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Deloitte The Metaverse Overview

This paper answers the key questions: What is the value of the Metaverse? What will it look like in the future? Is there an analysis framework to cover all of its components? What technologies do organizations need to shape their Metaverse? Where are the bottlenecks? How should companies respond to the rise of the Metaverse? What types of companies are in the Metaverse?

The Metaverse Overview: Vision, Technology, and Tactics

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The Metaverse Overview : Vision, Technology, and Tactics | Preface With the sharp drop in Meta's stock price in February 2022, the global Metaverse craze triggered by Facebook's rebrand reached a turning point. Excessive enthusiasm has since started to subside, and people now view the Metaverse opportunity more rationally. This paper answers the key questions: What is the value of the Metaverse? What will it look like in the future? Is there an analysis framework to cover all of its components? What technologies do organizations need to shape their Metaverse? Where are the bottlenecks? How should companies respond to the rise of the Metaverse? What types of companies are in the Metaverse? Preface Facebook's renaming to Meta in October 2021 ignited global enthusiasm for the Metaverse. Capital market valuations of Metaverse-related stocks reached a peak one month later, but just three months after that, valuations of some Metaverse- related stocks had dropped by 20%-50%. People's attitudes towards the Metaverse have shifted from excitement and ambition to rationality and exploration. 1. 2021: Excitement & Ambition Looking back at 2021 – the first year of the Metaverse – its breakout was much more intense and the responses of market participants were much faster than they were when the internet entered global consciousness. From Roblox citing the concept in its prospectus and planting the first flag on the Metaverse landscape, to multiple companies entering the industry, and then to Facebook's changing its official name to Meta, the first Metaverse enterprises pushed its popularity to a climax (as shown in the figure). At the same time, many well-known institutions and individual participants demonstrated their willingness to try Metaverse applications. The University of California, Berkeley recreated its entire campus in Minecraft, where virtual avatars of graduates attended a ceremony and took group photos, virtual idol Liu Yexi became popular On TikTok, and US President Biden established Biden Island on Animal Crossing to attract voters. A glance at the global and Chinese markets reveals that the Metaverse is by no means just an experiment for small-scale players, but has become a landscape for all of humanity to jointly explore the next stages of development in society, technology, legal systems, and the arts. 04

The Metaverse Overview : Vision, Technology, and Tactics | Preface Figure1: Enterprises entering the Metaverse in 2021 2021.03 Roblox, one of the world’s largest interactive communities and a massively multiplayer game creation platform, was listed on the New York Stock Exchange and mentioned the Metaverse in its prospectus, known as “the first stock of the Metaverse”. 2021.04 ByteDance invested 100 million RMB in a Metaverse company Daimaqiankun, whose main products include youth social networking and UGC platform REWORLD 2021.08 On the VR sub-venue of ByteDance acquired Facebook: VR meeting NVIDIA announced that Baidu World Congress, VR startup Pico, which software Horizon Omniverse, the world’s first Xirang, virtual space price is estimated to Workrooms allows users simulation and collabora- multi-person interactive be at the $1 billion to conduct online VR tion platform, provides the platform, allows people level meetings as “digital foundation for the who cannot be physically people” Metaverse and will be present to experience the available to millions of new virtual space of this users. technology banquet 2021.09 Tencent registered Metaverse-related trademarks 2021.11 Facebook rename to Meta Microsoft announced that it will introduce elements of the metaverse into its chat and meeting application Microsoft Teams, when the MR (mixed reality) platform Microsoft Mesh will be integrated into Microsoft Teams. Through this feature, users will be able to meet and interact in the form of virtual avatars. Source: Public information, Deloitte analysis 05

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The Metaverse Overview : Vision, Technology, and Tactics | Preface 2. 2022: Rationality & Exploration Compared with the curiosity and ambition shown in 2021, markets and individuals have tended to be more rational and explorative towards the Metaverse in 2022. The capital market has been the best illustration of this shift, where valuations of Metaverse enterprises now largely depend on whether their business models can create real value for companies and customers. Analysis of the stock prices of business, continued to rise due to time high set in November 2021, three world-leading technology growth in its core business. Google including a drop of 27% from companies has retained its leading position in the start of the year. Roblox's Q3 Although Meta has the most advertising, its primary business, and 2021 revenue was up 195% year-on- influential voice and business Amazon and TikTok have had less year, and analysts expected large reserves in the market, its stock short-term impact on its position. capital flows into its stock. However, price fell about 20% in the first The explosion in internet traffic once passion for the stock cooled, quarter of 2022, missing analysts' driven by COVID-19 has also provided investors began to pay more attention expectations. Facing an intense a substantial boost to Google's to Roblox's profits, which missed onslaught from rivals including TikTok, performance, which has continued to expectations. conventional Meta ( push up its stock price. Baidu, Alibaba (USD) Tencent (USD) user growth stagnated, with daily Oculus's stock price has also 250.00 80.00 active users falling by a million users in The share price of Microsoft, which dropped sharply in 2022 after a 200.00 60.00 one three-month period. Meanwhile, announced its Metaverse business steep rise in the second half of 150.00 40.00 Meta's other apps, WhatsApp and at the same time as Meta did, also 2021. The virtual reality hardware 100.00 Instagram, saw significant drops rose, with some fluctuations, due company had previously maintained 50.00 20.00 in user growth. Meta's Metaverse- to a massive breakthrough in its cloud growth, aided by 2021's stock market 0.00 0.00 related businesses continue to burn business and solid performance in excitement around the Metaverse. 2021/8/2 2021/9/2 2021/10/2 2021/11/2 2021/12/2 2022/1/2 2022/2/2 money and have tended for some traditional software. However, after this heat subsided, Baidu Alibaba Tencent time to hinder the company's overall the many issues with Oculus head- development. Analysis of the stock prices of two mounted display devices, including global Metaverse companies their weight, physical and emotional Unlike Meta, the share price of By February 2022, Roblox's stock discomfort, high prices, and limited Google, which has not put too price was down 47% from its all- consumption potential, began to AVIT much effort into its Metaverse attract attention again: 14 12 10 8 6 Figure2: Share prices of Roblox and Oculus (Feb. 2021-Feb. 2022) 4 2021/10 2021/12 2022/1 2022/2 Meta, Microsoft (USD) Google (USD) ZQGAME 400.00 3,100.00 40 360.00 2,700.00 30 320.00 20 2,300.00 10 280.00 0 240.00 1,900.00 2021/10 2021/12 2022/1 2022/2 COL 200.00 1,500.00 20 15 2021/2/122021/3/12 2021/4/12 2021/5/12 2021/6/12 2021/7/12 2021/8/12 2021/9/122021/10/122021/11/122021/12/122022/1/12 10 Meta Microsoft Google 5 Source: Yahoo Finance, Deloitte analysis 2021/10 2021/12 2022/1 2022/2 06

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The Metaverse Overview : Vision, Technology, and Tactics | Preface Figure3: Share prices of Roblox and Oculus (Feb. 2021-Feb. 2022) Roblox (USD) Oculus (USD) 160.00 1.20 140.00 1.00 120.00 0.08 100.00 80.00 0.60 60.00 0.40 40.00 0.20 20.00 0.00 0.00 2021/2/122021/3/12 2021/4/12 2021/5/12 2021/6/12 2021/7/12 2021/8/12 2021/9/12 2021/12/12 2022/1/12 2021/10/122021/11/12 Roblox Oculus Source: Yahoo Finance, Deloitte analysis Figure4: Share prices of Baidu, Alibaba, and Tencent (Feb. 2021-Feb. 2022) Baidu, Alibaba (USD) Tencent (USD) 250.00 80.00 200.00 60.00 150.00 40.00 100.00 50.00 20.00 0.00 0.00 2021/8/2 2021/9/2 2021/10/2 2021/11/2 2021/12/2 2022/1/2 2022/2/2 Baidu Alibaba Tencent Source: Yahoo Finance, Deloitte analysis Figure5: Share prices of AVIT, ZQGAME and COL (Feb. 2021-Feb. 2022) AVIT 14 12 10 8 6 4 2021/10 2021/12 2022/1 2022/2 Meta, Microsoft (USD)Google (USD)ZQGAME 400.003,100.0040 360.002,700.0030 320.00 20 2,300.00 10 280.00 0 240.001,900.00 2021/10 2021/12 2022/1 2022/2 COL 200.001,500.0020 15 2021/2/122021/3/12 2021/4/12 2021/5/12 2021/6/12 2021/7/12 2021/8/12 2021/9/122021/10/122021/11/122021/12/122022/1/1210 MetaMicrosoftGoogle5 2021/10 2021/12 2022/1 2022/2 Source: Google Finance, Deloitte analysis 07

The Metaverse Overview : Vision, Technology, and Tactics | Preface Analysis of the stock prices of craze, remain at the conceptual stage. three leading Chinese technology It is difficult to achieve far-reaching companies breakthroughs or returns on capital Although Baidu, Alibaba, and Tencent investment at speed. have all deployed in the Metaverse, this has not influenced their stock Third, technology, products, rules, prices much over the past six months, and regulations continue to restrict except during mild fluctuations during the actualization of enterprises' and "Metaverse fever" in November 2021. consumers' visions of the Metaverse. However, Alibaba's stock price went Technologies do not have the ability into a volatile decline during the to create a true Metaverse experience past quarter as its primary business yet, and related products including revenue and gross merchandise value hardware and software have not (GMV) growth disappointed. matured. In our still centralized world, there has been no quick creation of Analysis of the stock prices decentralized rules to support the of three Chinese Metaverse Metaverse, and it will not transform companies easily or quickly from a niche market China's Metaverse Index rose into a universal consumer group. 30% in 2021, with most of that rise coming in the fourth quarter. What kind of Metaverse will exist ZQGAME was up 270%, AVIT rose beyond its initial popularity and now 185%, and COL gained 69%. However, that capital market excitement has because they did not generate cooled? Metaverse-related income, all three companies' stock prices retreated The Metaverse will fundamentally 2022. reshape people's productivity, lives, and social relationships, in time As described above, capital market creating a new world. This is the enthusiasm for the Metaverse has development direction of Metaverse. declined. There are three reasons for After the excitement subsides, this. companies that focus on accurate positioning, continuous development, First, the development speed of and outstanding ability will produce a Metaverse-enabling technologies viable Metaverse that inspires renewed and applications has not matched excitement. the continuous rise of consumer expectations for Metaverse applications. This year is expected to see a continuation of that trend, with Metaverse development throughout the year slower than the public expects. Second, most Metaverse practices, intending to cater to the Metaverse 08

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The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values 1. Vision and Values In this chapter, we discuss the development vision of the Metaverse, its long-term value, its characteristics compared with current internet platforms, and development bottlenecks. 1.1 Vision and 4 meanings of the access restrictions, economic functions, experiential, technological, or regulatory Metaverse connectivity, and creativity. Jon Radoff, interpretations. It is not easy to provide a In this nascent phase of the Metaverse, founder of Beamable, has ideated concise, definitive, unified definition that the industry has not formed a unified seven levels of Metaverse construction: covers all these dimensions. standard for defining or understanding experience, discovery, creator economy, it. It is a garden in which 100 flowers are spatial computing, decentralization, Starting from the original meaning of blooming and 100 schools of thought human-computer interaction, and "Meta (Meta) + Verse (Universe)", Deloitte contend. infrastructure. In China, some institutions has defined and imagined the future of have proposed that the Metaverse is a the Metaverse as "a converged world of David Bashuki, CEO of Roblox, has new internet application and social arena the virtual and the real". This has four proposed eight elements of the that integrates various new technologies, meanings: a virtual mirror world that Metaverse: identity, sociality, immersion, shaping a virtual space in an online world simulates the real world, an innovative low latency, diversity, anywhere, that mirrors the natural world in an virtual world set apart from the real economic system, and civilization. increasingly realistic digital landscape. world, the real world as a facet of the Renowned analyst Matthew Ball has Metaverse, and the convergence of the identified six characteristics of the These different understandings and virtual and real worlds beyond either the Metaverse: sustainability, real-time, no definitions of the Metaverse come virtual or the real world. from different perspectives, including Figure6: Definition and meanings in the Metaverse Components of Metaverse “A virtual and real world converged universe” 4 meanings Metaverse Virtual Mirror Virtual Native A virtual world Innovate virtual simulating world Virtual Mirror World reality to simulate reality Real World Convergence of Virtual Native World Real World Virtual and Real A new virtual world The real world Worlds Surpasses Virtual or Real World Source: Deloitte analysis 10

