Description
Analyze the case based on the questions below and write your report. You can write your report in English Before writing your report, use the attached rubric as a guideline. Your report will be assessed using this rubric. • You must write your report between 1,500 – 2,500 words in EnglishUse Times New Roman 12-point font, 1.5 spaced 1-inch margin on all sides, and APA style. Refer to APU writing guide (available both in Japanese and English) https://en.apu.ac.jp/academic/page/content0296.html/?c=17. Indicate the number of words at the end of your report.Questions: 1. Evaluate the specific metaverse initiatives from Nike and compare them to the competitors. What are the pros and cons of each initiative? To what extent does each initiative advance Nike’s business and strategic goals? 2. How should these initiatives be organized and prioritized? What are the criteria for prioritization? 3. What next steps would you recommend to Nike’s digital strategy team?
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Final Individual Case Analysis
Instruction:
• Analyze the case based on the questions below and write your report. You can write your
report in either English or Japanese.
• Before writing your report, use the attached rubric as a guideline. Your report will be
assessed using this rubric.
• You must write your report between 1,500 – 2,500 words in English or 3,000 – 5,000 words
in Japanese (excluding cover pages, tables, figures, appendices, and references). Use Times
New Roman 12-point font, 1.5 spaced 1-inch margin on all sides, and APA style. Refer to
APU
writing
guide
(available
both
in
Japanese
and
English)
https://en.apu.ac.jp/academic/page/content0296.html/?c=17. Indicate the number of words
at the end of your report.
• Submit your file to your respective Capstone01A/B, 02A/B’s Moodle>>Final Individual
Case Analysis by Jan 31, before 18:00 pm JST.
Questions:
1. Evaluate the specific metaverse initiatives from Nike and compare them to the competitors.
What are the pros and cons of each initiative? To what extent does each initiative advance
Nike’s business and strategic goals?
2. How should these initiatives be organized and prioritized? What are the criteria for
prioritization?
3. What next steps would you recommend to Nike’s digital strategy team?
Case Analysis Rubric
Criteria
Excellent (5 点)
Problem/opportun
ity Identification
Identifies the problem(s)/
opportunity(ies)
comprehensively
and
presents a critical and
balanced view of underlying
issues.
Develops highly logical,
cohesive, and feasible
strategies
that
are
innovative,
profitable,
scalable and sustainable,
taking full account of the
identified problems.
Strategy
Development
Good (3-4 点)
Identifies the problem(s)/ Fails to or does not define
opportunity(ies) adequately the
problem/opportunity
and presents a fairly adequately.
balanced view of underlying
issues.
Develops strategies for the
identified problems that
demonstrate
logic,
cohesion, and feasibility.
The strategies demonstrate
some innovation, and are
profitable, scalable and
sustainable.
Solution
Proposes logical, feasible, Proposes
adequate
Recommendation innovative, and impactful recommendations to solve
recommendations to solve the problem with reasons
the problem with alternative and evidence/data support.
strategies
and
strong
reasons.
Analysis
and Consistently identifies and Identifies
and
utilizes
Integration
of utilizes highly appropriate business and management
Knowledge
business and management knowledge, practices, and
knowledge, practices, and tools
throughout
the
tools
throughout
the analysis and is generally
analysis and is able to able to justify the choices
justify the choices that were that were made in their
made in their selection.
selection.
Organization
Overall structure is very Overall
structure
is
logical
and
quickly reasonably logical and
apparent. Writing is clearly apparent.
organized around a central Writing demonstrates good
theme. The reader can grasp of organization, and
clearly and easily follow the the writer’s intentions.
line of reasoning.
Grammar
Format
Poor (0-2 点)
Fails to develop logical,
cohesive
and
feasible
strategies; or the strategies
fail to be innovative,
profitable, scalable or
sustainable; or are detached
from
the
identified
problems.
Fails
to
propose
recommendations to solve
the
problem.
Limited
reasons
and/or
no
evidence/data support.
The choice and application
of
business
and
management knowledge,
practices, and tools is
incomplete or incorrect.
Choices cannot be suitably
justified.
Overall structure and logic
can only be discerned with
effort.
Writing is rambling and
unfocused with the main
theme.
The reader cannot identify a
clear line of reasoning in
many parts.
