Kevin McCullagh, SportBusiness June 22, 2022
Microsoft and GSIC technologist Jesus Serrano speaks to SportBusiness about the metaverse
The Ready Player One vision is years away, but metaverses are expected to transform business
Sport can begin offering fans new experiences in today’s early metaverses
Hype around the metaverse, one of the most-discussed tech concepts of the past year, may already be peaking.
Facebook owner Meta, one of the early cheerleaders, was last month moved to defend its planned heavy investment in the space. Business consultancy Gartner expects 25 per cent of the global population to be spending one hour a day in the metaverse by 2026 – significant growth, but a few years away yet.
Nevertheless, experts believe metaverse-related technology will have a profound effect on our lives and on business in the coming years. This includes effects on our consumption of entertainment and sport.
SportBusiness spoke to one such expert, Jesus Serrano at Microsoft, last month, and asked him to explain what sports organisations need to understand about the metaverse, and how it might affect their business in the future. Serrano is a principal program manager at the technology giant, which has taken a keen interest in the crossover between
Jesus Serrano
sport and technology. Microsoft backs the Global Sports Innovation Centre (GSIC), a network connecting sports technology startups, rights-holders and other sports industry stakeholders.
Serrano acknowledges hype around the metaverse has gone “like a rocket to the moon”, and says current reality is far from matching expectations. But he says profound changes are coming down the track:
“The pitch about the metaverse is always related to using some kind of extended reality headset to interact with something, and blurring the lines between the physical and the digital worlds. That’s mostly true, but it’s not only that. I think it’s a new economy, a new way of interaction, a new way of selling things, a new way of doing many different things.”
Technically impossible
The common pitch around the metaverse that Serrano alludes to is the idea that users will don virtual reality headsets and enter a new life in a game-like, virtual world. This vision is credited first to science fiction author Neal Stephenson’s 1992 novel Snow Crash. It has been developed in books, television and films since, such as Steven Spielberg’s 2018 film Ready Player One.
A flurry of announcements last year from companies including Meta that they would be investing heavily in metaverse-related projects gave the impression that the new world was just around the corner. Businesses scrambled to understand what it might mean.
Serrano says the popular conception of the metaverse is still some years off. One misconception he jumps on early in our conversation is the idea of there being one metaverse – the future will consist of many metaverses, he says:
“There won’t be ‘One metaverse to rule them all’…there will be many metaverses. Technologists believe there will probably be at least two or three metaverses that we experience every day.”
These metaverses will serve different functions. Some will be for work – ‘industrial’ or ‘enterprise’ metaverses. Others will come with the expected proliferation of augmented reality glasses, that will overlay digital information on our view of the world as we walk city streets, for example. Perhaps most importantly for sport, some metaverses will be places where we socialise and are entertained.
However, Serrano says there is a massive technological hurdle to overcome before we experience anything like the visions in Snow Crash or Ready Player One. The computing power required to deliver such a world simultaneously to millions of users is not yet available. This has been evident in some of the blocky visual experiences of early projects in the space.
“The metaverses in the novels and other fictions are referencing a world where everybody can be there without limitations. That’s something that today is absolutely impossible, technically speaking,” Serrano says.
Gaming companies have come closest, which may signal a big role for them in the future of the metaverse, he adds:
“The Fortnite or Call of Duty games – those are the ones that are demonstrating credibility in terms of having millions of people in the same experience, but with an important limitation: they are in rooms, or encapsulated spaces, where they can only interact with maybe 100 others.”
These smaller virtual arenas, with only 100 or so users at a time, are less challenging in terms of required computing power.
Ready Player One’s vision of the Metaverse
Core principles
The technical limitations mean today’s metaverses – which Serrano calls ‘proto’ or ‘incipient’ metaverses – do not satisfy the core principles of a fully-fledged metaverse, as envisaged by technologists.
Serrano suggests that sports organisations trying to figure out their place in the metaverse start by becoming acquainted with these principles.
He picks out the key principles as:
Persistency, meaning a metaverse will continually evolve and change, even when a user logs out – it will not have ‘reset’ when they log in again.
Synchronicity, meaning that everything that happens within a metaverse will happen for all users at the same time.
Identity, meaning that users will have a single and consistent identity throughout their life in a metaverse, although aspects like their visual appearance may change.
