Behind the curve on metaverse

People are just starting to get their heads around the concept of the metaverse. The promise is of immersive environments where we can do pretty much anything. Users will utilise avatars and gear like virtual/augmented reality helmets or glasses (more options will surely develop) to dive in.

Citibank guesstimates the metaverse may generate between $8 trillion and $13 trillion worth of global gross domestic product (GDP) by 2030, with 5 billion users. In 2020, global GDP was $85 trillion and the global economy is expected to grow at near 3 per cent annually. The world population is 8 billion, growing at 1 per cent.

So, if Citi’s projections range close to reality, the metaverse could be worth between 7 and 12 per cent of global GDP by 2030, and roughly 51 per cent of the population would be residents (or at least regular visitors).

What needs to happen for these projections to approach reality and, how well-placed is India?

The metaverse won’t work unless it’s a seamless environment available on the move. This means hyper-fast mobile networks carrying huge data and of course, devices to ride the networks. Citi admits there’s an enormous technological gap and the infrastructure doesn’t exist.

Even the best 5G networks can’t deliver what metaverse zealots promise. We need 6G — that is just a whisper on the tech horizon. It’s being taken for granted that the required telecom infrastructure will be rolled out quickly. It’s even taken for granted that 6G will be developed, stabilised, rolled out and delivered to the metaverse quickly. There are many nations, including India, which don’t possess commercial 5G. India is yet to hold 5G spectrum auctions, so it’ll be a while before 5G rollout.

The metaverse will not be a single environment. There will be different metaverses developed by different service providers. Users will need “meta-virtual” passports to move from one to another and interoperability and compatibility between metaverses will be required. Money, or tokens will be needed to do commercial stuff. These transactions are all being done on blockchains, using different cryptocurrencies.

India has a potentially large user-base. On a per capita basis, Indians consume the most data in the world. The willingness to move to the metaverse would be high. As a nation, we love escapism and the metaverse is escapism turned into (virtual) reality. The average Indian is also very value-conscious, since he or she doesn’t have a great deal of money. If there were fast 5G (and 6G) rollouts and data charges were reasonable, India would have a big metaverse population.

There’s also a pool of skilled developers, with imaginations. There’s potential for desi themed metaverses — whether it’s temples, cricket stadiums, concerts with avatars, or CGI games based on desi themes. India, however, also has a regulatory system that’s terrified of cryptocurrencies, and a ridiculously complex system of goods and services tax (GST) compliance.  If Indians can’t use blockchain-based decentralised cryptocurrencies, or legally convert rupees into these instruments, India is out of step. Desi metaverses will not have interoperability with overseas metaverses. Desis will also find it hard to use global metaverses with crypto-based payment systems.

Right now, somebody running a paid online service (like say, a workshop honing Python skills) has to provide GST certification to every participant, and pay 18 per cent tax upfront and wait for input credit. If metaverse service providers have to provide GST certification on every transaction, their software development skills will be focussed on payment solutions rather than immersive environments. Also, if the government takes an 18 per cent cut upfront from start-ups, most such businesses will not get off the ground. Finally, data leaks could be catastrophic and India doesn’t have data protection legislation.

It’s hard to say if the technology and infrastructure to deliver the metaverse will develop as fast as assumed. But whatever the global pace of development may be, India may well be behind the curve. It’s two years behind in terms of telecom infrastructure, the cryptocurrency policy is wrong-headed, and the tax compliance is painfully cumbersome.