteristics.
The concept of a metaverse is not a new one. In many ways this has been a linear progression. While US big tech companies Meta and Microsoft are going all-in on the metaverse concept, the nascent metaverse industry in China alone could be valued up to US$8 trillion, according to a note to investors from Morgan Stanley.
The term “Metanomics” refers to the economy of the metaverse. When one considers metanomics, there are opportunities in almost every market segment. While many companies are looking to leverage these opportunities, there are some essential factors that differentiate the Chinese metaverse from the Western one. To comprehensively understand the Chinese metaverse, certain factors need to be taken into account.
Everything has two sides, and the metaverse is no exception. While the technology promises an encouraging future, there are also disruptive consequences which need to be considered, for instance, the idea of “dangerous by design”. Chinese companies such as TikTok owner ByteDance, NetEase, Alibaba, and Tencent have been kept on their toes after the recent big tech crackdown, as regulators play catch-up. However, at this point, according to the Center for China and Globalisation’s senior research fellow Andy Mok,“Chinese authorities are on the right track in shaping up the regulatory framework for metaverse, with last year’s introduction of the Data Security Law,”
In recent years, Chinese policymakers have been looking to create a regulated tech environment for “secure and controllable” technologies that are produced domestically and held closely accountable to government oversight. Given this context, China’s metaverse ecosystem will probably be developed under stringent regulatory oversight, and content regulations, strengthening antitrust actions, with an emphasis on protecting personal information, and increasing scrutiny of data exports, among many other characteristics. As such, the trend suggests that China’s metaverse will likely not be interoperable with the metaverse overseas. Meanwhile, the government’s strong anti-monopoly enforcement may encourage the development of many competing metaverses.
In addition to regulatory strategy, another crucial factor concerns Chinese consumers’ behaviour and attitude. While many Western apps focus on best-in-class functionalities, Chinese apps tap into consumers’ desire for human connection. China’s most prominent technology names have ventured into the metaverse and are beginning to experiment and lay the groundwork for future applications.
In order to develop an industry, it is extremely vital to be supported by relative policy and integrated implementation. Due to China’s anti-money laundering and illegal financing concerns, NFTs, for example, cannot be traded (only collected) and cryptocurrencies cannot be used. But, except for these regulatory constraints, Chinese cities and regions are creating enough room to co-opt the metaverse’s development as companies innovate. For instance, last year, Shanghai mentioned the metaverse in its five-year development plan for the information technology industry.
Insights into Different Industries
As another buzzword that has always been mentioned together with the metaverse, Web 3.0 enables different features and approaches to it. Therefore, it is important to lay the foundation using features of today’s metaverse – Web 2.0 characteristics – and the emerging Web 3.0 characteristics. The elements already mentioned, together with some key features of Web 3.0 – decentralised, community-governed, transferable – have a potentially great transformative impact on different industries.
Fashion & Luxury
So far, many luxury and fashion brands see the metaverse as a marketing opportunity via art toys, games, and idols rather than a direct source of profit, according to research by Jing Collabs & Drops.
In the Key Opinion Leader (KOL) market, the human look-alike virtual idol Ayayi has already promoted major brands such as Guerlain and TMall, both online and offline. According to iiMedia Research, China’s virtual idol-related market is expected to hit 333.47 billion yuan (US$52.4 billion) by 2023, up triple from 107.49 billion yuan (US$16.9 billion) in 2021.
There are other industries and brands that are benefitting from adaptation to the Chinese metaverse. Music is one of the essential factors within the metaverse, with many music industry giants such as UMG, Sony Music, Warner Music, SM Entertainment, Spotify, etc. participating in the virtual world through different activities, including but not limited to virtual performances, virtual idols, and NFTs. China’s first virtual music festival TMELAND was launched by Tencent Music Entertainment Group (TME), the online music subsidiary of Chinese internet giant Tencent. It includes features such as digital avatars, virtual performances, immersive experiences, and social connections, and can be regarded as the prototype of a “music metaverse”. Considering its scalability, TME has a certain first-mover advantage.
Virtual Idols – Real Engagement
The metaverse can be considered a novel marketing ecosystem. In the future, where everything could be digitalised, brands will need to find a foothold in a virtual parallel universe. In other words, to win over the next generation in terms of providing forward-looking services and products, entering the metaverse and optimising its potential have become a must. In this case, except for Ayayi, Chinese platforms and brands are taking the same steps to launch “hyper-realistic virtual idols”. Virtual idols are becoming the linchpins of the convergence between the real world and the metaverse, between brands and Gen Z and even younger generations.
Among these figures, China’s blue-haired virtual KOL, Ha Jiang, is probably the most representative example. In just two years, she has become the first virtual road safety publicity ambassador, and has many faces such as Guochao KOL, esports anchor, and public welfare ambassador. Last year, a new identity was added to her repertoire by her being signed up with Whet Records: Warner Music’s first virtual music artist. From her music creation and AI human voice to the sale of posters, some of the most advanced tech trends have been integrated in her evolution. Even her fashion was continued along with the concept of her music, and she became the first virtual icon to be featured in GQ magazine. Whether it is a fashion blockbuster or a debut song, Ha Jiang showcases the pioneering culture of the new generation.
Some of the obvious advantages of having a virtual idol such as Ha Jiang are the short incubation time, and complete ecosystem for commercialisation, pan-entertainment, and technology. At the same time, she is an “open virtual person”, whose setting itself has unlimited “growth” possibilities. There is no doubt that compared to other virtual idols who are still in their infancy, Ha Jiang can continuously help brands integrate into youth culture, creating a new interaction model within the metaverse trend.
The online and offline worlds are gradually merging. Following the rapid growth of the metaverse in China, there are many possibilities to be explored and many opportunities for businesses, entrepreneurs and innovators to become a part of this ecosystem. However, it could take a form very different from that in the West, in terms of having direct monetisation. The approach could also orient towards engaging with people through integrated touchpoints, and immersive experience which provide not only virtual effects but also a genuine and creative effect, such as delivering messages more wisely and broadly. Moreover, players in this verse will need to be nimble and innovative, adapting to locals as well as customers’ preferences.