Free or almost free of Some grammatical, spelling Many grammatical, spelling
grammatical, spelling or or punctuation errors. Errors or
punctuation
errors.
punctuation errors. Errors may affect meaning.
Meaning is unclear.
that do occur do not affect
meaning.
Follows
all
the Follows most of the Does not follow most of the
requirements.
requirements.
requirements.
最終個人ケース分析
Instruction:
• 下記の設問に基づきケースを分析しなさい（ケースに示されている質問に回答す
る必要はありませんがレポートを書く際の参考にはなります）。レポートは日本
語もしくは英語のどちらかで作成してください。
• ケースを作成する前に、そのガイドラインとして以下に添付したルーブリックを
参照してください。最終個人ケース分析はこのルーブリックに基づいて評価され
ます。
• レポートは英語で 1,500 – 2,500 words, 日本語で 3,000 – 5,000 文字 で作成してくだ
さい（ただし表紙、表、図、付録、参考文献は除く）。レポートは MS 明朝体
（英数字は Times New Roman）の 12-point font を採用し、行間を 1.5 に、余白を
1 インチとってください。詳細は APU ライティング・マニュアルを参照してく
ださい（日英版あり）https://en.apu.ac.jp/academic/page/content0296.html/?c=17。
レポートの最後に文字数を記載して下さい。
• ファイルはそれぞれのクラスの Moodle>> 最終個人ケース分析に 1 月 31 日
18:00pm までに提出してください。
Questions:
1. Nikeの特定のメタバース・イニシアチブを競合他社と比較して評価してください。
それぞれの取り組みの長所と短所は何ですか。それぞれのイニシアティブがナイキ
のビジネスと戦略目標をどの程度進めていますか？
2. これらのイニシアティブはどのように整理され、優先されるべきですか。優先順位
付けの基準は何ですか。
3. ナイキのデジタル戦略チームには次にどのようなステップをお勧めしますか？
Case Analysis Rubric
Excellent (5 点)
Good (3-4 点)
Poor (0-2 点)
問題を包括的に把握し、
問題を不足なく特定し、
問題を適切に特定するこ
根底にある課題に対して
根底にある課題に対して
とができない。または把
批判的でかつバランスの
ある程度バランスの取れ
握していない。
取れた見方を示してい
た見方を示している。
Criteria
問題特定
る。
戦略開発
解決策の提案
高度に論理的でまとまり
特定の問題に対する、論
論理的で実現可能なまと
があり、実現可能かつ革
理的で実現可能なまとま
まりのある戦略を開発で
新的で、収益性があり測
りのある戦略を開発して
きていない。または、戦
定および持続可能で、特
いる。戦略はある程度の
略に革新性、収益性、測
定した問題を十分考慮し
革新性を示し、収益性が
定・持続可能性が無い
た戦略を開発している。
あり測定・持続可能であ
か、特定の問題から離れ
る。
ている。
代替戦略と強い理由を伴
理由や根拠、データの裏
問題解決策を提案してい
う、論理的で実現可能で
付けがある適切な問題解
ない。理由が限定的であ
革新的かつ影響のある問
決策を提案している。
るか、裏付けとなる根拠
題解決策を提案してい
やデータが無い。
る。
分析および知
分析全体を通して、一貫
分析全体を通して、ビジ
ビジネス・経営知識およ
識の統合
して最適なビジネス・経
ネス・経営知識および慣
び慣行、ツールの選択と
営知識および慣行、ツー
行、ツールを特定して利
適用が不完全もしくは不
ルを特定して利用してお
用しており、それらの選
正確である。選択の正当
り、それらの選択の正当
択の正当性をおおむね証
性を適切に証明すること
性を証明することができ
明することができる。
ができない。
全体的な構成が非常に論
全体的な構成が論理的で
全体的な構成および論理
理的でとても分かりやす
分かりやすい。文章は適
の理解に苦労する。文章
い。 文章は主題を中心と
切に整理されており、執
は漫然としていて、主題
して明確に整理されてい
筆者の意図を理解するこ
に焦点を当てていない。
る。読者は論理の道筋を
とができる。
論理の道筋を追うことが
る。
構成
文法
はっきりと容易に追うこ
できない箇所が多くあ
とができる。
る。
文法、綴り、句読点の間
文法、綴り、句読点の間
文法、綴り、句読点の間
違いが全く無いかほとん
違いがいくつかある。間
違いがたくさんある。意
ど無い。意味を変えてし
違いにより本来の意味か
味が不明確。
形式
まうような間違いはな
らややそれることがあ
い。
る。
全ての要件を満たしてい
要件の大部分を満たして
要件をほとんど満たして
る。
いる。
いない。
Nike: Tiptoeing Into the Metaverse
For the most optimal reading experience we recommend using our website. A
free-to-view version of this content is available here, which includes an easy to
navigate and search entry, and may also include videos, embedded datasets,
downloadable datasets, interactive questions, audio content and downloadable
tables and resources.
