Focus: South Korea's 'Gen MZ' leads rush into the 'metaverse'

SK Telecom Co

08/09/2021 02:00

By Joori Roh
    SEOUL, Sept 8 (Reuters) - South Korean engineer Shaun has
big plans to develop the parcels of land he has snapped up for
millions of won (thousands of dollars) in recent years into
long-term moneyspinners. 
    "I'm planning to design my building which is suitable to
host K-pop live performances and K-drama screenings," the
30-year-old investor told Reuters. "That can probably lead to a
profitable business model in two to three years."
    And construction won't be hampered by any coronavirus
pandemic-spurred labour shortages or increased costs. Shaun's
grand project is all in the blockchain-based virtual world
Decentraland.
    The "metaverse https://www.reuters.com/business/metaverse-bet-crypto-rich-investors-snap-up-virtual-real-estate-2021-04-19
" may be a futuristic prospect for most of the world, but it's
increasingly a reality in South Korea where soaring home prices
and income inequality have enticed the so-called Generation MZ,
or Gen MZ, into alternative online worlds.
    Their digital avatars play games, walk around with friends,
host social gatherings, shop and party - and make plans to build
cities and profitable businesses. 
    Shaun, who declined to be identified other than by the name
of his Decentraland avatar, has gradually immersed himself in
the platform over the past three years.
    Users can buy land in this virtual world with the aim of
hosting real businesses there, like a nightclub that charges
users for access. Just like in the real world, the success of
the businesses and the communities around them can raise the
value of your virtual land.  urn:newsml:reuters.com:*:nL1N2Q4098
    And investment managers, telecom firms and even the South
Korean government are all plugging in.
    Samsung Asset Management expects its Samsung Global
Metaverse Fund  LP68667332 , launched in late June, to easily
beat its goal of drawing 100 billion won ($86.49 million) by the
end of 2021, with around 1-2 billion won flowing in everyday.
    Choi Byung-geun, Samsung Asset Management vice president,
said interest in the metaverse had grown since the pandemic as
people worked remotely. The Samsung fund launched just two weeks
after KB Asset Management's KB Global Metaverse Economy Fund
 LP68663290 .
    "With global big tech companies such as Facebook seeing
their business direction shifting toward the metaverse, the
industry is raking in money," Choi said. 
    SK Telecom, the country's largest mobile carrier, launched a
metaverse 'ifland' in July where denizens can host and attend
meetings with other animated avatars.
    "As the social trend shifted to non-face-to-face due to the
pandemic era, the demand (for metaverse services) jumped," an SK
Telecom official told Reuters. "There are thousands of rooms
being created everyday and tens of thousands of daily users."
    SK Telecom is part of a 'Metaverse Alliance' launched by the
South Korean government in mid-May that includes more than 200
companies and institutions. 
    A Ministry of Science and ICT official told Reuters the
government hopes to play a lead role in the metaverse industry.
In a 604.4 trillion won budget for 2022 unveiled last week, the
government earmarked 9.3 trillion won to accelerate a digital
transformation and foster new industries such as the metaverse.
 urn:newsml:reuters.com:*:nL1N2Q12FN
    
    MZ GENERATION   
    South Koreans have been especially open to the attractions
of the metaverse, even though it remains unclear to what extent
a full replication of real life is possible, or how long it will
take to develop. 
    Social experts attribute the interest to the disgruntled MZ
generation - a term coined in the country that merges
Millennials and Generation Z, encompassing those born between
1981 and the early 2010s.
    As the coronavirus pandemic has dragged on, a new lexicon
has sprung up in South Korea for the "untact" - the opposite of
"contact" - economy.
    "The craze for the metaverse reflects the sadness and anger
of the MZ generation due to polarisation," said Kim Sang-kyun,
an industrial engineering professor at Kangwon National
University who has published two best-selling books on the
metaverse since late 2020.
    "They do not consider the metaverse as an alternative or
replacement of reality, instead it's just another part of their
lives," said Kim. "They are the generation that has communicated
with the world through devices since birth, unlike the older
generation."
    For 37-year old Choi Ji-ung, it was frustration with real
estate prices and regulations in the physical world that drove
him to buy property in geolocation-based platform Earth 2.
    Choi's 50 million won investment in the pricey Gangnam
district in Seoul on Earth 2 is something he can only dream of
in the real world.
    "It was easy to purchase and not as expensive as I thought,"
he said.
    Fuelling many of the metaverse platforms are non-fungible
tokens (NFT), intangible digital assets encompassing everything
from artworks and videos to clothes and avatars, which are
purchased with cryptocurrency.
    Decentraland offers a limited number of digital land
parcels, or LAND, in the form of NFTs that are acquired using
MANA, a fungible token that acts as the game's currency. MANA,
an altcoin, can be purchased with fiat currency on limited
cryptocurrency exchanges or in a swap with digital currencies
like bitcoin or ether.
    As in the real world, land parcels located closer to popular
districts are more valuable than others. Some land parcels that
sold for about $20 each when Decentraland launched in 2017 now
change hands for hundreds of thousands of dollars. 
    As the platform develops, Shaun and other landowners believe
they will be able to make money by using their land for a
variety of commercial businesses, such as building concert
venues and charging admission for performances.
    Changes and developments to Decentraland are overseen by the
Decentraland Foundation, which was set up as a nonprofit
organization to act on behalf of users.
    
    PROPERTY DEVELOPERS
    Wang Keun-il, a 36-year-old fintech entrepreneur, owns lands
in North Korea's capital Pyongyang, Vatican City and Egypt on
Earth 2, where he plans to build a profitable tourism or
educational business. 
    Earth 2, which launched in November, is not a fully-fledged
metaverse environment, but rather a marketplace for selling
digital tiles which represent parts of the Earth. Users cannot
currently "enter" the land they have bought, meaning Wang has
taken a gamble on a world that is yet to materialise. 
    Earth 2 Chief Executive Shane Isaac told Reuters South
Koreans were the most active users on the platform, based on
self-affiliation, spending about $9.1 million, followed by the
United States with $7.5 million and Italy with $3.9 million.
    Decentraland said its platform had more than 7,067 active
users from South Korea in the 30 days to Sept. 1, second only to
the United States.
    "People won't forget about or move away from the industry
once things return to something resembling normality," Dave
Carr, a communications lead for Decentraland Foundation, told
Reuters.
    "If anything, this period will define the most important,
valuable or relevant entities and experiences."
    On the stock market, net purchases of gaming firm Roblox
Corp  RBLX.N  made it the top foreign stock purchased in June
and July, Korea Securities Depository (KSD) data showed.
    Shares in local AR and VR technology firms MAXST  377030.KQ 
and WYSIWYG STUDIOS  299900.KQ  have soared in recent months.
    Earth 2 investor Choi is conscious of potential metaverse
pitfalls but excited: "Depending on the point of view, some
could see it as a ridiculous thing or a bubble, but some see it
as an opportunity."

($1 = 1,156.2500 won)

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FACTBOX: What is the 'metaverse' and how does it work?   
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 (Reporting by Joori Roh; Editing by Vidya Ranganathan and Jane
Wardell)
 ((joori.roh@thomsonreuters.com; +82 2 6936 1493))