This article is part of PMW’s Undercover series taking a deep-dive into the metaverse and its implications for the performance marketing industry. To discover 10 must-know stats, 8 metaverse myths and how brands are using NFTs, click here.
”South Korea has lived in the future for a very long time, waiting for the world to catch up,” writes self-styled ‘creative badass’, game developer and futurist Kelly Vero. Last October, when Mark Zuckerberg announced his rebranding of Facebook as Meta, the reaction among opinion formers in the South Korean capital Seoul, was not ‘Wow!’, it was more like ‘Finally!’
A national multiverse strategy
Nine months before Zuckerberg’s declaration, South Korea’s Ministry for Science and IT had announced, to significantly less fanfare, that the government would invest $7.5bn in digital technologies in 2022, with 9% of that devoted to the metaverse and cloud services.
The money was significant but more impressive, in its way, was how quickly the government followed this strategy through. An upgraded ‘Digital New Deal 2.0’ was published last July focusing on an open metaverse platform, blockchain and cloud technology. This was preceded by news that the government was collaborating with big tech companies such as SK Telecom and Hyundai to expedite development of the metaverse.
If the South Korean government achieves its stated goal of becoming the fifth largest metaverse market in the world (it presently ranks twelfth) with 40,000 experts working in this sector, it could create more than 1.5m jobs. Such state-led programmes are often viewed as particularly Asian but you could argue they are not that dissimilar to the often unacknowledged role that the American government played in nurturing Silicon Valley.
Virtual visions in Seoul
As Seoul has long seen itself as the world’s most connected city, there was a certain inevitability about the council’s declaration that it would become the first major city in the world to enter the metaverse. Yet, the virtual realms that the capital’s officials are getting excited about are worlds apart from Zuckerberg’s revenue driven model.
The aim is to open a virtual public centre in 2023 where avatar officials will handle the kind of questions and complaints – everything from COVID-19 rules to planning regulations and parking tickets – that would hitherto require a trip to City Hall. The goal is for the city government’s metaverse to be fully operational by 2026.
That sounds ambitious but, as the World Bank has pointed out, Seoul has already pioneered the data-driven management of such challenges as urban mobility, the circular economy and e-governance.
If, as many experts believe, gaming will initially drive the growth of the metaverse, South Korea looks well placed to lead the charge. The country has a vibrant gaming culture – over half of the 52m population already plays games on its smartphones – and consumers have been quick to adopt such devices as Oculus VR headsets and mobile wallets (which almost two out of three Koreans now have). The country is also ‘world-beating’ in the burgeoning business of e-sports
Most industry analysts believe that the 5G mobile network will be integral to the successful roll out of the metaverse and South Korea was the first country to deploy this technology. Although the country enjoys one of the world’s fastest internet speeds, substantial investment in its digital infrastructure will still be needed to ensure that the metaverse does not buffer and crash its way into irrelevance. The country’s largest internet provider KT has recently paid out $34m in compensation after an hour-long nationwide outage caused chaos last October.
The rise of the ‘untact economy’
The pandemic has also helped promote South Korea’s metaverse. During lockdowns, Gen MZ (Korea doesn’t distinguish between Millennials and Gen Z, treating them as one demographic) have been attracted to what experts call an ‘untact economy’ – the opposite of a ‘contact economy’ – with new virtual meeting rooms being created daily to satisfy tens of thousands of active users.
Although some analysts say that hard economic realities – notably soaring property prices – are driving Gen MZ into the metaverse, South Korea’s social culture is probably a greater influence. Like many neighbouring nations, South Korea is a tightly knit, family-oriented society which expects young people to study very hard. In this environment, the metaverse gives Gen MZ the chance to carve out an individual identity (even if it is a virtual persona) and stage their own small rebellion against society’s mores without overtly challenging the primacy of the family unit.
The metaverse industrial complex
South Korea’s biggest companies have certainly got behind the government’s strategy. Key developments so far include:
- Hyundai, the country’s largest automaker, is collaborating with American 3D content platform Unity to create a twin factory in the metaverse to serve as a global innovation hub.
- SK Telecom already has more than 1.1m monthly active users in its Ifland metaverse, which it launched last July. Major rival Zepeto is part of the online giant Naver, which co-owns the popular Asian messaging app Line with Soft Bank.
- Samsung, the world’s largest maker of memory chips and mobile phones, has formed a metaverse task force, which reports directly to vice-chairman Han Jong-Hee and is developing a VR headset under the Galaxy brand.
- Consumer electronics giant LG recently showcased a virtual office and zoo and, through its LG Technology arm, has invested around $159m in related start-ups and venture capital firms.
- Role play gaming company Netmarble has launched a new entertainment division to promote virtual pop stars. It also owns around a fifth of the company which promotes boy band BTS and is 17% owned by Tencent.
- South Korean ad agencies – especially Innochen (which is part of the Hyundai group) and Chell (in which Samsung Electronics is the biggest single shareholder) – are keen to acquire virtual and augmented reality businesses.
It remains to be seen how the public-private partnership spearheading the metaverse in South Korea will play out. Experts recognise that open source-software and interoperability are key – and certainly the government’s goal is to create an open metaverse – but how open will that be, exactly? The devil – much like the revenue – really is in the detail.
There is also the question of whether, as the metaverse expands, it fulfils Gen MZ‘s expectations. When the government lifted the last pandemic-related social distancing regulations recently, metaverse activity across the country fell sharply, with fewer users spending time in virtual worlds. One Korean academic even talked of ‘metaverse fatigue’. It is more likely to be a blip. Given Korea’s knack for living in the future, the ‘untact economy’ may well spread to other countries.
The global success of boyband BTS – estimated to be worth around $4.8bn a year to Korea’s economy – has led Peter Vanham, deputy head of media at the World Economic Forum, to speculate that globalisation may be entering a new, more diverse, and less Anglo-centric, era, saying: “Their success is against the cultural odds. Their songs are mostly in Korean, which isn’t even one of the top ten global languages.” In the past decade, BTS have topped Billboard’s US singles chart more often than Justin Bieber, Drake and Taylor Swift.
If America no longer has a monopoly on its own music charts, Silicon Valley cannot realistically expect to have a monopoly on the future of the metaverse.