Author: Mohanbir Sawhney, Pallavi Goodman
Pub. Date: 2023
Product: Sage Business Cases
DOI: https://doi.org/10.4135/9781529622881
Keywords: branding, customers, virtual, virtual worlds, games, gaming, sport, avatars, trademarks, assets
Disciplines: Consumer Marketing, Marketing, Business & Management, Electronic Marketing, Marketing
Strategy
Access Date: September 12, 2023
Publishing Company: Kellogg School of Management
City: London
Online ISBN: 9781529622881
© 2023 Kellogg School of Management All Rights Reserved.
Sage
Sage Business Cases
© 2022 Kellogg School of Management, Northwestern University
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles.
Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or
used for other commercial purposes.
The case studies on SAGE Business Cases are designed and optimized for online learning. Please refer to the online version of this case to fully experience any video, data embeds, spreadsheets, slides,
or other resources that may be included.
This content may only be distributed for use within Ritsumeikan APU PARENT.
2023 Sage Publications, Inc. All Rights Reserved
Abstract
Throughout 2021, excitement about the metaverse as the next generation of the internet experience
had been building steadily. The buzz reached a fever pitch in October 2021, when the CEO of Facebook, Mark Zuckerberg, announced that the company was changing its name to Meta and that it would
spend $10 billion to build “the metaverse.” Nike had been exploring opportunities in this new virtual environment with several experimental probes, including its purchase of a virtual sneaker company called
RTFKT, partnerships with game platforms Roblox and Fortnite, the creation of blockchain-based digital
sneakers called CryptoKicks, and moves to protect its brands and logos by filing for trademarks for its
virtual sneakers and logos. In its early metaverse initiatives, Nike had employed a “probe and learn”
strategy to evaluate the metaverse as a new channel for customer engagement and to create new digital revenue streams. However, it was now time for Nike to define a cohesive metaverse strategy that
would help drive its business goals. To do this, Nike’s digital team needed to understand how each
of the metaverse initiatives would help Nike to grow revenue, build brands, and promote its thoughtleadership position as an innovator. The team then needed to prioritize these initiatives by assessing
their risks, rewards, and reversibility. Finally, it needed to define a roadmap to scale and enhance each
initiative. In charting its course in the metaverse, Nike also needed to consider whether the timing was
right to place big bets on metaverse platforms and assets, given the high level of uncertainty about the
evolution of this emerging space.
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Case
In January 2022, Nike’s chief digital information officer, Ratnakar Lavu, was planning the year’s digital strategy
for Nike. The leadership team at Nike had requested a presentation regarding company strategy in the rapidly
evolving metaverse. Nike had already made several forays into the metaverse and related digital products.
These included an in-game collaboration with the online video game Fortnite, trademarked blockchain-based
digital sneakers called CryptoKicks, a virtual 3D showroom called Nikeland in the Roblox environment, trademark applications related to the creation and sales of virtual sneakers and apparel, and the acquisition of
RTFKT, a creative company that made digital sneakers and NFTs (non-fungible tokens) for the metaverse.
Nike’s leadership team wanted to move aggressively into the metaverse, in keeping with the company’s reputation for pioneering design and innovative marketing. However, the leadership team wanted evidence that
Nike’s digital team was placing the right bets at the right time in a very dynamic and confusing space. To
prepare his digital strategy, Lavu needed to assess the experiments that Nike was participating in, evaluate
trends in the evolution of the metaverse, and benchmark the strategic moves of competitors such as Adidas.
It was time to take stock of the various experiments that Nike had conducted between 2019 and 2021, so the
company could chart a more strategic and cohesive path forward. Lavu and his team would have to tread the
narrow path between being carried away by the hype and getting left behind by competitors in the brave new
world of the metaverse.