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The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values The Metaverse will include almost future direction of the Metaverse. 65,536 kilometers. A vast number of all elements of our real world. This is The public's current perception of people pass through the commercial the key to understanding the long- the Metaverse encompasses games, block, where there are many shops. term state of the Metaverse and how experiences, technologies, and social Opening a shop there requires fundamentally and profoundly it will applications. These are parts of the third-party approval, buying land, influence us. The four meanings above Metaverse, but the future of the obtaining the relevant licenses, and can described as follows: Metaverse is much more than the sum bribing Inspectors. Humans walk and of those parts. interact with the neighborhood as Meaning 1: A virtual mirror world digital avatars; populating a world that simulates reality The term Metaverse originated from a the author calls the Metaverse. The The Metaverse includes a virtual world scene in Snow Crash. It is a conceptual picture below is a schematic diagram that simulates almost every element extension of that scene to imagine of the scene depicted in Snow Crash. of the real world, including individual a "real" virtual world that is a full There are many core elements of identity, enterprise identity, the simulation and complete mirror of the the real world in its described virtual business world, entertainment, social real world. world, including neighborhoods, social interaction, civilization, legal, tax, and interaction, commercial real estate governance structures, and one of Neil Stephenson's Snow Crash development, business activities, and the most critical features of our real describes such a virtual world: the even corruption. world—feelings. protagonist enters a commercial block, on the Champs-Élysées in the This is an important starting point for super-meta-domain (the Metaverse). understanding and envisioning the The street is very long, traversing Figure7: The virtual world of Snow Crash Avalanche, 1992 The Virtual World Constructed by the Global Multimedia Protocol Group Global Multimedia Authorize Protocol Group Companies $ $ Building façade to run business in Champs Elysees in the Metaverse Virtual Space $ Virtual identity Connect Connect Headset Glasses The public Terminal Source: Public information, Deloitte analysis 11

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      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values Derived from its depiction in Snow in the real world: environment, people, and governance systems. There are Crash, the future Metaverse will include objects, institutions, society, and also 10 elements in the virtual world a virtual world that simulates all real- economic, enterprise production, corresponding to these 10 real world world elements. There are 10 elements individual production, civilization, elements. Figure8: A virtual world that replicates the real world Virtual World Form 1 : Mirror of Real World consisting of 10 elements 10 Elements in Virtual World Virtual Institutions Identification Government Community Company School Virtual Object/Goods Social System Virtual Social Skills Law Code Identification Virtual People Natural (Avatar) People Economic System Virtual Environment Identification Transaction Rules Currency Natural Social Commercial Production System Environment Environment Environment Enterprise Personal Civilization System Production System Production System Production Rules Production Tools Language Custom Culture Governance System in Virtual World Human Community Society World Source: Deloitte analysis Meaning 2: A native virtual world regulations, and new wisdom will who only exist in the virtual world, like The Metaverse includes another virtual embody innovation in this virtual native virtual digital employee Cui Xiaopan, world. This is an innovative, native world. who won the 2021 Best Newcomer virtual world that has all the elements Award at Vanke Headquarters. Other of the real world, but whose elements This new entity is home to people, examples include non-fungible token have no corresponding elements in objects, and environments shaped (NFT) objects such as pictures, audio, the real world. People can use their entirely in the virtual world, with no real videos, artwork, and buildings. In this imaginations and creativity to create world counterparts. In this Metaverse, native virtual world, liberating some of completely virtual people, objects, there will be new "people" who are the physical and spatial stipulations of and environments. New entities, new not avatars, but people created and the real world create a virtual natural environment. 12

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      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values Regulation has three aspects in this that far away given the acceleration of Meaning 4: Convergence and new native virtual world: governance technology, with the computing power interaction of the virtual and real by decentralized autonomous of Nvidia's CPUs now said to be 1 worlds organizations (DAOs), which is million times faster than it was 10 years In the end, the virtual world and the completely different to the centralized ago. real world will form a closely converged model in the real world; user-created and interacting world— content (UGC) rather than the Current Metaverse platforms have from the virtual to the real, the real platform-generated content (PGC), already partially achieved the to the virtual, the virtual in the real, Virtual World Form 1 : Mirror of Real World consisting of 10 elementswhich will completely liberate people abovementioned three innovations and the real in the virtual—like a "live to be creators and allow anything to be in the native virtual world. When action" version of the coexistence of created; and the movement of people the virtual world frees us from the robots in the real and virtual worlds in the virtual world, unencumbered by limitations of physical space, human seen in Terminator . 10 Elements in Virtual Worldreal-world physical or spatial rules. beings can bring their thinking and Virtual Institutions creativity into full play, creating the This convergence and interaction mean IdentificationNew wisdom refers to artificial potential for limitless innovation. the Metaverse will transcend both and intelligence (AI). Virtual people, despite each of the real and virtual worlds, existing only in the Metaverse, will Meaning 3: The real world calling back to the original meaning of GovernmentCommunityCompanySchoolhave the same or greater wisdom The real world is an integral part the word "Meta" as above or beyond. Virtual Object/GoodsSocial Systemthan human beings do in the real of Metaverse. All elements in the The degree to which the virtual world Virtual world. Currently, most AI seeks to virtual mirror world are facsimiles of is converging and interacting with Code IdentificationVirtual People Natural Social SkillsLawsimulate human beings by listening, elements in the real world. The value the real world is a critical criterion in (Avatar)Peoplespeaking, reading, writing, smelling, of the virtual world is generated by evaluating the value of the Metaverse. Economic SystemVirtual Environmenttouching, moving, and thinking. One interactions between it and the real Among various definitions of the Identificationday the wisdom of AI will go beyond world. Metaverse, one posits that it will only Transaction RulesCurrencyNatural Social Commercial human beings, and that day is not Production SystemEnvironment Environment Environment Enterprise Personal Civilization System Production SystemProduction SystemFigure9: Three "new things" in the virtual native world Production RulesProduction ToolsLanguageCustomCultureNew EntitiesNew Regulations New Wisdom Governance System in Virtual World Human Community SocietyWorld Figure Artificial Intelligence Consensus Mechanism Mechanism Object Decentralization & UGC Human Intelligence Environment (Creativity & Innovation) Source: Deloitte analysis 13

      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values Figure10: Convergence and Interaction of virtual-world and real-world elements Elements in Virtual World Low Difficulty of Merging High Virtual Economy Virtual Personal Virtual Virtual Transaction Rules, Production System Virtual Governance Environment Institutions Currency Personal Creation System Virtual Object Virtual People Virtual Society Virtual Enterprise Virtual Civilization Code Identification Identification Social Media Production System Language, Customs, Culture Production Rules Social Value Virtual NFT Civilization Competition for Unified Coding Rules & Identification System Rules Exchange Supports Copyright Reality Rules Governance Natural People Society Enterprise Production Civilization Object People System System Natural Institutions Economic System Personal Production Governance Environment System System Elements in Real World Source: Deloitte analysis be when people rely on the virtual maintenance for physical machines. for governance rights. That is, who world more than they rely on the real Many production and manufacturing will govern this Metaverse, humans world that the Metaverse will be fully scenarios have already explored and or AI in the virtual world, Metaverse formed. applied digital twin technology. companies or real-world government? As mentioned earlier, the virtual and Level 2: This level will see the Competition for control between real world each have 10 elements. integration of environment, people, government and the virtual world In this "4th Metaverse", these 10 objects, and institutions through has already occurred in the clash elements (environment, people, unified coding rules and identification for control of the data of billions of objects, institutions, and society, and systems between the virtual and real users between government and the economic, enterprise production, world; the integration of the virtual internet giants. For the first time in individual production, civilization, and and real economies through value human history, companies now own governance systems) will converge and exchange rules; and the integration of more of people's information than interact. personal production systems through governments do, which has caused NFT-related copyright (virtual IP and alarm in some government circles. The Integration (convergence and real IP). fight for governance of the Metaverse interaction) between the virtual and will intensify, with some pessimists real worlds has four levels of varying Level 3: This level sees the integration positing that Metaverse governance difficulty, set out below from the of society and civilization, becoming rules will even affect and oppress the easiest to most difficult: even closer to the essence of the real real world. world and thus much more difficult, Level 1: The interaction of enterprise encompassing social rules and systems In future, various virtual spaces, production systems. This sees the of civilization that require long-term communities, and societies will virtual world replicate and support thinking, collision, and polishing. emerge. Small, personal virtual spaces the real world. For example, digital will combine to form a large virtual twin technology generates digital Level 4: The integration of governance community spaces. Multiple virtual deconstructions and simulations of rules is the most challenging community spaces will combine and real machine equipment to support Metaverse scenario, as it will involve converge to form even larger and more operational state prediction and disputes around and competition diverse virtual social spaces. Different 14

      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values Figure11: The entrance to virtual reality Elements in Virtual WorldLow Difficulty of Merging HighOccasions to Enter Digital ToolsDevice Connection the Metaverse Signal Virtual EconomyVirtual Personal Voice Interaction Transition Virtual Virtual Transaction Rules, Production SystemVirtual Governance PersonalEye TrackingSignalVR GlassesVR Gloves EnvironmentInstitutionsCurrencyPersonal CreationSystemMotion Capture Virtual ObjectVirtual PeopleVirtual SocietyVirtual EnterpriseVirtual CivilizationHome, Private VR Helmet VR Armor Metavers Code IdentificationIdentificationSocial MediaProduction SystemLanguage, Customs, CultureWorkplaceHaptic Interaction Production Rules … Social Value Virtual NFTCivilization Competition for Signal Unified Coding Rules & Identification SystemSupports RulesExchangeRealityCopyrightRules GovernancePublicBCI Hearing Touching Transition e Equipment Coding Wireless Natural People SocietyEnterprise Production Civilization provided by Seeing Smelling Brain rd ObjectPeopleSystemSystem3 parties Tasting -computer Natural InstitutionsEconomic SystemPersonal Production Governance EnvironmentSystemSystemSource: Deloitte analysis Elements in Real Worldworld elements, people, avatars, to apply brain-computer interface Kill roleplaying. We illustrate these currencies, and activities will flow freely technology, which transmits electrical occasions below. between these different spaces and and biogenic signals directly to the worlds, realizing information flows and human brain, achieving real-time, The Metaverse is evolving in two a virtual space-time shuttle. barrier-free information exchange. dimensions: from the real to the virtual and virtual to the real. From People will participate freely in the In terms of business models, there are real to virtual involves real scenes Metaverse with a specific digital two occasions to enter the Metaverse. superimposed on immersive digital identity they use to interact with the One is a personal occasion, in which experience, including virtual education, real world. people at home, in the office, or the virtual training, and virtual malls. In natural environment can enter the virtual to real, the virtual world extends The entrance to virtual reality virtual world through virtual-real into reality. For example, virtual game There are two entrances to the interaction tools, various XR devices. Niantic Lightship promotes social Metaverse through virtual-real The second is a public occasion, where interactions by designing scenarios interaction: the first is to apply digital a third party provides an entrance including real-world map positioning, tools, including portable and wearable to the Metaverse, akin to personal environment and object recognition AR/VR devices, and the second is KTV huts in shopping malls or Script and judgment, and real-time interactive sharing. Figure12: Six characteristics of the Metaverse Metaverse Six Characteristics vs Internet Immersive Experience Eye, Nose, Mouth, Tongue, Body Virtual Mirror Complete World System Natural & Social Environment, To simulate reality Civilization & Governance System Real World User-Generated Content UGC Virtual Native Real Estate Economics, A complete Huge Economic Value Digital Artwork virtual world New Regulation Decentralization Big Uncertainty Competition for Governance Source: Deloitte analysis 15

      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values Figure13: The Production Metaverse R&D Stage Consumption End Virtualize-tion and RealityFull Life Cycle Symbiosis ofVirtual Plan Open Office Employee- Employee Virtual visit before buying Virtual maintenance Identity Virtual Design Virtual Model Customer-visit Identity Product training before buying Manufacturing Stage Inside the Enterprise Real Factory Virtual Factory Manufacturing Monitor & Manufacturing Virtual Meeting Virtual Virtual Office Command Identity Monitor & Command Monitor & Command Economic System Inside the Enterprise Enterprise and Supplier Enterprise and Downstream Enterprise and Collaboration StructureUnderlying Network and Computing Technology AI Technology Blockchain Technology Cloud Edge Computer vision Machine Learning Consensus Mechanism Distributed Storage 5G/6G Computing Computing Natural language processing Intelligent Voice Intelligent Contract Distributed Ledger InfrastructureBackend IoT Interactive technologies Video game technology Application Network Perception Hologram Sensing Random 3D Engine Real-time Space Layer Layer Layer Technology Interaction rendering rendering Source: Deloitte analysis 1.2 Six characteristics of the games have 2D pictures and sound always online, real time, and includes Metaverse effects. A small number of games have an infinite number of people who can Based on the descriptions above, added senses including pressure and connect and communicate with each and compared with current internet shock, but these sensory experiences other. In other words, it is sustainable, platforms, the Metaverse has six are far from actual physical and tactile real-time, has no access restrictions characteristics: realistic immersive experiences. With the development of and possesses connectivity and experiences, a complete real world technologies including somatosensory creativity, as described by Matthew structure, UGC, huge economic value, devices, digital smell, digital taste, and Ball. In this way, the virtual world gives new regulations and rules, and large brain-computer interfaces, the ideal users a feeling that the surrounding potential uncertainty. Metaverse integrates vision, hearing, environment, people, and things are touch, smell, taste and ideas to bring real. Characteristics 1: Realistic players infinitely closer to real sensory immersive experience experiences. Immersive experiences geared toward Realistic immersive experiences personal sensory experiences are provide verisimilitude of the senses, Object verisimilitude is the use of easier to understand. The following objects, and environment, and have digital twin technology to create digital describes the immersive experience driven Metaverse excitement. virtual objects, forming a mapping of the Metaverse that simulates the relationship that is very similar to real production process. The Production The Metaverse creates sensory objects in shape, texture, and use. Metaverse use digital twins as its core verisimilitude by upgrading 2D internet technology to simulate the production experiences to 3D, sensory ones. The In environmental verisimilitude, a environment, processes, and objects senses here are mainly visual and virtual world runs like the real world. (see figure below). auditory. For example, most video Like the real world, this virtual world is 16

