SEOUL (Reuters) – South Korean engineer Shaun has big plans to develop the plots of land he has earned for millions of won (thousands of dollars) in recent years in long-term financiers.
“I intend to design my building to be suitable for hosting live K-pop performances and K drama screenings,” the 30-year-old investor told Reuters. “This can probably lead to a profitable business model in two to three years.”
And construction will not be hampered by any labor shortage caused by a coronavirus pandemic or rising costs. Shaun’s big project is in the blockchain-based virtual world Decentraland.
The “metaverse here” may be a futuristic perspective for most of the world, but it is increasingly a reality in South Korea, where house prices and income inequality have led to the so-called MZ Generation, or Gen MZ, Towards Alternative Worlds Online.
Their digital avatars play games, hang out with friends, organize social gatherings, shop and party, and make plans to build profitable cities and businesses.
Shaun, who refused to identify himself apart from the name of his Decentraland avatar, has been gradually submerging himself on the platform over the past three years.
Users can buy land in this virtual world with the aim of hosting real companies, such as a nightclub that charges access to users. As in the real world, the success of businesses and the communities around them can increase the value of your virtual land.
And investment managers, telecom companies and even the South Korean government are connecting.
Samsung Asset Management expects its Samsung Global Metaverse Fund, launched in late June, to easily surpass its goal of earning 100 billion won ($ 86.49 million) by the end of 2021, with a daily figure of about 1-2 billion won.
Choi Byung-geun, vice president of Samsung Asset Management, said interest in the metaverse had grown since the pandemic as people worked remotely. The Samsung fund was launched just two weeks after KB Asset Management’s KB Global Metaverse Economy Fund.
“With the world’s big tech companies, like Facebook, seeing their business direction move toward the metaverse, the industry is making money,” Choi said.
SK Telecom, the country’s largest mobile phone company, launched an “ifland” metaverse in July where residents can host and attend meetings with other animated avatars.
“As the social trend shifted face-to-face due to the pandemic era, demand (for metaverse services) jumped,” an SK Telecom official told Reuters. “Every day thousands of rooms and tens of thousands of daily users are created.”
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.
An official from the Ministry of Science and ICT told Reuters that the government hopes to play a leading role in the metaverse industry. In a budget of 604.4 trillion profits for 2022 presented last week, the government allocated 9.3 trillion won to accelerate a digital transformation and encourage new industries such as metaverse.
South Koreans have been especially open to the attractions of the metavers, although it is not yet clear to what extent full real-life replication 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, which encompasses those born between 1981 and the early 2010s.
As the coronavirus pandemic has dragged on, a new lexicon for the “inactive” economy has emerged in South Korea, as opposed to “contact”.
“Metaverse mania reflects the sadness and anger of the MZ generation due to polarization,” said Kim Sang-kyun, a professor of industrial engineering at Kangwon National University who has published two best-selling books on metaverse since the end of 2020.
“They don’t consider the metaverse as an alternative or a substitute for reality, it’s just one more part of their lives,” Kim said. “They are the generation that has communicated with the world through devices since birth, unlike the previous generation.”
For Choi Ji-ung, 37, it was the frustration with real estate prices and regulations in the physical world that prompted him to buy properties on the Earth 2 platform based on geolocation.
Choi’s 50 million profit investment in the prized Gangnam district of Seoul on Earth 2 is something he can only dream of in the real world.
“It was easy to buy and not as expensive as I thought,” he said.
Powering many of the metaverse platforms are non-consumable tokens (NFTs), intangible digital assets that range from artwork and videos to clothes and avatars, which are purchased with cryptocurrency.
Decentraland offers a limited number of digital land plots, or LANDs, in the form of NFTs that are acquired through MANA, a fungible token that acts as the game’s currency. MANA, an altcoin, can be bought with fiat currency in limited cryptocurrency exchanges or in a swap with digital currencies like bitcoin or ether.
As in the real world, plots of land closer to popular districts are more valuable than others. Some plots of land that were sold for about $ 20 each when Decentraland was launched in 2017 are now changing hands for hundreds of thousands of dollars.
As the platform develops, Shaun and other owners believe they will be able to make money using their land for a variety of commercial ventures, such as setting up concert halls and charging entry for performances.
Decentraland’s changes and developments are overseen by the Decentraland Foundation, which was created as a non-profit organization to act on behalf of users.
Wang Keun-il, a 36-year-old fintech businessman, owns land in the capital of North Korea, Pyongyang, Vatican City and Egypt, on Land 2, where he plans to build a profitable tourism or education business.
Earth 2, which was released in November, is not a complete metaverse environment, but a marketplace for selling digital tiles that represent parts of the Earth. Currently, users cannot “enter” the land they have purchased, which means Wang has opted for a world that has not yet materialized.
Earth 2 chief executive Shane Isaac told Reuters that South Koreans were the most active users of 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 South Korean users in the 30 days through Sept. 1, just after the United States.
“People will not forget or walk away from the industry once things get back to normal,” Dave Carr, head of communications for the Decentraland Foundation, told Reuters.
“In any case, this period will define the most important, valuable or relevant entities and experiences.”
In the stock market, net purchases from gaming firm Roblox Corp made it the first foreign share bought in June and July, according to data from Korea Securities Depository (KSD).
Shares of local RA and VR technology companies MAXST and WYSIWYG STUDIOS have skyrocketed in recent months.
Choi, an investor in Earth 2, is aware of possible metaverse traps, but excited: “From the point of view, some might see it as something ridiculous or a bubble, but some see it as an opportunity.”
($ 1 = $ 1,156,2500)
Reports by Joori Roh; Edited by Vidya Ranganathan and Jane Wardell