The History of Nike: 1964 to 2019
Nike was founded by University of Oregon student athlete Phil Knight and his coach Bill Bowerman at Eugene, Oregon, in 1964. Knight had met Bowerman when he ran for the university’s track and field team. Bowerman was always tinkering with the athletes’ shoes, and Knight was one of the first to try one of Bowerman’s
alterations. Knight went on to Stanford for his MBA. After graduating from Stanford in 1962, he went on a trip
to Japan, where he struck a deal with some Japanese businessmen to export their popular Tiger shoes to the
United States. Knight reached out to Bowerman for support, and the two entered a 50-50 partnership deal
with the Japanese for their new company, Blue Ribbon Sports.
Knight started selling the Tiger athletic shoes out of his car and quickly realized they presented an attractive
market opportunity as an alternative to the popular Adidas and Puma shoes of the time. In 1967, Knight and
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Bowerman came up with a new shoe design, called the Tiger Cortez, at once stylish and comfortable, that
became an instant hit. This led to complications with Tiger in Japan; the two companies split in 1971. Tiger
sued Blue Ribbon Sports, and a judge ruled that each company could sell its version of the shoes, which
resulted in the shoes becoming a bestseller for both companies. Tiger eventually became known as ASICS.
Blue Ribbon sports rebranded itself as Nike, after the Greek goddess of victory.
Nike continued its success story, innovating on shoes, including the “waffle” sole design, which resulted in
the “Waffle Trainer.” The company’s growth culminated in an IPO in 1980. Nike continued from strength to
strength through the 1980s with the help of innovative advertising campaigns, including the iconic “Just Do
It” campaign in 1988. Nike also negotiated path-breaking celebrity endorsements. The most famous was its
tie-up with basketball legend Michael Jordan, and the launch of a shoe line called Air Jordans brought in revenues of $100 million by 1985. Air Jordans continued to garner huge revenues for Nike as Jordan rose to
superstardom.
In 1990, the first Niketown store opened in Portland, Oregon. Despite some bad press about low wages and
poor conditions in Indonesian Nike factories, Nike signed golfer Tiger Woods in 1996 and basketball kings
LeBron James and Kobe Bryant in 2003. Meanwhile, protests had broken out over the treatment of overseas
workers, and Nike responded by raising the minimum employment age, increasing factory monitoring, and
adopting USA-OSHA standards for clean air in overseas factories. In 2004, Nike acquired the shoe company
Converse for $309 million. That same year, Knight stepped down as CEO and president, handing over the
reins to William Perez.
Nike continued to grow revenues and profits in the 2010s, becoming the official supplier of NFL apparel in
2012 and of the NBA in 2018. In October 2019, Nike announced the appointment of John Donahoe as its
next CEO. Donahoe had previously served as the CEO at eBay and the consulting firm Bain & Company.
Under Donahoe, Nike continued to do well, a circumstance reflected in an increase in its stock price rise from
about $96 at the time he took over as CEO to about $166 at the end of December 2021, despite the global
COVID-19 pandemic.
Nike Digital
In 2017, Nike revealed its Consumer Direct Offense strategy, aimed at connecting directly with consumers via
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direct selling and digital innovation. In 2020, the pandemic forced the company to close 900 stores worldwide.
However, the negative effect of store closures was more than compensated for by the growth in digital sales.
In December 2020, Nike announced that it had recorded three consecutive quarters of 80 percent digital
growth.1 As the pandemic continued worldwide, the company enjoyed double-digit growth in markets around
the world: Europe, Asia-Pacific, Latin America, and China. It added 70 million digital members during the pandemic.2 In 2018, Nike had announced a goal to achieve 30 percent digital penetration by 2023. Spurred on
by the pandemic, it achieved this goal by June 2020 and raised its digital revenue goal to 50 percent by 2022.
In 2021, Nike’s Consumer Direct Acceleration aimed to increase digital sales with consumers, innovation, and
investments in technology to enhance digital touchpoints. To that end, Nike acquired data platform Datalogue,
to continue its quest for consumer-led digital transformation. Donahoe said that it “builds on our digital momentum by enhancing our ability to transform raw data into actionable insights in real-time and across the
enterprise.”3 A trio of Nike apps—SNKRS, Nike Training Club, and Nike Run Club—drove tremendous value.