      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values Figure14: The complete world structure of the virtual world R&D StageConsumption End Elements in Virtual World Virtualize-tion and RealityFull Life Cycle Symbiosis ofVirtual PlanOpen OfficeEmployee-Employee Virtual Enterprise Virtual Civilization Virtual visit before buyingVirtualmaintenanceVirtual Virtual Virtual Society Production System Language, Customs, IdentityVirtual DesignVirtual ModelCustomer-visit IdentityProduct trainingEnvironmentinstitutionsSocial Media Production Rules Virtual Personal Culture before buying Virtual Object Virtual People Virtual Economy Production System Virtual Governance Code Identification Identification Transaction Rules, Personal Creation System Manufacturing StageInside the Enterprise Currency Real FactoryVirtual Factory ManufacturingMonitor &ManufacturingVirtualObject Natural Economic Personal Production Governance Virtual MeetingIdentityVirtual OfficeNatural Institutions People People System Enterprise System Civilization System Monitor & CommandCommand Monitor & CommandEnvironment Society Production System System Economic SystemInside the EnterpriseEnterprise and SupplierEnterprise and Downstream Enterprise and CollaborationElements in Real World StructureUnderlying Network and Computing TechnologyAI TechnologyBlockchain TechnologySource: Deloitte analysis Cloud Edge Computer visionMachine LearningConsensus Mechanism Distributed Storage 5G/6GComputingComputingNatural language processingIntelligent VoiceIntelligent ContractDistributed LedgerThe first aspect of the production The Metaverse, meanwhile, will be The last production Metaverse InfrastructureBackendMetaverse is integrated virtual-real element is real-virtual symbiosis in the a complete replica of the real world, IoTInteractive technologiesVideo game technologysymbiosis at the R&D stage. R&D internal operations and management simulating all of its 10 elements. The ApplicationNetworkPerceptionSensing Random Real-timeSpace personnel from different places can of enterprises. This enables employees 10 virtual elements of the Metaverse LayerLayerLayerHologramTechnologyInteraction3D Enginerenderingrenderingenter the virtual world together for to create and customize virtual will correspond to those in the real product planning, design, and testing offices, and have a friendly avatar that world: the natural environment, people in 3D form, solving problems including can freely communicate and solve (identity recognition), institutions long test periods and unstable management problems in the virtual (government, community, schools, manufacturing processes. realm. enterprises) , objects, social systems (social interaction, social rules), the The second aspect of the production There is a great degree of overlap in economy (transaction rules, virtual Metaverse real-virtual symbiosis in the underlying technical architecture currency), enterprise production manufacturing. Highly immersive, real- of the immersive experiences of the (production rules), personal production time data simulation manufacturing production-oriented Metaverse and (personal creations including NFT management is realized through human sensory experience. artwork), civilization (language, Internet-of-Things and digital twin customs, culture), and governance systems. Employees wear AR devices Characteristics 2: A complete world (decentralized governance). for manufacturing and production structure monitoring in a real or virtual factory, Unlike the internet world, the virtual Characteristics 3: UGC which greatly improves the operational world of the Metaverse will have all UGC is a new creative arena in which efficiency of field personnel and overall 10 elements of the real world. The Metaverse residents create content efficiency of remote managers. existing internet world represented by and applications in their own virtual media, social networking, e-commerce, worlds. Unlike internet platforms, The third aspect of the production and industrial internet is a world where owners create most of the Metaverse is real-virtual symbiosis in narrow-sense, simulating only content and establish the rules, users during sales, split into three scenarios: part of whole social, business, and will create their own content and during sales, in use, and after- production systems in the real world. rules in the Metaverse, with platforms sales maintenance. This supports The existing internet world does not providing the technical tools they need. interactions between employees and clearly reflect elements such as real For example, in Roblox, people can use customers in the virtual world looking estate development, government and some simple tools embedded in the at the same digital twins products. governance, and social civilization. 17

      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values platform to design a game, and launch cheap, despite it being just a piece of value in the real world, that is, this game for other users to play. In the of coding. Metaverse platforms will exclusivity, competition, and the spatial context of the virtual world mirroring create limited space to simulate the and temporal scarcity of things. Many the real world, UGC is closer to how natural scarcity of space in the real people think that the Metaverse, as a the real world works, with people world, and charge people based on digital virtual space like the internet, finding new land, building homes, and that scarcity rather than length of will be inexhaustible and easily copied, developing their own rules. code pasted, and used for their own use, • Identity economy: This experience but the Metaverse does not work Characteristics 4: Huge potential revolves around avatars. Everyone like this. The creators of Metaverse economic value will have their own avatar in the platforms will endow the Metaverse Based on what the Metaverse can virtual world and will pay for this with scarcity through technologies provide for people, its value arises personalized version of themselves. including information anti-proliferation, from five elements: This realm of the Metaverse will homomorphic encryption, code and attract attention from capital chain non-homogenization certificates, • Social economy: The Metaverse and manage digital asset rights provides various social scenarios with • Digital art economy: this is based through these technologies so data immersive experiences and people on the value of various forms of NFT becomes tamper-proof. pay for these digital artworks, including audio, video, pictures, and even virtual At the same time, the Metaverse • Land economy: As in the real-world shoes has less scarcity than the real world, property industry, there is "land" • Finance economy: The value of making it possible for it to surpass in the Metaverse, and people need financial investments or speculation the real world's economic value. It to pay real money to buy it before opportunities will achieve this through powerful building virtual companies, homes, digital productivity, allowing everyone or communities. Virtual land is not In essence, the value of the Metaverse to create diverse forms, all of which comes from its equivalent sources Figure15: Centralization vs decentralization Centre Consensus Mechanism Centralized Structure Decentralized Structure DefinitionThe center is associated with nodes. Nodes must depend on Definition Nodes are interconnected. Under a consensus mechanism, the center and are not directly associated with one another. each node can become a phased center, and the platform is maintained by all nodes. Features Poor data privacy, vulnerable to attack, slow response speed, Features Strong data privacy, anti-attack, fast response, open & nodes lack information control transparent, traceable Cases Bank, Traditional Internet, Social & Game Platforms Cases Bitcoin, DeFi Traditional Regulation New Regulation Source: Deloitte analysis 18

      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values will have value to someone, and certain limitations in the real world. establish power-biased operating rules overcoming the natural elements For example, online virtual social to absorb more wealth, and then feed and limitations of current political networking after the emergence of this back into the real world. In this and legal systems. In the Metaverse, the internet avoids the limitation way, the Metaverse would execute these limitations can be broken and of having to travel long distances an even more unequal distribution of more value generated. Furthermore, to meet friends. The Metaverse will resources and widen the gap between creation and trading is more flexible in mitigate this and other limitations the rich and the poor. the Metaverse, supporting smooth and while weakening personal identity and free transactions within a single virtual wealth restrictions in society. The concept of the Metaverse as world, between two virtual worlds, or a parallel world means weakening between the virtual and real world. There are many problems in the "central privilege" in the real world. real world, including the uneven Creators in the Metaverse have Characteristics 5: New regulations distribution of resources and the developed regulations and rules Although the virtual world is a disparity between rich and poor. through DAOs. No country, company, complete simulation of the real world, If the Metaverse is unable to avoid or individual controls these, and new Metaverse creators hope that the centralization, then this will not only members who want to join a virtual operating rules of the virtual world hinder our ability to address real- world can automatically do so by can be different to the centralized world problems in, but also make following the DAO's rules. DAOs allow structures of the real world. They want these problems more prominent. For people in the Metaverse who create the virtual world to operate based on example, powerful people in the real more value to attain more in the virtual decentralization. world could use their resources or world. DAOs record the relationship prestige to quickly accumulate great between a creator and their creations, The original intention of human beings wealth in the virtual realm, and even and others need to pay to obtain the in creating virtual worlds was to avoid Figure16: Governance structure of the Metaverse Who are the rule makers To whom do the economic dividends Who is the ultimate manager of the Metaverse? of the virtual world belong? of the Metaverse? The game of unilateral power The game of trilateral power The game of many forces Consensus Private Capital Fusion Fusion CentreMechanism Metaverse Developers Government Government ructionCo-cons- ructionCo-cons- Private capital Private Capital Metaverse Developers Government Metaverse Developers AI robot Intervention Intervention Metaverse Virtual Human Centralized StructureDecentralized Structure The expansion of the Metaverse Virtual Autonomy & consciousness Non-human Nodes are interconnected. Under a consensus mechanism, metaverse capital economy Natural Human transcend human control Virtual Human DefinitionThe center is associated with nodes. Nodes must depend on Definition each node can become a phased center, and the platform & gradual formation of virtual society the center and are not directly associated with one maintained by all nodes. Features Poor data privacy, vulnerable to attack, slow response speed, FeaturesStrong data privacy, anti-attack, fast response, open & Staggered Governance Structure nodes lack information controltransparent, traceable Virtual world managers manage people in real world CasesBank, Traditional Internet, Social & Game PlatformsCasesBitcoin, DeFiReal World Virtual World Real People Virtual Natural People - Managers Virtual Natural People – Ordinary Users Traditional RegulationNew Regulation Real world manages some ordinary users in virtual world Source: Deloitte analysis 19

      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values right to use or own all or part of these Who will top the Metaverse designing the Metaverse, all creators virtual creations. In contrast, the real, governance structure in future? AI will need to decide who has the final centralized world allows any game is at the root of this problem—will say in the virtual world and who owns prop to be copied at almost zero cost. human beings rule robots or will we its economic benefits. eventually create robots that surpass Characteristics 6: Big uncertainty human beings? It is probably not the 1.3 The value of the Metaverse Governance structure is the core issue original intention, but AI self-learning The Metaverse can bring tangible in the Metaverse, that is, who will be on could make robots eventually surpass value to people and the real world. top of its future governance structure. human intelligence, giving them the This is the fundamental driver of the ability to rule the world. Metaverse wave. In the end, the value The governance structure in the the Metaverse will bring to people is Metaverse is interlaced. One scenario This governance issue is so critical multifaceted, spiritual and material, is virtual worlds managed by real because the virtual world of the including five main elements: people. Most of the early Metaverse Metaverse carries has enormous • Entertainment: games and social worlds had this governance structure. economic and political power. Some activities, where players enter the Real people write code to create prototypes of the Metaverse, such Metaverse to enjoy immersive and virtual worlds and manage avatars as online game purchases of virtual realistic interactions, resulting in a in them. In another scenario, real props, community purchases of pleasant experience of games and people are constrained and managed real estate, and virtual currency socializing by the virtual world, with groups of transactions, have already shown the virtual world managers who manage economic power of the virtual world, • A second Life: collaboration platforms people in the real world. This small and this power will only grow. At the where creators build their own group establishes the rules, controls same time, the number of users of the personal worlds in a virtual space, the virtual world and its citizens, with products of the global internet giants giving individuals the opportunity to virtual individuals managing a large has already exceeded the number of experience a life that is different from group of real people. residents of any single country. When the real world Figure17: User value in the Metaverse Enter the Metaverse A 2nd Life with Entertainment Creative Collaboration game Platform Metaverse Experience Promote Real World Efficiency New Influence & Social Status Education Virtual Community Shopping New Income Trade Source: Deloitte analysis 20

