by Ben Williams, founder of digital transformation agency Kiln
We’ve now entered the third phase of the internet, often referred to as ‘web 3.0’. Readers of New Digital Age will have plied their trade across ‘web 2.0’ – defined as dynamic web pages & apps and the growth of social media. Some of you (me included) may have been working in digital during ‘web 1.0’ – the first iteration of the web, defined as ‘read only’.
This new phase of the web will provide unprecedented opportunities for our industry – new jobs, technology innovation, environmental scrutiny, and huge revenue potential. But where are we in the context of this chapter and more importantly what technologies are defining it?
Firstly, let’s talk about the Metaverse, which sage Matthew Ball defines as “a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments”. Jensen Huang, CEO of GPU manufacturer Nvidia, recently told investors that “The economy of the metaverse will be larger than the economy of the physical world”. To put this into context the IMF, World Bank and the United Nations estimate Global GDP between $90-95 Trillion.
Web 3.0 and the Metaverse should be seen as separate, but intertwined, opportunities – akin to how social media became a tenet of the web 2.0 chapter. The private US Venture Capital firm Andreessen Horowitz define web 3.0 as “combining the decentralized, community governed ethos of the first era with the advanced, modern functionality of the second era”. This is a significant moment for the advertising and media industry, which is predicted to fund the internet to the tune of $600Bn in 2022.
In the web 2.0 chapter, most of the value accrued was handled by a small group of technology magnates. However, since the start of this decade we’ve begun to see independent, privately owned ventures begin to pivot and take advantage of the opportunity. For example, in-game adtech business Admix recently made a confident pivot and fully committed to web 3.0 and the Metaverse by acquiring a metaverse branding studio and rebranding to Landvault. They now have 175 staff focused on helping brands and IP create experiences in this new environment. Newcomer Alkimi Exchange are building the first decentralized ad exchange powered by Hypergraph – a revolutionary blockchain technology with a mission to reward users, publishers, and advertisers for rebuilding the intended value exchange of the open web.
But what are the underlying technologies which are driving this new chapter? We see three core components:
- Distributed ledger technology: a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, commonly known as ‘blockchain’.
- NFT’s: a nascent technology with use cases emerging across art & music, gaming, finance, utility, and virtual worlds with the potential to revolutionise the creator economy.
- Extended reality: different types of immersive technologies, encompassing blended digital and real-world environments.
The area of media and entertainment openly embracing web 3.0 is gaming, an industry with a track record of layering new platforms and business models (for example free to play and virtual goods). According to Blockchain Game Alliance, 20% of NFT sales volumes in 2021 were gaming related assets, 49% of crypto wallet activity comes from games and there are over 50 live web 3.0 games with more than 1k unique on-chain users. At an engine level, Epic Games have been running their $100m Megagrant fund since 2019 to drive innovation in this sector, and Unity Games recently merged with ironSource to grow live gaming and real-time 3D technology development.
As a digital transformation agency Kiln helps clients and partners make this transition in what is being termed ‘web 2.5’. Our work is focused on understanding the transition in context of the opportunities and then formulating and executing on strategies to realise those opportunities. We’re currently working with start-ups and scale ups native to this space, as well as advising established global companies who formed in a pre-internet era. In each scenario Kiln follows the same approach, practical solutions to help them maximise their opportunity in this new era of creativity and entrepreneurship.