The SNKRS app had been downloaded nearly 500 million times globally. “Digital is now woven into everything we do as a company,” Donahoe said in an earnings call. “It’s how we operate and prioritize, from how
we engage with members, to how we operate our supply chain, to how we serve consumers in the marketplace.…We are using digital to connect product to consumers like never before.”4
Nike’s App Ecosystem
Nike’s e-commerce app was the main platform through which customers purchased Nike shoes and apparel.
Nike saw more than 150 percent growth in mobile sales in 2021, powered by its commerce app. However, the
company’s SNKRS, Training Club, and Run Club apps also played a key role in Nike’s digital strategy.
The SNKRS app offered exclusive, highly desirable footwear to customers in the US, China, and Japan. In
2020, Nike reported $1 billion in revenue for the first time from this app. Whereas SNKRS was designed for
Nike shoppers, Training Club and Run Club were designed for Nike fans, an important distinction in the company’s eyes. Users could plan workouts and runs and compete with friends to earn rewards through these
two apps. In March 2020, in a bid to attract more users, Nike dropped the premium subscription fee for the
Training Club app. The next month, Nike reported 20 million workouts on Training Club, a huge increase from
1.6 million per month in 2016. With the Training Club and Run Club apps, Nike focused on a direct connection
and consistent digital engagement, which the company perceived as more valuable than the purely shopping
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experience on SNKRS. Through rewards and gamification, the user was continually invited into the world of
Nike. Indeed, with these augmented experiences, the company hoped to blur the line between shopper and
user. “The key was to offer services that naturally fit within the consumer’s daily activities,” said Matthew Boss,
head of JPMorgan’s US retailing.5
The Metaverse
The term metaverse was coined by Neal Stephenson in his dystopian sci-fi novel, “Snow Crash” (1992), in
which characters used digital avatars to explore a fully digital world. The metaverse allowed one to have a
second life, or a second (digital) version of the physical life. This was possible by leveraging technology and
using virtual reality and augmented reality headsets. In this universal virtual world, one could not only spend
time interacting with friends and associates in a virtual space but also play, attend concerts, purchase virtual
property, and shop for a digital avatar. The metaverse promised a new generation of the internet, one that
was based on activities and experiences, not just on information and content. (See this video introduction to
the metaverse: vimeo.com/686463863.)
Elements of the metaverse already existed in online video games such as Roblox and Fortnite. In these
games, avatars interacted with others, playing, competing, and fighting for virtual money to adorn and decorate their virtual selves or virtual spaces. Many of the big technology companies, startups, and venture capitalist (VC) funds were signaling their interest in investing large amounts in the metaverse. Leading brands
such as Nike were actively participating in the metaverse, as it promised to be the next-generation paradigm
for digital customer engagement.
Precedents of the Metaverse
Second Life
The metaverse was not a completely new development. In some ways, it was the second coming of a 1999
social platform called Second Life. Created by Linden Lab, Second Life enabled people to use digital repre-
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sentations of themselves to socialize and connect with others and even to shop and build property to enhance
their digital lives. (See this video for an introduction to the Second Life platform: vimeo.com/686467144.) Second Life was created long before Facebook was founded, and it predated even further the popular social
networking platforms Instagram, TikTok, and Snapchat. However, compared to Facebook’s roughly 3.5 billion
monthly users, Second Life had stagnated at about 1 million users since 2008.
Later, Second Life prepared for the second coming of itself by reimagining the social and economic aspects
of the game and giving users a better experience. At the end of 2021, Second Life had about 200,000 daily
active users, compared with 43 million daily active users for Roblox, the biggest metaverse-like platform. The
Second Life economy reported a $600 million annual gross domestic product, with more than two billion usergenerated assets. The platform processed 345 million transactions annually and paid about $80 million annually to creators.
Minecraft
Another metaverse-like platform wherein millions of users immersed themselves for hours every day was
Minecraft, a wildly popular gaming platform owned by Microsoft. Minecraft sold more than 200 million units in
2020, and it boasted a total of 141 million active players in 2021. Minecraft reported between 2.8 million and
3.6 million daily active users that year. Like the newer metaverse platforms, Minecraft was decentralized, customizable, and immersive. Minecraft encouraged creativity by allowing users to build worlds and to participate
in those they liked. Minecraft was exceptionally immersive without requiring expensive hardware and new digital media such as augmented reality (AR) and virtual reality (VR). However, like Second Life, Minecraft was
glitch-filled and prone to hacking.