      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values • Efficiency in the real world: • Portability of access to the virtual industry and manufacturing. The Technologies such as digital twins, world. At present, wearable devices real-time sustainability, digital XR, and AI can improve the efficiency including AR/VR sets continue to twins, and integrated reality in the of many industries, including dominate people's entry into the Metaverse have deep application education, manufacturing, and retail. Metaverse. In the future, entering prospects for manufacturing, but Activity in these industries will be and interacting in the Metaverse will technological limitations mean unconstrained by time and space, be more flexible and convenient. Just this potential is a long way from experiences will be upgraded, and like the League of Legends meeting in realization. quality will improve The Avengers, there will be no need • Information security and • New wealth: virtual currencies and to wear cumbersome equipment. privacy. Network security and data trading in virtual objects provide an After connecting to a line, the avatar privacy have become increasingly opportunity to reshuffle wealth of the other party will appear in serious issues in recent years. The front of you and your avatar will characteristics of the Metaverse, • New influence and social status: appear in the other party's space, such as sustainability, real-time, in virtual communities, creating enabling simulated interaction. VR/ connectivity, and creativity, indicate a different avatar for oneself and AR kit is becoming more lightweight that the amount of data it hosts partaking in social activities provide and convenient, and in 10 years, will increase exponentially, and opportunities to achieve a new social AR contact lenses should mature. the retrieval and use of data will status Generally, major technical constraints become more frequent. How to remain and there needs to be more balance information security with These five values mean that although innovative thinking. development of the Metaverse needs the rise of the Metaverse has slowed • Rules of governance in the forward-looking consideration. temporarily, it retains huge potential virtual world. This requires long- for growth and increased value. term research, exploration, and • Energy supply. The complex testing to design social, economic, mechanisms of the Metaverse 1.4 Current bottlenecks in cultural, tax, legal, and governance consume vast network, storage, Metaverse development rules in the virtual world. If this and computing power resources. Development of the Metaverse is in is too conservative, construction Its stable operation will inevitably its infancy, although the market has of the Metaverse will not meet require the construction of new high expectations. The ideal form of expectations. If it is too radical, it will infrastructure. Current 5G networks, the Metaverse will eventually arrive, intensify contradictions and even IDC centers, high performance Enter the Metaverse A 2nd Lifeincluding elements of what we have threaten the real world. computing, and AI are far from with EntertainmentCreative Collaboration described in the previous content. meeting the conditions required for gamePlatformHowever, as the Metaverse matures, it • Industrial Metaverse a smooth Metaverse experience. In will inevitably encounter bottlenecks applications. At present, the addition, amid a trend towards global that need to be broken through. The Metaverse is used mainly on carbon neutrality, the issue of how to Metaverse most prominent bottlenecks at this the consumer side, including build and operate infrastructure in a Experiencestage are: entertainment, social networking, green way also needs consideration. Promote Real World EfficiencyNew Influence & Social Status games, and NFT art. It is not EducationVirtual Community integrated closely enough with Shopping New Income Trade 21

      The Metaverse Overview : Vision, Technology, and Tactics | Vision and Values Figure18: The five major Metaverse bottlenecks 1. Portability of Access to Virtual World At this stage, the main application scenarios of the Metaverse are mostly for display. Application entry remains immature and inconvenient Applica- tion 2. Metaverse Rules Creation Normal operation of the economic and social systems of the Metaverse requires a series of rules and institutions to support it Supervi- 3. Industrial Application sion At present, the Metaverse is mainly used in entertainment, games, and other fields, which lack entry points and a focus on deep integration with production. There has yet to be demonstration and benchmarking application on the production side 4. Data Security & Privacy Protection Technol- The scale of data in the Metaverse will increase exponentially, involving a large amount of ogy personal privacy information, and data collection and use must be controlled 5. Metaverse Energy Supply Stable operation of the Metaverse is inseparable from the support of data centers, computing power centers, network equipment, and communication base stations. Operation of this infrastructure requires a large supply of energy, which needs to be green and low-carbon Source: Public information, Deloitte analysis 22

      Deloitte The Metaverse Overview - Page 22

      The Metaverse Overview : Vision, Technology, and Tactics | Technology 1. Portability of Access to Virtual World At this stage, the main application scenarios of the Metaverse are mostly for display. Application entry remains immature and inconvenient Applica- tion2. Metaverse Rules Creation Normal operation of the economic and social systems of the Metaverse requires a series of rules and institutions to support it Supervi-3. Industrial Application sionAt present, the Metaverse is mainly used in entertainment, games, and other fields, which lack entry points and a focus on deep integration with production. There has yet to be demonstration and benchmarking application on the production side 4. Data Security & Privacy Protection Technol-The scale of data in the Metaverse will increase exponentially, involving a large amount of ogypersonal privacy information, and data collection and use must be controlled 5. Metaverse Energy Supply Stable operation of the Metaverse is inseparable from the support of data centers, computing power centers, network equipment, and communication base stations. Operation of this infrastructure requires a large supply of energy, which needs to be green and low-carbon 23

      The Metaverse Overview : Vision, Technology, and Tactics | Technology 2. Technology Metaverse Characteristic Tech Cluster Role Tech Category XR Hologram Technology is the core element underpinning realization of the Metaverse, enabling Immersive Experience, High Simulation Simulation Interactive Path to the Metaverse Technology Technology Virtual-Real Interface BCI Sensing the creation of all of the components and experiences of the virtual world. Many Technology clusters of enabling technologies support the Metaverse, each cluster has several Machine Computer Real-time Operation, Artificial Algorithm Support Learning Vision Digital subcategories, and each subcategory can support multiple Metaverse functions. For Multi-dimensional Interaction Intelligence Content Production Smart NLP Twin the convenience of this discussion, we use the sequence of key user scenarios in the Voice Metaverse as the spine of the following summary of technical categories. These key Creation The Most Intuitive Game Engine 3D Engine Efficient Content Production & Interaction Way to Present Real-Time scenarios correspond to the key features of the Metaverse. After identifying the main Platform Virtual-Real interface Rendering Digital Twin supporting technologies, we describe the current stage of each major category. Blockchain The Core Code of Distributed Consensus Data Identity & Rules Technology the Metaverse Storage MechanismTransmission & (including NFTs) Identity and Authen- Distributed Timestamp Authentication tication Mechanisms Ledger Technology Mechanism 2.1 Technology clusters that use cloud computing, high the environment (air, temperature, Basic Support corresponding to Metaverse performance computing, wireless and humidity), physical equipment Network & 5G/6G Edge Computing Ensure Large-scale Users Stay Online Computing Network Environ- Technology features communication (5G and 6G). In (machine malfunctions, energy Technology ment & Data Cloud Computing IoT Technology The sequence of user access to the addition to enabling interactions, AI consumption), biometric identification Processing Metaverse and its corresponding algorithms will underpin most other (plant growth, animal signs). technologies have the following technologies. clusters: Interaction – high simulation • Access, which emphasizes Access – Immersive experiences interaction immersive experiences driven by XR. Convenient access and a realistic This covers interactions between immersive experience are one of people and people or people and the • Interaction, which focuses on high the core features of the Metaverse. physical world, including blooming simulation interactions between The technologies that support this in flowers, a change in the shape of different users or objects, driven consumer scenarios are XR-based, a palm when shaking hands, and mainly by AI and supported by game including access and somatosensory damage to vehicles when they collide. engines. devices, holographic imaging 3D engines, real-time rendering, digital • Digital content, the creation of technology, and brain-computer twins, spatial computing, and other virtual objects or spaces using digital interaction. There are also other more technologies drive these interactions. twins, real-time rendering, and 3D advanced forms of access equipment engines. technology, such as computer vision, There is also language-, text-, and speech recognition, NLP and other image-based interaction and feedback • Rules and identity, which support algorithms behind these. between people in the Metaverse, mutual recognition and interactions which typically requires AI of varying between different users and entities In manufacturing scenarios, digital degrees of sophistication. in the virtual world, typically based twins and sensing technologies that on blockchain. simulate and perceive the physical Content – creating virtual objects • Large-scale, continuous online world are the main supporting and spatial content availability to ensure continuous technologies. The immersive Metaverse content creation operation and real-time feedback of experience of the physical world technologies include game engines the virtual world as if it were the real mainly relies on sensors and digital (providing important technical support world. This requires a large number twin technology to realize perception for digital content), 3D modelling of high-speed computing and and simulation. Sensors include (for building high-speed and high- information transmission capabilities physical and biological perception of quality materials), real-time rendering 24

      The Metaverse Overview : Vision, Technology, and Tactics | Technology Figure19: Required technologies for Metaverse scenarios and characteristics Metaverse Characteristic Tech Cluster Role Tech Category XR Hologram Immersive Experience, High Simulation Simulation Interactive Path to the Metaverse Technology Technology Virtual-Real Interface BCI Sensing Technology Machine Computer Real-time Operation, Artificial Algorithm Support Learning Vision Digital Multi-dimensional Interaction Intelligence Content Production Smart NLP Twin Voice Creation The Most Intuitive Game Engine 3D Engine Efficient Content Production & Interaction Way to Present Real-Time Platform Virtual-Real interface Rendering Digital Twin Blockchain The Core Code of Distributed Consensus Data Identity & Rules Technology the Metaverse Storage MechanismTransmission & (including NFTs) Identity and Authen- Distributed Timestamp Authentication tication Mechanisms Ledger Technology Mechanism Network & Basic Support 5G/6G Edge Computing Ensure Large-scale Users Stay Online Computing Network Environ- Technology Technology ment & Data Cloud Computing IoT Technology Processing Source: Deloitte analysis (simulating physical effects when mechanisms for consensus and data Continuous large-scale, real-time different Metaverse objects interact), transmission and verification, and online availability requires technologies timestamps (for the traceability and timestamps, typically drive these rules including network communication confidentiality of underlying data), and and identities. and computing, mainly 5G/6G (to other technologies. ensure wireless communications in Continuous online use – large-scale the Metaverse); cloud computing NFTs underpin the ability to identify information computing and real- (sufficient background computing unique created items and artworks time transmission power to ensure more powerful, to ensure their scarcity and non- Any interaction in the virtual world lightweight terminals at the front end), replicability. requires the processing of a vast edge computing (to solve problems amount of data and transmission of of cost, responsiveness, and network Rules and identity – uniqueness multiple signals. At the same time, congestion), and Internet of Things and decentralization to stimulate real life, interactive (IoT). The virtual world is a "universe" responses in the virtual world require because it brings things closer to the extremely low latency. When we are These supporting technologies are essence of human society, including socializing in the Metaverse and set still far from creating a fully formed status and systems for economy, out to shake hands with another Metaverse experience, but some society, and civilization, necessitating a person, if they take three seconds to specific, "pre-Metaverse" scenarios decentralized model. respond, this will not be an immersive, have applied key technologies. lifelike experience. These needs Blockchain technology, which includes require extremely fast background distributed storage and ledgers, calculations. 25

      The Metaverse Overview : Vision, Technology, and Tactics | Technology 2.2 Key technologies' development coverage that can accommodate the Whether XR will become the main stages and bottlenecks current scale of Metaverse users, entrance to the virtual realm is still There is a barrel effect around and support for UGC content, 3D unknown. The blockchain is developing Metaverse technologies, in which engines, and computing power. steadily, and downstream application the "shortest board" technology Current technology and content can scenarios are constantly expanding. determines the realizable extent of the meet the primary requirements of the Regional policies and laws regulate Metaverse. Metaverse, and will continue to evolve. blockchain-based virtual currency technology. At present, various technologies only VR, AR and other virtual reality meet the development needs of the technologies have also reached the XR initial Metaverse, with 5G having basic requirements of the Metaverse XR provides an immersive experience, achieved large-scale, low-latency and now need to be optimized. with the goal of taking over human Figure20: XR experience development Basic Implementation Initial Realization Not Yet Started Somatosensory Seeing - Glasses, Screen Smelling - Smell Movie Tasting Realization Hearing - Headphones, Speakers Touching - Somatosensory Devices Idea - Brain-Computer Interface No Immersion Primary Immersion Partial Immersion Deep Immersion Full Immersion Experience Seeing Seeing Seeing, Hearing Taste is a Visual 2D Visual 3D Hearing Hearing Touching, Smelling combination of Hearing Touching Touching Ideas multiple senses: Smelling Tasting flavor comes Technology VR/AR , from smell and Spatial Audio Sensor, texture relies on Screen Technology & AI, Odor Digitization Brain-Computer touch, which is Acoustic Simula- Somatosensory Interface Taste? ? very difficult to tion Technology Device make virtual Source: Deloitte analysis Figure21: XR development 1.0 Experiment 2.0 Development Boom 3.0 Trough 4.0 High Speed Germination VR/AR Enters the Investment Fever Constrained by business models Develoment Public Eye Climaxes and technical bottlenecks, • Microsoft growth was sluggish announced • 5G commercial officially • Home demand catalyzes development of AR announced VR/AR industry • The founder of • Oculus VR • Facebook bought glasses Hololens • Oculus, Microsoft, HTC, Huawei, penetration Oculus VR developer Oculus VR for iQiyi, OPPO, 3Glasses,Pico, Value invented VR headset USD2 billion and • AR game and other companies intensively prototype VR Oculus Rift launched VR phenomenon launched related products device raises headset PokemonGo USD2.4 • Sony announced launched • Ivan Sutherland , million Project Morpheus Numerous companies • Apple the "father of • Google VR headset started to launch new releasesd • Oculus Go VR • Concept stock Roblox computer releases AR projects: Arkit headset listed graphics" in the Google • BBC released 360° • Google released • Facebook , Tencent, United States, Glass documentary We released • VR game Beat ByteDance, NetEase, developed the first • Google released Wait Saber sold 1 Nvidia, and Epicgames, computer graphics- CardBoard to • Six Flags America Arcore million copies etc. have successively driven helmet- blend content into launched VR roller • Baidu, implemented strategies VR headsets via • Huawei mounted 3D coaster Alibaba and launched AR display smart phone • Media company Tencent AR • Samsung released platforms engine Samsung Gear VR RYOT produced VR issued platform series 5G + Epidemic + Metaverse 1968 2011 2012 2014 2015 2016 2017 2018 2019 2020 2021 Source: Public information, Deloitte analysis 26