A sense of presence, delivered by technology that will start with a purely visual experience, but which Serrano expects to evolve to include a sense of touch and perhaps even smell.
An economy, in which users can trade digital goods. Two other emerging ‘Web3’ technologies – blockchain technology and cryptocurrencies – are expected to play a big role in metaverse-based economies. But they are not essential, Serrano notes, pointing out that gaming companies sell in-game items within their nascent metaverses via credit card payments.
Interoperability, meaning the ability to move between metaverses but retain things such as avatars or digital possessions.
Third party experiences, meaning individuals or organisations are able to create and manage their own experiences and content in their own ‘space’ within a metaverse, similar to how they build presences in social media. The scope for doing this within various metaverses could play a big role in determining their usefulness for sports organisations and other entertainment properties.
The interoperability concept touches on one of the great challenges for the future world of multiple metaverses – there are as yet no common technical standards. This is unlike previous iterations of internet technology. In the early days of the internet, technical standards were set by the likes of the World Wide Web Consortium. These rules essentially enabled the networking and connectivity that make the internet so powerful.
“With Web 2.0, the standards were set far before things were happening…In this case, the trends are going faster than the standards,” Serrano says.
Early experiments
Despite the hurdles, Serrano is excited by the potential of the metaverse, including its potential impact on sport. He is working on various metaverse-related sports projects with Microsoft.
For sports organisations figuring out how to address the space, he says the core principles above are a starting point for making sense of the emerging landscape of companies and services.
This landscape is still in its early stages. Some of the world’s biggest tech companies are piling investment into metaverse-based projects and are expected to be major players. Facebook said it will invest $10bn this year in its metaverse activity. Google is investing in augmented reality glasses and an augmented reality operating system that could be the basis for metaverse experiences. Serrano expects that completely new, giant companies will also emerge, just as Facebook et al did in the social media era.
After getting some understanding of the basic concepts and the landscape of metaverse entities, Serrano says the next step for sports organisations is to begin experimenting to see what sort of experiences and products can be created for fans.
One approach that can be taken today is to acquire ‘land’ in one of the ‘decentralised’ online environments like Decentraland or The Sandbox. These are early metaverses where users can buy plots of ‘land’ and build virtual venues that other users can visit.
Adidas and Manchester City are among the sports organisations in The Sandbox.
Adidas is creating digital wearables that users’ avatars can wear, linked to non-fungible tokens (NFTs), and developing a virtual venue offering digital experiences and content.
City entered The Sandbox back in December 2020. It is building a virtual stadium, again promising users unique digital content experiences within it.
This month, Italian football’s Serie A broadcast a live match at a venue within a metaverse called The Nemesis.
A different approach to entering existing metaverses is to create one of your own. Major League Baseball team the Atlanta Braves has created a digital version of its stadium, Truist Park. Fans can create avatars, explore the stadium and interact with each other.
The Braves are working with game developer Epic Games, creator of Fortnite, and Surreal Events, a company that has helped stage music concerts within Fortnite. A landmark concert within the game in 2020 featuring US rapper Travis Scott drew a global audience of 12.3m.
The Braves are promising features within their virtual stadium including music concerts, chances to meet players, games, special prizes, and ‘Easter eggs’ (hidden, special features).
The Atlanta Braves’ virtual Truist Park
NBA team the Brooklyn Nets has created ‘the Netaverse’, a virtual representation of its games that is not a metaverse but draws on related concepts. Real Nets games are being captured with new, ‘3D volumetric’ camera technology that allows the games to be recreated using graphics. Viewers then have almost unlimited ability to change their viewpoint as they watch the graphical representation of the game. It is currently only available for highlights and replays, but the Nets hope to introduce a version for live broadcasts. The project is being run in collaboration with New York regional broadcaster YES Network.
Immersive game broadcasts that, for example, project within a stadium a photo-realistic virtual representation of a game taking place at another stadium, are another possible metaverse-related sports experience of the future. Serrano says the idea is probably 10 to 15 years away from being a reality, due to the technical challenge.
Metaverses will also be used by industry to improve the real-world performance of businesses, Serrano says. He first joined Microsoft to work on a project in which a sports stadium was being digitally modelled in painstaking detail, so that the owners could trial changes to the venue before making them in real life. Aspects of the venue that were modelled included the vibrations produced by crowds, water and electricity consumption, and queues at food and drinks concessions.