The experience of precedents of the metaverse, including Second Life and Minecraft, offered some important
lessons for the developers of metaverse platforms:
• A metaverse needed to provide an easy-to-use toolkit for users to be creative and to be able to express themselves.
• Very few creators would make enough money in a metaverse to earn a living by selling digital goods
or NFTs.
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• Ease of use, reliability, and security were crucial to attracting and retaining users.
• A metaverse was not likely to appeal to all demographics or to become a universal platform. Its initial
appeal was expected to be to younger, gaming-centric audiences.
• Metaverse platforms inevitably would spawn nefarious activities, such as fraud, money laundering,
sex trafficking, and intellectual property violations.
• To avoid becoming obsolete, a metaverse platform needed to adapt as hardware and networks
evolve.
Metaverse Platforms and Players
Various platforms and players were jostling for mind share in the metaverse. The watershed event was Facebook’s announcement (see this video: vimeo.com/686467992), on October 28, 2021, that it was changing its
name to Meta and that it would spend $10 billion over the next year to build its metaverse. Mark Zuckerberg,
the CEO of Facebook, laid out an expansive vision that involved using new and improved AR and VR hardware to experience the metaverse. AR allowed users to embed virtual objects into the physical world, whereas VR used 3D computer modeling to let users immerse themselves into a 3D virtual environment. However,
these headsets were still expensive, clunky, and uncomfortable. Although the metaverse did not require users
to wear these headsets, it was widely believed that they were important enablers of the immersive metaverse
experience.
Facebook Horizon Worlds
In December 2021, Facebook took a step toward its much-publicized goal of “working and playing” in the
metaverse by announcing that it was opening Horizon Worlds, its virtual reality world, to anyone 18 and older
in the US and Canada. Previously, only Oculus VR users were invited to join the virtual world. Facebook had
acquired Oculus in 2014 for $2 billion. In Horizon Worlds, users could create a legless avatar to traverse the
animated virtual world. The Horizon Workroom app offered virtual meeting rooms and video call integration
for up to 50 people at a time. Meta CEO Zuckerberg wrote that he anticipated that one billion people would
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participate in the metaverse, spend hundreds of billions of dollars in digital commerce and create millions of
jobs for creators and developers. However, critics called Horizon Worlds a “strange” experience that mimicked a virtual office more than a digital playground. TheGamer publication described Horizon Worlds as “less
of a virtual utopia, and more of a glitchy, incomplete cluster of experiences.”6
Decentraland
Developed on the Ethereum blockchain, this was the most popular metaverse platform in 2021. Decentraland
allowed users to purchase virtual land where they could monetize their assets and content. Decentraland had
more than 90,000 parcels, which included individual parcels, estates (multiple parcels), districts (parcels with
similar themes), and plazas (owned by the community). Decentraland offered three types of tokens: MANA,
the native currency; WEAR (for wearables and articles); and LAND (for owning a virtual plot of land). To
attract others, Decentraland wanted to bring in creators, celebrities, and others to build content and advertisements and drop NFTs.7 (See this video for an introduction to NFTs: vimeo.com/686468088.) Decentraland
was backed by more than 20 investors, including Digital Currency Group, Kenetic Capital, and Coin Fund,
and had built partnerships with brands such as Samsung, Atari, Polygon, and even the South Korean government.
The Sandbox
The Sandbox permitted users to tour virtual space, purchase virtual land, and interact with other players.
Like Decentraland, The Sandbox was developed on the Ethereum blockchain. However, The Sandbox had
four types of tokens8: SAND (the native currency); ASSETS (content created by users); GAMES (created by
users); and LAND (the virtual land). The Sandbox also had more than 166,000 plots of land that were grouped
into estates (owned by one person) and districts (owned by two or more people). The Sandbox managers had
a clear strategy for the future: to bring the platform to mobile devices before the end of 2022 and launch it
on consoles such as PlayStation and Xbox. The Sandbox company also wanted to create in-game jobs that
would allow them to work as in the physical world. The company was backed with a $93 million funding round
by Softbank, one of the largest investors in the world. It had also partnered with brands such as Adidas, Atari,
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the rapper Snoop Dog, and NFT company CryptoKitties.9 The Sandbox, with more investors, partnerships,
and a clear roadmap for the future, appeared to be gaining on Decentraland.