      The Metaverse Overview : Vision, Technology, and Tactics | Technology vision, hearing, and touch, and realizing Content and technology are the two such as games, social networking, the input and output of information current bottlenecks in XR. and film and television. Application in the Metaverse through motion scenarios including virtual offices and capture. In somatosensory realization, Many manufacturers have invested fitness have begun to deepen, but visual and auditory simulation heavily in VR/AR hardware, but for the coverage, quantity, and quality of interaction is currently the most large-scale consumer application, other application scenarios still need advanced technology in the virtual equipment remains expensive to be improved. On the world's most space. Simulations of smell, touch, and and beset by a poor sense of use, mainstream VR content platform, ideas (human thinking) have started. environmental restrictions, poor Steam, for example, VR games are Simulated taste, a synthesis of multiple portability, compatibility restrictions, its most popular products but only senses, has not yet been achieved. and short battery life. account for 8% of total content. In addition, content developing slowly Overall development of XR technology, High-quality content, the endogenous and the number of VR users has not having bottomed out over the past way to attract users, will drive the yet attained scale, which exacerbated three or four years, is entering another development of hardware and the this slow development and led to period of high-speed growth. overall Metaverse industry. At present, content falling to keep pace with VR content is not mature, and remains hardware advances. dominated by application scenarios Figure22: XR bottlenecks Less user content high physical price discomfort slow low low content Content amount device Terminals Space development of compatibility restrictions content short Poor poor battery portability quality life Source: Deloitte analysis Blockchain Blockchain technology has entered requirements, blockchain struggles Blockchain has developed steadily. After the NFT stage, heralding an era of to meet demand. Most notably, given an early stage of exploration, market digital content capitalization. The main blockchains are distributed systems, preparation, and recognition, it has difficulties in blockchain development bottlenecks in throughput, confirmation entered industrial deployment, most are technical bottlenecks and regulatory delay, and storage costs have restricted commonly in the financial sector. In the compliance challenges. their application. These bottlenecks Metaverse, blockchain and NFTs will contradict one another, making them resolve problems around ownership Technology difficult to overcome simultaneously. and identification of production and Finance and e-government have For application scenarios like assets in the Metaverse. adopted blockchain technology. In other the Metaverse, there are higher business scenarios with relatively high requirements for speed, throughput, 27

      The Metaverse Overview : Vision, Technology, and Tactics | Technology Figure23: Blockchain development DAI is the first fully decentralized stable currency on Ethereum and the cornerstone of decentralized finance DAO (Decentral- The first ized Autono- Release of Payment Launch of zero-knowledge mous the first giant PayPal Yunb, the Estonian proof zk-Snarks Organization) version of announced first NFT government began Tether released; receives more DAI, opening Facebook support for digital asset incorporating Ethereum issues ERC-20 token than $ the era of released cryptocur- trading Bitcoin's first genesis blockchain into white paper USD-based standard USD100m in decentral- Libra white rency platform in block mined digital IDs released stablecoin proposed crowdfunding ized finance paper payments China 2008 2009 2010 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Bitcoin The concept of Germany Ethereum VISA Europe Bitcoin IPFS project Launch of Beeple’s NFT concept is blockchain was recognized Bitcoin raised uses Lightning team OpenSea, encrypted proposed first proposed as legal; Bitcoins worth blockchain to Network announced now the digital artwork Canaan Yunzhi $18.3 million send money launch establishment world's purchased for released 1st of the Filecoin largest NFT USD million; commercial mining project trading Wyoming machine Ethereum proposed a complete programming language, users passes DAO bill can develop decentralized APPs through their own smart contracts, and realize a decentralized database through a consensus mechanism, making Ethereum a truly decentralized computing platform Decentralized Ledger Decentralized Computing Platform Defi Decentralized Finance Source: Public information, Deloitte analysis NFT (Non-fungible Token) and storage costs, so decentralization or security sometimes IoT have to be sacrificed for efficiency. In addition, "information The development of IoT has three stages: pre-outbreak, barriers" and challenges to creating "on-chain" physical assets outbreak, and full-scale outbreak. At present, the core are affecting the implementation of blockchain technology in technology of the global IoT continues to develop, with the Metaverse. the creation of unified standards, an improving industrial ecosystem, and a rapidly developing global IoT industry. Regulatory compliance However, it will take a few more years before the IoT There are also policy risks in the continuous development outbreak. of the blockchain. Bad actors can easily use the anonymity and anti-tamper characteristics of the blockchain to spread Three challenges need to be solved for IoT to achieve scale misleading information, threaten network security, and and accelerate its evolution: damage user privacy. First, high cost. IoT is costly because there are so many In addition, there have been frequent cases of illegal financial types of sensors, including camera, weather, and pollution activity under the banner of "blockchain", disrupting the sensors. This makes it difficult to create scale effect, and normal market order. Figure24: IoT development Full-Outbreak Outbreak Demand-side pull, ubiquitous, definable, and Pre-Outbreak The supply side and the demand side have basically creation of unified infrastructure Pulled by the supply side, some industries have initially achieved a balance, industry boundaries have begun to blur, achieved scale and local interconnection and the scope of horizontal data circulation has increased 5G Network Deployment Standardization of Private Network of IoT Penetrates All Terminals, Networks, IoT Emerged, Accelerates, Vertical Walks of Life Equipment, etc. Realizes Giants Entered IoT Application Business True IoT Breakthroughs 2016 2020 2030 2050 Source: Public information, Deloitte analysis 28

      The Metaverse Overview : Vision, Technology, and Tactics | Technology DAI is the first fully decentralized stable currency on Ethereum pushes up marginal cost, making IoT IoT must solve these development possible to achieve almost zero-latency and the cornerstone of decentralized financeconstruction expensive. problems of cost, technology, and shuttle interactions in the Metaverse. DAO (Decentral- security before it can become widely The first ized Autono-Release of Payment Launch of zero-knowledge mous the first giant PayPal Yunb, the Second, the technology is not yet used in the industry. The development of 6G networks is Estonian proof zk-Snarks Organization) version of announced first NFT mature. Big data analysis is still hugely reliant on breakthroughs in government began Tether released; receives more DAI, opening Facebook support for digital asset incorporating Ethereum issues ERC-20 token than $ the era of released cryptocur-trading required after sensors collect data Mobile communication networksits four main technologies: terahertz Bitcoin's first genesis blockchain into white paper USD-based standard USD100m in decentral-Libra white rency platform in from the edge. It is not yet possible to The transition from 5G to 6G is technology, air-space-sea-terrestrial block mineddigital IDsreleasedstablecoinproposedcrowdfundingized financepaperpaymentsChina 200820092010201220132014201520162017 2018201920202021integrate and connect data collection still in its early stages. The ideal integration, deterministic networks, and analysis across different industries Metaverse requires at least 6G or and AI-based air interfaces. and fields. The high-value of data even more powerful networks. 6G Bitcoin The concept of Germany Ethereum VISA Europe Bitcoin IPFS project Launch of Beeple’s NFT will only be released once analysis network communication should be Because the frequency band of concept is blockchain was recognized Bitcoin raised uses Lightning team OpenSea, encrypted is integrated deeply with industry fully implemented by 2030. 6G can terahertz technology is 1-4 orders proposedfirst proposedas legal;Bitcoins worth blockchain to Network announced now the digital artwork Canaan Yunzhi $18.3 million send moneylaunchestablishment world's purchased for applications. go far beyond the powers of 5G to of magnitude greater than existing released 1st of the Filecoin largest NFT USD million; support microsecond or even sub- microwave communication, it can commercial mining projecttradingWyoming machineEthereum proposed a complete programming language, users passes DAO billThird, security issues. Compared microsecond delay communication, carry more data, easily overcome can develop decentralized APPs through their own smart with the hard secure protection of positioning accuracy of 10 centimeters bandwidth limitations, and meet the contracts, and realize a decentralized database through a mobile phones, IoT sensor structure indoors and 1 meter indoors, and the communication requirements of large consensus mechanism, making Ethereum a truly decentralized computing platformis relatively simple, making it easily "Internet of Everything" on a global data transmission rates. A globally Decentralized LedgerDecentralized used as a springboard for distributed scale. Intuitively, in the 6G era, when connected 6G communication network Computing PlatformDefi technology attacks. downloading 300 movies will take just that integrates satellite, deep-sea Decentralized Finance the blink of an eye, then it will also be ocean and terrestrial communication NFT (Non-fungible Token) Figure25: Development of mobile communication networks 1G 3G 5G Download Speed: 2 Kbps Download Speed: 8 Mbps Download Speed: 10 Gbps Download Time: 6 days Download Time: 2 minutes Download Time: 3 movies - 1 second 1991 2008 2030 1979 1998 2018 2G 4G 6G Download Speed: 100 Kbps Download Speed: 150 Mbps Download Speed: 100 Gbps Download Time: 2.5 hours Download Time: 20 seconds Download Time: 1Tb (300 movies) - 1 second Source: Public information, Deloitte analysis Figure26: Computing power development Intelligent & Diversified Applications Business Industry Application Animation Rendering, Life Sciences, applications Aerospace, Unmanned Driving, are gradually Scientific Research Application Simulation, Oil & Gas, Meteorology Financial Economy, Smart Cities, etc. enriched 2000 2005 2010 2015 2020 2025 Lenovo DEEPCOMP Dawning 5000A Xi’an Hefei Lanzhou The 6800 Tianjin Changsha Wuxi construc- 2003: Lenovo DEEPCOMP 2008: Dawning 5000A. Sensetime Chengdu Xiamen tion of 6800. Top500 14 Top500 10 Shenzhen Guangzhou Zhengzhou Qingdao Alibaba Taiyuan computing 2004: Dawning 4000A. 2008: Lenovo centers has Top500 10 DEEPCOMP 7000. Top Jinan Kunshan Wuzhen Wuhan Tencent accelerated 500 19 Source: Public information, Deloitte analysis 29

      The Metaverse Overview : Vision, Technology, and Tactics | Technology networks is an important direction of Current computing, storage, and growing data operations, has the development. Deterministic network networking infrastructure cannot potential to break through into the technology with high reliability and low realize a true Metaverse vision. To "post-Moore" era, and can solve latency will accelerate the 6G era and achieve this true Metaverse, computing the Metaverse's computing power shape a wide range of applications. The power needs to be increased by bottleneck. But quantum computing is combination of wireless transmission another 1,000-fold. still at the of prototype development and AI at the physical layer of stage. communication is also a key trend in AI, edge, and quantum computing the 6G era. will be the main infrastructure Despite barriers to achieving massive technologies for development of the increases in computing power, the Computing power Metaverse. At present, AI chips are time for further breakthroughs is not In the past 20 years in China, the still in a period of rapid development. far away. After all, as we mentioned application of computing power made Chips need to achieve close parallel previously, Nvidia's CPU speed has advances and the construction of processing to support more diverse increased 1 million-fold in the past 10 computing centers has accelerated. AI calculations in the Metaverse. This years. With high-performance computing will require a series of technological (HPC) focused on scientific research breakthroughs. 2.3 Examples of Metaverse-related applications and key fields such as technology applications simulation, oil & gas, and meteorology, Edge computing can reduce latency Although far from creating a true the use of computing power has and improve computing efficiency. In Metaverse, various applications have become more diverse through an overall architecture, a central cloud deployed the above-mentioned deployment in intelligent applications implements global scheduling, the technologies. We call these pre- fields like animation rendering, life edge cloud focuses on local large-scale Metaverse applications and detail sciences, aerospace, unmanned data processing, and the terminal representative examples below. driving, the financial economy, and transforms vast amounts of physical smart cities. Business applications inputs into massive caches of data. Simulation – interactive games, have been enriched and growth in commerce, education and culture industry applications is accelerating. Quantum computing, meanwhile, has • Games: Game-based social the ability to support exponentially networking is being transformed and Figure27: Examples of Metaverse-related technology applications Simulation Artificial Create an IDENTIFICATION Interactive Intelligence and Interactive AND PAYMENT Technology Digital Twins Platform Game Manufacture Social Smart City VR games become the entrance of AI empowers smart manufac- Everyone builds a virtual Blockchain strengthens metaverse turing community smart city construction Business Shopping software introduces VR Medical Film and television Pay product try-on interface AI improves medical efficiency Support real-time audio and Blockchain makes Education video interactive creation virtual currency VR/AR innovative teaching methods transactions possible Culture Forbidden City AR Cultural Tourism Exhibition integrates face, gesture recognition and somatosensoryinter- action Source: Deloitte analysis 30