Direct-to-Avatar
Serrano says avatars – that is, users’ digital representations of themselves within metaverses – will play a major role and drive economic activity in the future. ‘Direct-to-Avatar’ (D2A) has already been added to the business lexicon.
Digital fashion is expected to be one new industry driven off the back of avatars. Nike this year acquired a company called RTFKT that produces digital fashion collectibles. In April, they launched a range of NFT-based sneaker designs. Observers expect the collaboration to produce digital sneakers and other items that can be worn by avatars.
Digital fashion will not be constrained by physical realities – some of RTFKT’s digital sneakers change their look and appearance as the avatars wearing them change other aspects of their appearance.
Serrano predicts that, in future, sports organisations will generate more revenue selling digital fashion and assets than they currently do selling physical merchandise. Launches of sports team jerseys in the digital world could be bigger events than those in the real world:
“I imagine that some sports organisations, in no more than one or two years, will present the kit of their team in the virtual world earlier than in the real world. And people will be able to purchase that jersey specifically for their Fifa or EA Sports game.”
The economy that is developing around trading digital sports collectibles and NFTs could also become bigger and more significant as metaverses grow. The NFT economy has dropped sharply recently, following a year or more of frenzied speculation. But technologists like Serrano believe it is not going to fade into irrelevance. He says there is room for the NFT space to develop and present better value for owners, such as by linking the tokens to digital and real-life experiences.
He picks out the NFT programme being run by US music festival Coachella as an interesting example. Buyers of Coachella NFTs can access benefits such as lifetime passes to the festival and access to exclusive areas.
RTFKT founders discuss their NFT sneaker collaboration with Nike
Expertise required
While a grasp of the basic concepts, landscape and opportunities are crucial for businesses contemplating ‘entering the metaverse’, Serrano says specific expertise is required to execute projects within it. He suggests sports organisations hire specialist consultancies and marketers that understand the space. It is so new and different that traditional business models and approaches will not always apply.
To put this in some context, he points out that early mobile applications were structured similarly to websites. But websites are accessed using computer mouses and keyboards, whereas apps are explored using a finger on a touchscreen. App user experience soon evolved to reflect this vital difference. The metaverse is another epochal shift in our interaction with technology and similarly requires new understanding, new thinking and new design.
Perceptions of value will be different in the metaverse too.
“Your value in digital is a different thing to your value in physical,” Serrano says. “Perhaps in the real world your team jersey can be purchased for €80 in Europe. You need to understand this product can also have value in the digital world but it is not going to be the same, it will depend on different characteristics. If the digital jersey is rare and there are only 10 of them, then probably each will be worth much more than the asset in the real world.”
Serrano suggests sports avoid the temptation to do things on the cheap by obtaining metaverse-related services in value-of-kind deals in exchange for marketing rights. This can lead to sports getting substandard stuff in technology partnerships, he says:
“I’ve been trying to change that for many years in sport. We need to understand the value that is in technology. Unless you do so, you cannot invest properly in the right technology.”
He acknowledges that large-scale metaverse projects will be beyond the reach of many sports organisations. But smaller and medium organisations can still start thinking about interacting with their fans and providing experiences via metaverses, he says.
Again, professionals that understand the metaverse can guide the way:
“Similar to what happened with social networks, you want to have your marketing people related to this world and understanding this world…You will need someone that understands very well the models around NFTs, avatars, direct-to-avatar, cryptocurrencies, games, and so on.”
Plateau of productivity ahead
Distilling Serrano’s main messages for the sports sector, as it contemplates the metaverse, we can say:
It will take some years for the popular vision of the metaverse to be fully realised
But today you can already begin thinking about and creating new experiences for fans
Sports will need to invest in expertise on the metaverse and related technology in order to explore these new experiences
Metaverses will eventually transform business, entertainment and digital media, opening up exciting new opportunities for the sports industry.
On global business consultancy Gartner’s ‘Hype Cycle’, which charts the typical path of hype around new technological developments, the metaverse is likely now cresting the ‘Peak of Inflated Expectations’. We may be heading into the ‘Trough of Disillusionment’ next, as reality fails to quickly live up to the early hype. But the message from technologists like Serrano is that the ‘Plateau of Productivity’ lies ahead, offering real opportunity.
This article 1st appeared in SportBusiness HERE
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