Roblox
Roblox was an online gaming platform that allowed users to play and program games created by other users.
It was developed and released in 2006 by Roblox Corporation. The video game platform emulated aspects
of a social media network. For many years, the platform was relatively small, but its growth accelerated after
2015. Roblox was free to play, but in-game purchases were available through a virtual currency called Robux.
By 2020, it had 164 million monthly active users; most of them in the US were younger than 16. Roblox users
could create their own games with Roblox Studio; these games could then be played by other users. Roblox
allowed users to buy, sell, and create virtual items to decorate their avatars. The platform also occasionally
hosted real-life (e.g., birthday parties) and virtual events. Roblox was an older platform but considered one of
the furthest ahead (along with Epic Games, creator of Fortnite) in building metaverses because it had already
built a virtual world in which millions of people (mostly kids and teenagers) already socialized, spent digital
money, and played digital games. See Exhibit 1 for a list of top metaverse platforms.
Metaverse Use Cases and Applications
The metaverse promised immersive digital experiences for consumers in domains such as gaming, digital
commerce, retail, real estate, live concerts, sports, and learning. The metaverse would also allow businesses
to engage with customers, design new products, hold meetings, and train employees in an immersive environment. Although it was difficult to identify which use cases had the most potential and would attract early
adopters, a few promising candidates had emerged:
E-Commerce
Shopping and commerce played a key role in the metaverse. People bought and sold things in a virtual world
just as in the physical world. Anything from shoes to candles to food to clothes (all digital, of course) were
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sold in the metaverse. Creators and sellers could have an exclusive launch party, and people anywhere in the
world could attend in the digital world; users could have a seamless channel-to-channel experience, cardless
payments, hyper-personalization, among other benefits. The metaverse held the promise of merging physical and virtual experiences. For example, when sneakers were sold in the physical space, the virtual version
could be unlocked, as well. Conversely, a digital currency or NFT could be traded for physical goods.
Gaming
Games like Roblox and Fortnite already include many elements of the metaverse. Hundreds of millions played
these games. Games created billions of play sessions. People had the ability to engage at a yet-unseen level,
not just with a few but with all games in the metaverse. The combination of technology, NFTs, e-commerce,
and engagement resulted in increased virality and better monetization for games. The metaverse would promote the growth of play-to-earn games, where people earned third-party revenue by playing games. Gaming
was expected to disrupt the system, and gamers could even become crypto investors. It wasn’t just Big Tech
that was interested in gaming. For example, VR startup Aldin Dynamics, based in Iceland, was building a virtual world based on the game Waltz of the Wizards.
Education/Learning
The metaverse’s value in learning was to provide an immersive learning experience. The possibilities were
promising because VR and AR allowed users to explore and experience other worlds. Virtual- and augmented-reality solutions allowed users to receive high-quality and immersive content, not simply read about it. Students could use their avatars and VR headsets to experience museums, participate in shared environments,
engage with instructors, and collaborate with other students. Three-dimensional learning content promised
to make education more engaging and satisfying. Several educational virtual experiences had already been
created, such as Britain at War, Fossil Museum (an immersive exhibit), and Nautilus (about the Great Barrier
Reef, which included a 180-degree viewing observatory).
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Real Estate
Using cryptocurrency, people could buy and sell properties in the virtual world, as in the real world. Even
though real estate dealings in the metaverse were considered highly speculative, some experts believed the
metaverse would expand to host its own fully functioning economy. Digital real estate was already selling for
millions of dollars. In Decentraland, a plot of virtual land had sold for $2.4 million worth of crypto, and one sold
for $4.2 million at The Sandbox. The popularity of digital land was spurring other companies to create digital
worlds and digital properties. An example was SuperWorld, where a player could collect, buy, and sell plots of
virtual land. It had unique plots valued at a total of $64 billion, including Mount Rushmore in the US, the Eiffel
Tower in France, and the Taj Mahal in India.
Retail
The metaverse facilitated the creation of shopping venues such as e-stores and malls. However, the retail
experience in the metaverse was much more than simply replicating the physical world. It was much more immersive, designed to be above and