      The Metaverse Overview : Vision, Technology, and Tactics | Technology expanded to encompass VR game- and continuation of historical and • Film and television: Creative based social networking, VR movie cultural sites. interactive platforms provide social networking (e.g. Douban) and innovative impetus for content VR travel social networking (e.g. Digital twins and AI – forms including film and television, Mafengwo). manufacturing and medicine variety shows, and short videos. • Commerce and trade: VR/AR • Manufacturing: Product For example, Tencent Video is an technology is now used for virtual design, process optimization, online interactive creation platform product displays, for example in quality management, supply that encourages original creators to Alliance Studio's 3D VR mall, where chain management, predictive participate. people use virtual navigation to maintenance, and customer Blockchain – smart city and move between and browse stores experience analysis can use digital finance and products and access payment twins. For example, in automobile gateway support. This convergence manufacturing, Siemens uses digital • Smart city: A city's information, of online and physical shopping is twins to simulate and verify each energy, transportation, and other a highly competitive new shopping stage of development, avoiding infrastructure is combined on a model. possible failures in actual production. blockchain to give full play to the • Education and training: Users • Healthcare: Digital twins used in huge value of data. At the beginning enter a virtual education space drug clinical trials, medical care, and of the construction of Xiongan New through VR/AR head-mounted surgical rehearsals help provide Area, it began to use blockchain display equipment, enjoying a more patients with more efficient, and technology to empower smart city attractive, interactive and intelligent effective services. AI can create construction. learning environment. For example, pre-life simulations to build digital • Finance: Blockchain technology STRIVR products used in employee prediction models for patients, connects the global financial system training, which increases the providing prediction record analysis to make transactions more efficient participation of employees, reduces and decision support throughout and cheaper. The Metaverse has the amount of training required, and their lives. more advanced means of payment, helps people master content faster. because its economic activity • Culture: Using interactive Creative, interactive platforms supports the transaction of virtual simulation technology to digitize – social networking, film, and goods. Pure digital currency made the cultural heritage of ancient television possible by blockchain can be used buildings, breaking the constraints to buy goods. of time and space and improving • Social: Content creators are Simulation Artificial Create an the display effect and efficiency of encouraged to build virtual worlds Technologies will eventually converge Interactive Intelligence and Interactive IDENTIFICATION cultural landmarks. For example, and create content and interactions to empower various application TechnologyDigital TwinsPlatformAND PAYMENTthe Forbidden City AR Cultural in the Metaverse. For example, scenarios, liberate productivity, Tourism Exhibition integrates Horizon Worlds allows users to advance insights, improve decision- GameManufactureSocialSmart Cityface and gesture recognition with enter virtual spaces as creators, making, and upgrade business. VR games become the entrance of AI empowers smart manufac-Everyone builds a virtual Blockchain strengthens somatosensory interaction, enabling have real collaboration and sharing metaverseturingcommunitysmart city constructionexhibitors to freely and easily obtain experiences, and explore constantly Business information that is pivotal to the long- created and evolving virtual worlds. Shopping software introduces VR MedicalFilm and televisionPay product try-on interfaceAI improves medical efficiencySupport real-time audio and Blockchain makes term protection, renewal, promotion, Educationvideo interactive creationvirtual currency VR/AR innovative teaching methodstransactions possible Culture Forbidden City AR Cultural Tourism Exhibition integrates face, gesture recognition and somatosensoryinter- action 31

      The Metaverse Overview : Vision, Technology, and Tactics | Industry 32

      The Metaverse Overview : Vision, Technology, and Tactics | Industry 3. Industry There are numerous enterprises already involved in Metaverse. Our framework for the Metaverse industry below facilitates analysis of the sector, related companies, and different business applications. 3.1 Metaverse industry framework Application layer: Generates all distribution platforms; and AI Given the broad contents in and digital contents and applications, algorithms that support intelligent different understandings of the including environment building, applications and interaction. Metaverse, a unified industry industrial manufacturing applications, framework is critical for analyzing the games, social activities, digital Technology infrastructure layer: industry, developing solutions, and artworks, economic activity, and virtual The underlying technologies of the other Metaverse-related work in a offices. Metaverse including internet, IoT, structured way. 5G/6G, and cloud computing. Technology platform layer: Contains We view the Metaverse as a large technologies that support virtual We use this industry framework to enterprise application with four layers: community building, community rules compare different participants in and application development, including the Metaverse. People wanting to Access layer: VR/AR, somatosensory the generation and import of virtual enter the Metaverse or investors and devices, brain-computer interfaces, infrastructures such as blocks and companies can use this to identify and other technologies that connect architectures; supporting technologies specific opportunities in the Metaverse users to the Metaverse. such as game engines and content industry. Figure28: Industry Framework Access VA/AR Somatose- BCI Speech Camera Mobile PC nsory Devices Recognition Industrial Application Environment Industrial Scenarios Consumer Scenarios Governance Scenarios Scenarios Tech Platform Digital Twins Game Engine (Engine) AI Blockchain Spatial Computing NFT Internet IoT Tech Cloud Computing Infrastructure Wires and Wireless Communications Networks Source: Deloitte analysis 33

      The Metaverse Overview : Vision, Technology, and Tactics | Industry 3.2 Types of participators, The future Metaverse will see fierce driving. Moreover, Omniverse has cooperation and competition competition between Microsoft and formed its own ecosystem based on There are four main classes of internet companies, especially in the micro-services and a third-party digital Metaverse solution providers: internet access layer, technology platform content creator. companies, hardware companies, layer, and infrastructure network layer software development companies, and (including cloud) where both groups The fourth group are the new new entrepreneurs. have a footprint. In the application entrepreneurial Metaverse companies, layer, Microsoft's strength is the with each focusing on a specific In the future Metaverse landscape, enterprise Metaverse, whereas most segment. Many of them have been these four classes of company will internet companies attach greater around longer and acquired first- be involved in stronger cooperation importance to consumer Metaverse. mover advantage in their specific inside, and stronger competition However, we also expect stronger markets, such as Roblox (gaming and outside, each class. competition in this layer as most community), Decentraland (community internet companies are also serving and gaming), OpenSea (NFTs), and The leading internet companies include and enlarging their enterprise market. Sandbox (gaming and community). Meta, Google, and Amazon in the Although the market values of Roblox US, and Baidu, Alibaba, Tencent, and The third group (hardware companies) and OpenSea have each exceeded Bytedance in China. Most of them own is represented by NVIDIA. NVIDIA USD10 billion, most entrepreneurial the multiple technologies needed to maintains strong leadership in AI, high- Metaverse companies have a small create the Metaverse, have massive performance computing (HPC), and market size and have are dedicated user bases, abundant application chips, establishing solid foundations to niche technologies or applications, scenarios, and have brought the in the Metaverse infrastructure and including Lingo3D, Attrsense, Cyzone, Metaverse into their long-term technology platform layers. In the and Deemos. strategies. They are expected to take second half of 2021, NVIDIA announced the main roles of Metaverse platform Omniverse—the first simulation and For internet giants, these innovative constructors and community owners. cooperation platform to support enterprises can become solutions Metaverse construction. Omniverse providers for specific Metaverse The second group, software is now open to millions of users and scenarios via collaboration or M&A. For companies, is represented by because it has high efficiency and low example, Tencent has invested heavily Microsoft, which has business plans for cost is expanding rapidly in multiple in Roblox, Bytedance has acquired all four layers of the Metaverse and is fields, including architecture, media, VR provider Pico, and Meta acquired emphasizing enterprise applications. product design, and autonomous- Oculus several years ago. Figure29: Participants in the Metaverse Hardware Internet Technology Vendors Manufactur- ers Software Entrepreneur 小鸟看看 Technology (Small Particles Vendors of Technical Flow) Source: Deloitte analysis 34

      The Metaverse Overview : Vision, Technology, and Tactics | Industry Figure30: American internet and technology enterprises in the Metaverse Meta Google Microsoft Amazon Perception & VA/AR Speech Recognition VA/AR Somatosensory Speech Recognition Display Layer oculus wayii HOLOLENS Device Transcribe Medical Kinect Gaming Social Contact Gaming Games (Activision Beat Saber Horizon STADIA Blizzard, MINECRAFT) Application Layer Worlds AR Shopping Fitness Video Meeting + MR Les Mills Bodycombat YouTube VR (Microsoft Teams) Platform Layer Development Platform Google Daydream Tool Software Development Platform Presence Platform VR Platform Operating System Sumerian Android OS Open Computing AI Cloud TPU Cloud Content Network Layer Data Center Computing AI Computing Delivery Cloud Computing AI Internet Chip Edge Network Computing AI Source: Open source data, Deloitte analysis 3.3 Major platform players segments of the Metaverse through of machine cognition and AI functions Platform-based players (mainly large strategy and transformation. Meta has that include Insight SDK, Interaction internet and technology companies), launched several programming tools SDK, Voice SDK, Tracked Keyboard rely on their mature technologies, including Spark AR, Presence Platform, SDK, and other components, and broad user bases, and existing and Pytorch to build and develop the plans to build an ecosystem that application scenarios to quickly deploy Metaverse community. supports Metaverse learning. In the Metaverse applications. Benefiting network layer, Meta has launched open from capital advantages, they can In the access layer, Meta's Oculus infrastructure and data center network expand their Metaverse reach through leads the global market for XR devices, hardware that supports cloud services investment or M&A in areas not yet with its latest product, Oculus Quest and is growing in areas like AI. Hardware covered by their own businesses. This 2, taking up to 75% of the market. In Internet Technology section analyzes these industry giants content, Meta has acquired several Microsoft VendorsManufactur-and provides an overview of their ers VR game and cloud game developers Microsoft is devoted to all four layers Metaverse layouts. and launched virtual social and and helps enterprise customers with office platforms like Horizon Worlds digital transformation through a series Software Entrepreneur小鸟看看Meta and Horizon Workrooms. In digital of products including HoloLens, Mesh, Technology (Small Particles Meta has one of the most currency, it has Libra and is now Cloud, and Azure Digital Twins. Unlike Vendorsof Technical comprehensive layouts in Metaverse. marketing the Diem token. In the Meta, which emphasizes the consumer Flow) It has dabbled in hardware, software, platform layer, Meta has released the end (household applications, office, content, digital currency and other Presence Platform covering a series social apps, and UGC content); 35

      The Metaverse Overview : Vision, Technology, and Tactics | Industry Microsoft puts more efforts into the Glass in 2012 should not be ignored. algorithms, and intelligent driving, with enterprise Metaverse. Google has only a few deployments AI running through every aspect of its in the application layer, and mainly business. In August 2021, Microsoft announced combines existing businesses with the its enterprise Metaverse solution, Metaverse concept, including Stadia In hardware, Baidu has been involved with two core features: Dynamics in cloud games and YouTube VR in in VR for many years with a full-scale 365 Connected Spaces and Mesh software services. product line that includes consumer- for Teams. Dynamics 365 Connected oriented (iQIYI Qiyu series) and Spaces helps company administrators Amazon enterprise-oriented VR (Baidu VR). analyze the movements and Amazon's Metaverse strategy of is In applications, Baidu has launched interactions of consumers in grocery mainly based on its current cloud Xirang alongside its VR lines. This stores or employees on factory floors. computing AWS and e-commerce is a mixed enterprise-consumer Mesh for Microsoft Teams integrates business. virtual community that aims to Microsoft Mesh (an MR meeting create a virtual world supporting platform) into Microsoft Teams, It has provided cloud-computing multiplayer interactions. Baidu also has allowing people in different locations to services to help Meta accelerate R&D autonomous-driving technology and collaborate on Teams using 3D avatars. on its AI projects. The two companies could make this one of its Metaverse In the hardware layer, Microsoft has will also cooperate to help customers applications. VR/AR visualization (the Hololens improve the performance of PyTorch (a series) and somatosensory technology deep learning computing framework) Alibaba (Kinect). In terms of applications, apart on AWS, and accelerate the modelling, In the Metaverse, Alibaba focuses from enterprise software mentioned training, and deployment in AI and on two core advantages: Metaverse above, Microsoft has acquired machine learning. solutions based on cloud computing Minecraft and Activision Blizzard in and combining e-commerce user gaming. As the second-largest public Amazon also cooperates with Epic experience optimization with the cloud server in the world, Microsoft is games and provides it with cloud- Metaverse. experienced in edge computing and AI. computing services. Epic Games' ace product, Fortnite, has 350 million users It has extensive experience in cloud Google worldwide. As a Metaverse game, it computing, with a public cloud that Google has solid foundation in the requires massive computing resources. ranks third in the global market, only infrastructure layer of the Metaverse Almost all of its workload is currently behind Amazon and Microsoft. In through its AI and cloud service. In on AWS. In addition, Amazon is using 2021, Alibaba put more effort into 2017, Google's strategy changed its advantages in retail to develop AR the Metaverse, creating cloud game from Mobile First to AI First, and it shopping applications. Yuanjing, building an XR laboratory, now leads the AI industry in R&D and and launching NFT platform Jingtan. applications. Chinese internet companies in the In e-commerce, Taobao supported VR Metaverse shopping since 2016. Tensor Flow, Google's open-source Chinese internet companies are software for AI, is widely used developing applications for multiple Tencent worldwide, and Google has launched layers of the Metaverse by utilizing Tencent's Metaverse strengths are TPU chips specifically for Tensor Flow. their own strengths. backed by its huge user base and In cloud computing, Google Cloud rich application scenarios in social is among the world's top four public Baidu interaction, lifestyle services, and cloud service providers. With its Baidu's Metaverse advantage is in AI entertainment content. combined efforts in cloud computing and hardware, as an internet giant and AI, Google can play an important with an early strategy and in-depth Starting with the popular games role in Metaverse infrastructure. In development of AI. Its business ranges Roblox and Fortnite, Tencent has the access layer, it does not yet have a from search engines to AI applications assembled a development team for top product but the release of Google including chips, AI open-source Metaverse games and invested in 36

