Global consumer brands, especially luxury brands, are clamoring to stake their claims in the metaverse. But what exactly is the metaverse, why does it matter, how are consumers engaging with it, and how do brands leverage it to create deeper customer relationships?
Web3 is the latest iteration of the World Wide Web, which integrates decentralization, blockchain technologies, and token-based economics. The metaverse is a crucial part of this evolution — a digital space that mirrors aspects of the physical world in which people use virtual and augmented reality, social tools, and cryptocurrency to interact. Brian X. Chen, in his NY Times article, What’s All the Hype about the Metaverse? referred to it as “the convergence of two ideas that have been around for many years: virtual reality and a digital second life.”
It’s important to understand that the metaverse hasn’t yet fully come into being. In a thought-provoking article, The Metaverse Doesn’t Exist! You’re Talking About Gaming , James Whatley suggests that the various blockchain-enabled digital platforms that bring people together are primarily games — Fortnite, Roblox, Minecraft. I see these properties, and the spaces Meta, Google, Microsoft, and others are creating, as independent islands that are miniverses. Over time, certain ‘verses will reign supreme, capturing the zeitgeist while others fold. This anticipated shift is similar to how Web2 social properties proliferated and then consolidated.
The tech behemoths (Meta, Microsoft, Google, Apple) and up-and-comers (Decentraland, The Sandbox, Hyperverse, Roblox, Axie Infinity, etc.) are competing for dominance with their respective takes on the metaverse and thus vying for lifelong consumers. And luxury fashion brands are enthusiastically jumping into Web3 by partnering with established games that have created their own ‘verses. As a result, we have collaborations between Gucci and Roblox, Burberry and Roblox, Balenciaga and Fortnite, Prada and Meta, Dolce & Gabbana and UNXD, to name a few.
A critical and transformative difference between Web3 and Web2 is driving these collaborations. In the Web2 model, the platforms control the content, which limits and doesn’t reward creators. The Web3 model, with its foundation of blockchain and token economics, is inherently favorable to decentralization, creating the possibility of a circular economy where both content creators and content consumers are meaningfully rewarded for their efforts . This means consumers can create alongside their favorite brands, and brands in turn gain more loyal and engaged customers.
Creator-empowered Web3 communities already exist in gaming where independent ‘verses have collectives of people interacting with each other in a ‘second life’ and transacting in crypto-currency, significantly blurring the line between creators and players (consumers). This blending of player/creator is the catalyst for an exciting shift from play-to-earn to play-to-own to, ultimately, create-to-earn. With play-to-earn, the game feels like a job within the game, and its creators as the ‘boss’. With play-to-own, there’s a greater emphasis on the partnership between the game-maker and the player, with the player owning something and then having the option to sell. Play-to-own emphasizes the ‘fun’ aspect of gaming (it is a game, after all) by removing the ‘earn’ mentality, as explained by Crypto Raiders co-founder Nick Kreupner during a Q&A with Cointelegraph . However, this model still implies owning something created by the game-maker. The next evolution is create-to-earn, where players are intrinsically involved in creating a part of the game’s content, minting assets, and owning them definitively on the blockchain. Players can then monetize their creations, if and when they choose. Here we have, I feel, a much closer partnership and equality between game-maker and gamers.
Decentralization and creator empowerment is the future of the internet. It’s encouraging to see many brands, especially luxury brands, diving into the space and helping drive innovation, Web3 and the metaverse into the future.
Learn how to invest in your future experiences with Fount ETFs
The Fount Metaverse ETF (MTVR)
The Fount Metaverse ETF (MTVR) seeks to provide investment results that, before fees and expenses, generally correspond to the performance of the Fount Metaverse Index. The index was designed to measure the performance of companies that develop, manufacture, distribute, or sell products related to metaverse technology.
MTVR may be an attractive vehicle for investors looking to invest in the metaverse.
For a full list of MTVR holdings, please click here.
The Fount Subscription Economy ETF (SUBS)
The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Fount Subscription Economy Index. The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.
SUBS may invest in companies that offer subscription-based pricing models, including those in the technology hardware industry.
For a list of SUBS holdings, please click here.
1 Chen, Brian X. “What’s All the Hype about the Metaverse?,” New York Times, Jan. 18, 2022
2 Whatley, James. “The metaverse doesn’t exist! You’re talking about gaming,” The Drum, May 17, 2022.
3 Ghosh, Sumit. “Web3 holds the promise of decentralized, community-powered social networks,” Venture Beat, Feb. 26, 2022.
4 Exposito, Alyssa. “Crypto Raiders explains how blockchain gaming attracts new users to Web3,” Cointelegraph, Apr. 11, 2022.
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The Funds’ concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors. For MTVR, the Fund may be concentrated in the entertainment and interactive media & services industries. The entertainment industry is highly competitive and relies on consumer spending and the availability of disposable income for success, which may cause the prices of the securities of companies to fluctuate widely. The prices of the securities of companies in the interactive media & services industry are closely tied to the overall economy's performance. Changes in general economic growth, consumer confidence, and consumer spending may affect them. MTVR may also be subject to the specific risks associated with metaverse companies. These risks include but are not limited to small or limited markets, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation. Smaller, start-up companies tend to be more volatile than securities of companies that do not rely heavily on technology. Metaverse Companies may rely on a combination of patents, copyrights, trademarks, and trade secret laws to establish and protect their proprietary rights. There can be no assurance that these steps will be adequate to prevent the misappropriation of their technology or that competitors will not develop technologies that are equivalent or superior to such companies’ technology.
For SUBS, the Fund may be concentrated in the software industry. Technological changes, pricing, retaining skilled employees, changes in demand, research & development, and product obsolescence can affect the profitability of software companies causing fluctuations in the market price of company securities.
Both Funds are subject to communication services sector risk, which can involve the same risks as being concentrated in the software industry. Network security breaches, potential proprietary or consumer information theft, or service disruption can negatively affect companies’ stock prices.
The Funds are non-diversified. The Funds are new and have limited operating histories for investors to evaluate. New and smaller funds may not attract sufficient assets to achieve investment and trading efficiencies. In addition to the normal risks associated with investing, investments in smaller companies typically exhibit higher volatility.