      The Metaverse Overview : Vision, Technology, and Tactics | Industry Epic, the American game development ByteDance owns Reworld, a game creation and and marketplace platform. In cloud ByteDance focuses on hardware interactive content platform for teens. It computing, Tencent launched cloud entrance, content and applications, has also launched Pixsoul, a social app game START, and with the Metaverse and its current product matrix featuring face art creation. gaining more attention in 2021 including Douyin, Xigua Video, Toutiao, registered a series of trademarks and TikTok support networks in its ByteDance's launch of its Metaverse including QQ Metaverse, Tencent Music Metaverse strategy. social game app Party Island, which is Metaverse, Game for Peace Metaverse, currently in beta testing, is expected Honor of Kings Metaverse, and Oasis In the access layer, ByteDance soon. In October 2021 TikTok launched Metaverse. In NFTs, Tencent has acquired Pico, a leading Chinese VR its first NFT series, TikTok Top Moments. developed the Huanhe marketplace manufacturer in September 2021. In the network layer, ByteDance is built on top of its proprietary Zxin In the application layer, in April 2021 entering the market with Volcengine as Chain. ByteDance invested RMB100 million in an independent business unit for the Code Qiankun, which developed and public cloud market. Figure31: Chinese internet and technology enterprises in the Metaverse Perception & VR/AR VA/AR VA/AR VR/AR(pico) Display Layer ( Baidu VR) (TenVR) Social, Gaming Application Layer Social, Gaming (Hyryang) VR Shopping ( Buy+) Social Contact (Reboot World) Cloud Game (Yuanjing) Cloud Gaming NFT Products ( START) ( TikTok Top Moments) Game Engine Platform Layer NFT Platform (Unreal) Game Engine (Whale Scout) NFT Platform (Restart the World) (Magic Core) Cloud Computing Cloud Computing IoT AI Network Layer AI Internet (Alibaba Cloud) (Tencent Cloud) Cloud Computing AI Chips AI Blockchain (Ant Chain) Blockchain AI (Volcano Engine) (Confidence Chain) Source: Open source data, Deloitte analysis 3.4 The NFT industry chain blockchain (public chains, side chains, Public chains are independent, NFTs are one of the fastest-growing developer tools, token standards, community-oriented blockchains arenas of the Metaverse, catering to wallets, and payments) and network- like Ethereum and Flow Blockchain. people's curiosity, pursuit of artistic attached storage. The infrastructure Ethereum, with its long history, is the creativity, and investment demand for layer creates and captures the value leading blockchain in the NFT market. digital art collections. The NFT industry of the NFT value chain through NFT Sidechains are new blockchains chain has four layers: infrastructure, minting. For example, the gas fee created to alleviate high traffic, production, circulation, and derivatives. during minting goes to the blockchain, improve public chain performance, and the more NFTs minted, the higher and realize certain functions that some The infrastructure technology the value captured by the blockchain. public chains cannot fulfill. Protocol layer is mainly composed of standards create an underlying logic 37

      The Metaverse Overview : Vision, Technology, and Tactics | Industry and consensus during NFT minting experience the game and acquire finance, artwork, collectibles, and and include ERC20, ERC721, and digital assets that are tradable in the virtual real estate, and creates virtual ERC1155. Developer tools help develop blockchain. museums, art exhibitions, music, and blockchain applications. technology events. The Huanhe NFT marketplace in China Network storage is data storage belongs to Tencent, which is devoted to Decentralized finance or DeFi is one on a blockchain, represented by developing digital collection business example of a combination of NFTs and InterPlanetary File System IPFS that confirms with compliance finance. It empowers traders to save, distributed storage. A wallet, e.g. requirements. Cryptopunks was one borrow, transact, and buy insurance Tokenall, is a tool for private key of the earliest NFT collections on without a centralized entity (bank or storage without holding tokens. Ethereum, where the most expensive financial institution) and overhaul the trade reached USD7.5 million. OpenSea traditional banking system. The production and circulation is the world's largest comprehensive layers host platforms that produce NFT marketplace, where users can Liquidity has often limited the and trade NFT works. Production mint, display, trade, and auction NFTs. financialization and popularization of platforms have two usual models, digital art. NFT20 is a decentralized UGC and PGC, to create NFT The derivative layer includes NFT derivatives trading market and artworks, games, virtual worlds, exhibition platforms and combinations protocol that addresses this issue and marketplaces. For example, of NFT applications with other by allowing NFT producers to create Decentraland is a decentralized industries. liquidity pools for their projects and virtual world based on Ethereum. traders to benefit from those pools' Users of Decentraland can create, This layer includes NFT fund greater liquidity and fair prices. Its explore, and trade NFT works in this Metapurse, a cryptocurrency fund trading volume and liquidity ensure fair virtual world. Sandbox launched its created and funded by Metakovan and prices for all. NFT20 tokens can also be blockchain-based Play-to-Earn game operated with Twobadour. It focuses bought as an investment. in 2018, which has no storyline or on identifying early-stage projects settled ending but allows players to across blockchain infrastructure, Figure32: NFT industry chain and companies NFT Industry Chain Representative Companies & Business Introduction NFT + Defi Any NFT work holder can deposit works to the fund pool in exchange for NFT20 Derivative tokens for liquidity Layer Exhibition Platform Metapurse hosts NFT art, music and tech events where anyone can participate remotely Circulation Integrated Trading Currently the world's largest comprehensive NFT trading platform, users can Platform mint, display, trade, and auction NFTs Layer Decentraland is an Cryptopunks, one of the Magic Core is Tencent's Digital Art Platform Ethereum-based earliest NFTs on NFT trading software, decentralized virtual reality Ethereum, currently has committed to the Production platform that allows users the most expensive implementation of Layer NFT NFT Virtual to create, explore, and transaction at USD7.5 digital collectibles Artwork Games World trade in virtual worlds million business under a compliant framework Network Storage IPFS is a global, peer-to-peer distributed file storage system Infrastructure Ant Chain is the external brand of Ant Group's intelligent technology business, Technology dedicated to linking trust with technology Layer BlockchainPlatform The NFT ecology of the Ethereum public chain was developed earlier, and it is the absolute overlord of the current NFT infrastructure Source: Public information data, Deloitte analysis 38

      The Metaverse Overview : Vision, Technology, and Tactics | Industry NFT business and circulation models Participants in NFT circulation are either upstream-creators, midstream-platforms, or downstream-bidders. Figure33: NFT circulation Upstream Midstream Downstream Creators NFT Platforms Deals / Bidders Mainly Individual • Global: OpenSea, Young People: Creators: 90% Individuals; SuperRare, Nifty 58% Millennials, 33% 10% Teams Gateway, Rarible Gen X • China: Ali Auction, AntChain, Tencent Magic Core Source: Public information, Deloitte analysis NFTs generate value at every link, including gas fees charged by blockchains, sales and trading fees charged by platforms, and copyright payments to content creators. Typically, upstream creators pay gas fees to a blockchain when creating an NFT. They then pay gas fees to the blockchain and commission to a platform when the NFT is published. Creators also collect transaction fees from buyers, and buyers pay gas and platform fees. If the NFT is traded again, the creator receives a copyright fee and the platform charges a resale service fee. The seller collects the NFT payment and pays resale service, royalty income, and gas fees. The buyer pays for the NFT and pays gas fees too. Figure34: NFT value distribution Value Value NFT Market Value Distribution Distribution Attribution Creation Issue & sell Transfer 1 Infrastructure layer Gas fee Gas fee Gas fee creation layer (creator) not in the chain: 0 without platform: sales Royalties Gas: a Gas fee is needed Blockch within the chain: Gas revenue-Gas fee for recording creation and ain fee with platform: first transaction information sales revenue-Gas fee on the blockchain creation layer (primary first sales revenue transfer platform) 2 creation layer (secondary resale service fee transfer platform) Sales/Resale Services collector (seller) resale revenue-resale Fee: service fee-royalties-Gas NFT transactions Creation fee through the platform Platform collector (buyer) issue revenue-Gas fee resale revenue-Gas fee need to pay the platform certain service fees Examples of Main NFT Market 3 Established Entry Forms of First Sales Resale Service Royalties of Time Creators Service Fee Fee Creators Sales Revenue, OpenSea 2017 Not Set 2.5% 2.5% 10% Royalties: creator’s income comes from the Creator SuperRare 2018 Application 15% 3% 10% sales income in the Nifty 2018 primary market and the Gateway Targeted circulation royalties Invitation and - 5%+0.3USD Self Design income in the Application secondary market Rarible 2019 Application 2.5% (in the price) 2.5% (out of the price) Up to 50% Source: Public information, Deloitte analysis 39

      The Metaverse Overview : Vision, Technology, and Tactics | Industry The three roles in circulation Upstream NFT developers include individuals and organizations using the UGC of PGC model. Individual creators represent 90% of NFT developers worldwide, but in China, professional teams dominate NFT creation. Figure35: NFT creation NFT dealers/Bidders, Users Portfolio: Take Everyday: The first 5000 Days the Bidding of as an Example PGC UGC Creators Professional teams generate content users generate content 6% 3% 6% Model of platform releases NFT with its own artist team or external artists users can create NFT works and creation upload, currently support audio, video, pictures, etc. 33% 33% Global: Nifty 58% 55% Cases China: Ali Auction, AntChain, Tencent Global: OpenSea, SuperRare, Rarible, etc. MagicCore, JD lingxi service fee: users pay Gas fees to upload their work to the chain Profit Sales sharing: the platform cooperates with well-known IP, and the through the platform, and the platform can earn Gas fees as a model- sales are divided according to the agreed proportion middleman platform Gas spread: the platform charges users a fee when they sell NFT, about 5%~15% Millennials (1981-1996) X age (1965-1980) Profit America Europe Asia model- sales sharing, contract fee sales revenue-chain fee-service fee Z age (1997-2012) baby boomers (1946-1964) creators Source: Deloitte analysis Globally, the midstream NFT trading platforms include OpenSea, SuperRare, Nifty Gateway, and Rarible. In China they include Alibaba Auction, Ant Chain, Tencent Huanhe, and NFT China. Internet and technology companies dominate China's NFT market because NFTs cannot be traded freely there. There are major differences in the technology, types of artworks, and oversight on Chinese and global platforms. Figure36: NFT markets globally and in China Blockchai Type of Threshold Currency Restrictions Restrictions Artwork of Creators C pl hina Global focus on public including high Ethereum, RARI Lax regulation more a wealthy and low and other And flexible relaxed rise t v Market f s chain or . thresholds cryptocurrencies trading and fall m g s lo b a legal currencies, some can be l China’s focus on less focus on high e.g. RMB, donated, not restricted Market private chain thresholds digital RMB open for resale rise and fall Source: Deloitte analysis Most downstream buyers and bidders are young. According to the auction data from Everyday: The First 5,000 Days, millennials (1981-1996) and Gen X (1965-1980) bought more than 90% of the NFTs, showing the current NFT market belongs to young people with buying power, at least for now. 40

      The Metaverse Overview : Vision, Technology, and Tactics | Industry Demographically, NFT market is more mature overseas, especially in Europe and the US. Among the biggest NFT buyers, 55% are in the Americas, 27% in Europe, and only 18% in Asia, mainly due to the greater flexibility of overseas markets. Figure37: Profile of NFT bidders and buyers NFT dealers/Bidders, Users Portfolio: Take Everyday: The first 5000 Days the Bidding of as an Example 6% 3% 6% 33% 33% 58% 55% Millennials (1981-1996) X age (1965-1980) America Europe Asia Z age (1997-2012) baby boomers (1946-1964) Source:, Deloitte analysis Current problems Four major problems currently beset the NFT market, the most prominent being security and market supervision. There is a long way to go before the massive adoption of NFTs and it will require cooperation and joint efforts from multiple counterparts. The four major problems are a lack of liquidity, with high price thresholds and no fair pricing mechanism; the security and uncertainty of blockchain storage, with occasional NFT losses; NFTs being a niche market limited to digital art, collections, and games, with a long way to go before mass adoption; and as-yet-unsettled market rules, with regulatory development far slower than NFT market growth, and the lack of a gateway for NFT supervision. Figure38: Problems in the NFT market 流动性匮乏 Lack of Liquidity 储存安全不确定 Uncertain Storage Security 发展面临 Problems 的问题 应用领域小众 Niche Application Field 市场规则不完善 Market Rules Are Not Perfect Source: Deloitte analysis 41

      The Metaverse Overview : Vision, Technology, and Tactics | Metaverse tactics for enterprises 42

      The Metaverse Overview : Vision, Technology, and Tactics | Metaverse tactics for enterprises 4. Metaverse tactics for enterprises This chapter explores the future stages of the Metaverse, major potential risks, the attitude to NFTs in China, and how companies should respond to Metaverse opportunity. 4.1 Metaverse development "blue ocean" market. Big companies The Metaverse will then enter a Defining Metaverse development are accumulating experience across symbiosis of virtualization and reality. depends on how immersive the the Metaverse, while startups thrive on People will shuttle back and forth experience is, user scale, the segmented portions of the Metaverse, between the virtual and real worlds. smartness of AI technology, and how similar to how people fed themselves Virtual humans and AI will enter many much humans rely on the virtual in the agricultural age. scenarios, interacting and coexisting world. Our predictions for Metaverse with humans. The length of this period development are based on the key This stage will only last around 10 depends on technical breakthroughs factor of "ownership of governance". years) as the public is already forming in AI. a consensus on how much value the There will be five stages in the Metaverse brings. The next stage Finally, the virtual and the real will Metaverse development: will be oligopoly after the biggest compete with each other. This will companies achieve their strategies happen after around 50 years when We are currently in the agrarian age and stop accumulating, having gained virtual humans are intelligent enough when primary applications spread the largest slice of the market. This and even surpass the average rapidly. A huge amount of new stage will last for around 20 years as intelligence of human beings, being enterprises and services are emerging, these giants build high barriers to able to compete with humans for and most of them can find their niche competition. control. because the Metaverse remains a Figure39: Development stages of the Metaverse Primitive Society Farming Stage Oligopoly Symbiosis of Virtual and Real Game of Virtual Reality ~2020 2020~2030 2031- 2050 2050 - 2070 2071~ The technologi- The primary Metaverse A few Metaverse giants Humans use the virtual world The game of the cal rudiments form lands. The appear, creating an to the same extent as they Wisdom of Virtual of the Metaverse is a blue oligopoly use the real world Humans vs Human Metaverse ocean Control of the emerge Metaverse Source: Deloitte analysis 43

      The Metaverse Overview : Vision, Technology, and Tactics | Metaverse tactics for enterprises Figure40: Potential risks Capital Manipulation Opinion Bubble Ethical Constraints Monopoly Tension There are still many Irrational public How to construct the ethical Competition among the Industry Evolution uncertainties in the framework consensus of the giants determines the Conceptual breakthroughs embryonic Metaverse, opinion bubbles Metaverse in a decentral- relatively closed nature have not fundamentally and industries and echo irrational stock ized framework needs to be of their ecology, and it is changed the status quo of markets need to return market volatility explored from multiple difficult to achieve industrial evolution to rationality perspectives complete openness and decentralization. Hashrate Pressure Privacy Risk Intellectual Property How to ensure the stability Addicted to Risk As the base resource supporting the Multi-agent collaboration of cloud computing, Economic Risk Excessive immersion in continuous operation of the and adaptation applications low-cost computing power Economic risk can spill virtual worlds can Metaverse, individuals’ data needs to across the virtual-real over from the virtual to exacerbate psychological be updated and expanded boundary are likely to lead resources, and many other the real world problems such as social constantly, and the compliant problems, remain to be anxiety and alienation collection, storage and management to disputes over production solved of data resources remains to be rights discussed Source: Deloitte analysis 4.2 Potential risks than the "old" internet has been in user interaction and form unified The advance of the Metaverse people's daily work and lives. Any standards, and needs stable service will present potentially significant malicious use of the data recorded providers, which creates potential risks related to addiction, privacy, by every interaction of people with oligopoly risk. Avoiding this risk is intellectual property, economics, the Metaverse will bring huge risks to crucial to Metaverse development. oligopoly, and governance. people's privacy. • Governance: The most desirable • Addiction: With continuous • Intellectual Property: With relationship between virtual development of the Metaverse, the integration of the digital and and human humans; whether addiction risk is becoming more real worlds, the ownership and decentralization of the digital world significant. The Metaverse breaks distribution of intellectual property is realized or it merely becomes the physical rules of the real world, in the virtual world and the problem the embodiment of a group of redefines production and lifestyles of virtual item embezzlement will developers' personal will; the in the digital world, and transforms challenge intellectual property influence of the digital world on social productivity. However, brand- management. the real world; and the division of new visual stimulus and interactive • Economics: Economic risk includes governance across the virtual and experiences could make people the possibility that the contradiction real worlds are key problems and addicted to the virtual world and between huge economic value in the complex to solve. unable to extricate themselves from virtual world and the virtual nature it. It is therefore critical to find a way of this value leads to speculative 4.3 China's attitude to the to balance the relationship between behavior, or that the Metaverse is Metaverse the real world and the Metaverse, attacked, invaded, disrupted, and Generally, China's attitude towards letting the latter play a more positive destroyed, damaging real-world the Metaverse has been to embrace it role. economic and social development. actively but move forward cautiously. • Privacy: The Metaverse will become China welcomes Metaverse technology a massive, extremely complex, open, • Oligopoly: Construction of the innovation and industrial cultivation, and dynamically optimized system Metaverse requires a huge amount but is strict with digital currency and that is more deeply integrated of investment to realize mass NFT trading. Embrace actively 44

      The Metaverse Overview : Vision, Technology, and Tactics | Metaverse tactics for enterprises The Ministry of Industrial and scenarios, and partnership in the Leading Zone, aiming to build a Information Technology (MIIT) recently Metaverse. paragon of international innovation mentioned the Metaverse for the and a domestic Metaverse ecological first time and local governments are Shanghai includes Metaverse in industry demonstration zone. making plans for the Metaverse. 14th Five-Year Plan According to the 14th Five-Year Plan Zhejiang accelerates Metaverse MIIT: cultivate a group of for Shanghai Electronic Information development innovative SMEs in the Metaverse Manufacturing Industry, Shanghai Zhejiang's Guidance on The and other emerging industries. plans to develop quantum computing, Construction of Future Industry The MIIT has said it will support SMEs 3rd-generation semiconductors, 6G Pilot Zones in Zhejiang Province with digital transmission, seize the technology, the Metaverse and other states that the Metaverse, alongside opportunity to push forward new industries, and create image engine AI, blockchain, and 3rd-generation infrastructure and develop the digital and blockchain technology to meet the semiconductors, is one of the most economy, and cultivate innovative development needs of the Metaverse. important strategies for Zhejiang's SMEs specializing in the digital industry Shanghai is encouraging application industry pilot zone due to launch by and innovative SMEs in emerging of the Metaverse to public services, 2023. Zhejiang will accelerate the industries such as the Metaverse, business, social entertainment, development of an open innovation blockchain, and AI. industrial manufacturing, production platform in brain-machine cooperation, security, and video games. VR, and blockchain, and boost Beijing Municipal Administrative industrial technology and integrated Center (Beijing MC) the first mover Jiangsu to build Metaverse innovations. At the Beijing MC Industry Ecological Industry Demonstration Development Promotion Conference Zone Wuhan writes Metaverse into in Tongzhou District, Beijing issued a Binhu District of Wuxi City launched government work report series policies including "Metaverse- the Metaverse Ecological Industry The government work report of the related policies" focusing on content Development Plan of Taihu Bay 15th People's Congress of Wuhan in design, industrial spaces, application Science and Technology Innovation Hubei Province talks about accelerating 45

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          The Metaverse Overview : Vision, Technology, and Tactics | Metaverse tactics for enterprises development of the digital industry should not use it to price products Opinions also prohibit acting as a and pushing the integration of the or services, or directly or indirectly market maker and other trading Metaverse, big data, cloud computing, provide Bitcoin-related services. The methods. In addition, as NFTs are blockchain, geospatial information, notices clarify that token issuance considered to have financial attributes, and quantum technology with the real is essentially an unapproved, illegal marketplace must obtain approvals economy. public financing, with suspected illegal from the State Council and its financial sales of tokens and securities, illegal authorities. Hefei and Hainan bring Metaverse fundraising, fraud, pyramid schemes, into future strategy and other illicit activities. 4.4 Metaverse tactics Within the next five years, Hefei The Metaverse presents a huge plans to put more effort into future In 2021, China adopted stricter opportunity but also major risks. industry, aiming to develop a group digital currency policies, with mining Enterprises aiming to embrace the of pilot companies, leading-edge designated as an eliminated industry Metaverse should take the following technologies, and high end products and clarification that digital currencies approaches: in areas including the Metaverse, such as Bitcoin and Ethereum do • Active learning. The Metaverse is superconducting materials, and not have the same legal rights as essentially a new technology-driven precision medicine. fiat currencies. Related financial revolution in society with deep activities and overseas digital currency influence. To embrace this change, In Hainan, meanwhile, the Sanya exchanges providing services to enterprises should understand its full Municipal People's Government residents in China have been declared scope before seeking opportunities and NetEase have signed a strategic illegal. in the Metaverse. cooperation agreement in which NetEase base its Hainan headquarters In the NFT space, platforms needs to • Gain first-mover advantage. in Sanya. From this new base, it will finish a very strict approval process Enterprises hoping to enter the develop the NetEase Metaverse before conducting business. This Metaverse and provide services to Industrial Base project to promote requires them to have licenses for companies or individuals must move high-quality development of Hainan's value-added telecommunications fast, provide targeted solutions, and digital culture and creative industries, and the dissemination of audio-visual enter customers' consciousness to and create an international digital programs via information networks, amplify results. The capital market, innovation center that integrates a permit for cyber culture business enterprises, and individuals accepted internet technology with digital content operations, one recordation for the concept of the Metaverse rapidly. production, copyright operations, and blockchain information services and Despite recent drops in market products. another for artwork business record. It valuations of Metaverse-related is difficult for enterprises to acquire all companies, it gained acceptance Move forward cautiously of these. much faster than the internet did China's policies on digital currencies when it emerged. This means each and digital art transactions are the Furthermore, it is difficult to operate window of opportunity will not main reflection of its cautious attitude an NFT marketplace. According to be open for long and first-mover towards the Metaverse the advantage is key. Implementation Opinions of the General Office of the State Council • Treat the Metaverse as an China has strict supervision on digital on Straightening out and Rectifying advanced digital transformation. assets. Back in 2013 and 2017, the Various Types of Trading Venues, Businesses that want to empower People's Bank of China and other standardized contract transactions themselves with Metaverse government departments issued cannot be conducted by centralized technologies and models can notices clarifying that Bitcoin does trading methods including call or consider these part of their overall not have the same legal status as fiat continuous auctions, electronic digital transformation and intelligent currencies and financial institutions matching, anonymous trading. The 46

          The Metaverse Overview : Vision, Technology, and Tactics | Metaverse tactics for enterprises upgrading. When the concept of market to develop innovative choose their positioning. the Metaverse was proposed, all of businesses should explore the • Build an ecosystem. Metaverse the relevant technologies already Metaverse value chain to find a link technology is becoming increasingly existed and had varying extents in that chain that fits their existing precise, and demand for application of application. All of the same capabilities. For example, the four scenarios is expanding. Enterprises technologies are also required in layers of the NFT market have must build ecosystems around their digital transformation. The immersive corresponding core capabilities, NFT core competitive advantages to experience of the Metaverse infrastructure requires blockchain provide customers with integrated suits marketing and consumer and NFT expertise, NFT production application scenarios and solutions. interactions, R&D and manufacturing requires creative resources, NFT use digital twins and 3D simulation, trading requires a platform, and • Avoid risk. Act according to national and AI algorithms are already widely NFT derivatives require industry polities, protect data and network used. applications. The entry points for security to prevent data breaches, • Focus on business model a Metaverse business are similar and avoid speculation in the innovation based on core to those in the NFT market, and Metaverse to prevent economic risks. competitiveness. Companies enterprises should use their own that want to enter the Metaverse capabilities and characteristics to Conclusion The Metaverse is guided and driven by human imagination and contains a vast amount of complex content. Its application also varies from country-to-country. Enterprises should embrace the Metaverse, clarify their positioning and layout in the Metaverse, and continuously strengthen their core capabilities and ecosystem construction to maximize the benefit of this new universe. Most of all, they should look forward to exploring and discussing the Metaverse together. References 1. 于佳宁 何超 元宇宙 、 《 》 2. 清华大学 元宇宙发展研究报告2.0版 《 》 3. 北京大学&安信证券 2022年元宇宙全球年度报告 《 》 4. 头豹研究院 2021年中国NFT平台研究报告 《 》 5. 国海证券 元宇宙专题深度——未来的未来 《 》 abc8501.pdf 6. 中央部委首提元宇宙 多地政府超前布局 《 , 》 47

          The Metaverse Overview : Vision, Technology, and Tactics | Deloitte Contacts Deloitte Contacts Taylor Lam Mark Lian Vice Chairman/ TMT Industry Leader Technology Sector Leader Deloitte China Deloitte China Tel: +86 10 8520 7126 Tel: +86 755 3353 8668 Email: [email protected] Email: [email protected] Hanson Wang Eric Ma Lead Partner, Deloitte Consulting Consulting Senior Manager Metaverse CoE Deloitte China Consulting Partner, TMT Industry Tel: +86 10 8524 8708 Deloitte China Email: [email protected] Tel: +86 10 8534 2558 Email: [email protected] Sunny Chen Consulting Consultant Deloitte China Tel: +86 21 6141 2151 Email: [email protected] 48


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              The Metaverse Overview : Vision, Technology, and Tactics | Preface 51

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