Metaverse: implications for the health and wellness industry

The convergence of fitness and gaming is not really new but the MV takes this to another level. Brands of all kinds are trying to stay relevant to Gen Z etc and the fitness industry is no different. However, it seems that the MV could have much broader applications in terms of target audience and value proposition than just exertainment. This is important for all stakeholders in the industry, from government bodies, to health care providers, to insurance firms, to health clubs as well as equipment manufacturers. Eco system thinking is absolutely the way to think strategically for this industry in both enlarging the pie and getting people to adopt long lasting lifestyle changes. How (and when) you firm and the MV fits into the eco system is the question that should be asked.

At a simplified level, the opportunities to offer MV based wellness experiences seem obvious:

• VR based workouts
• Health and wellness events
• Community workouts using avatars
• Workout with friends using VR, AR
• Celebrity led workouts
• Compete against athletes
• Fully immersive gym or facility experiences with music, trainers etc
• M2E plays with both digital and real rewards
• Gaming tie ups
• Play before you pay (trial)
• Pay as you go and access based fees
• Product marketing
• Customer engagement
• Brand loyalty through community
• Customer education

According to the Welltodo 2022 Consumer Wellness Trends Report, Gen-Z today are more inclined towards gaining a more robust workout experience rather than a usual fitness regime that offers core fitness mantras. Since the older ages of Gen Z are now in their mid-late 20s and will garner significant purchasing power, it is a segment worth targeting as part of the tailwinds driving MV use. However, as discussed earlier, the potential of the MV to impact the wellness eco system is much greater than just varieties of exercise gamification and rewards.

According to Dwivedi and colleagues (International Journal of Information Management, 2022), the potential for organisations to adapt their business models and operational capacity to function on the metaverse is significant, with transformational impacts on marketing, tourism, leisure and hospitality citizen-government interaction, health, education and social networks. For individuals that choose to interact with the metaverse in the future, the seamless nature of the transition between physical and virtual and the multimodal enhancement of experiences and interactions, opens an endless scope of possibilities, many of which perhaps beyond our current comprehension.

In two papers I published recently, What is Apples Makes a Treadmill; or doesn’t! and Business Model Innovation for a Fitness Equipment Manufacturer, I have argued that significant changes are looming for the industry that only business model innovation (BMI) can address. That is, exploiting current competences will not be enough in the next 5 years, one must explore and develop new competences.

Real World Use Cases of the Metaverse (Source: BCG, How the Metaverse will remake your strategy, 2022)

According to BCG, a third phase of the MV is underway, a broader ecosystem is developing thanks to continually expanding and faster connections. It is seeing monetization through crypto ecosystems, including the birth and rapid growth of cryptocurrencies (both governance tokens and utility tokens) and economic systems and virtual assets (such as decentralized finance and nonfungible tokens). BCG go on to say that much of this action has been in the B2C arena but the B2B space could be where the majority of value is created. For example, at an operational level they estimate a large retailer could realize a 1.5-2% points improvement in margins from staff on boarding and training, 200-400m upside due to improved ins store experiences, and $500-700m improvement based on better inventory management.

The BCG use cases above are some solid examples of BMI related to a variety of industries. If one looks at this at the individual firm level, there are also clear examples of BMI that would enhance the value proposition received by both consumers and enterprise customers in the wellness industry:

• Product testing and experiences
• Design thinking at scale with CX tested in real time
• Product launches
• Massively expanded reach of marketing touch points such as tradeshows
• Social support groups – i.e. health care, weight loss
• Remote and immersive health evaluations and interventions at scale and in depth
• Immersive virtual facility tours
• Digital twins of facilities
• Virtual real estate and e comm
• Product design and digital twins
• Facility design and fit out in real time and space using AR and VR
• Agile and lean at scale and in real time leveraging XR collaborative R&D
• True omni channel experiences and the potential for seamless transition between the real and virtual worlds
• Movement of assets across all platforms once interoperability is solved
• Content creators – could deploy their content across platforms and benefit from ownership
• Training and development
• Enhanced collaboration
• Payments
• Smart contracts
• Mass customization
• Supply chain transparency and real time tracking
• Customer service
• Employer branding and internal marketing

From an eco system perspective, the examples are perhaps less obvious but nevertheless still compelling. The organizations that are part of this eco system are many but are mainly; insurers, health care providers, doctors, equipment manufacturers (home and commercial), big tech, digital apps, wearables, drug companies, content producers, trainers, health clubs, corporate wellness, government bodies, industry associations, commercial health and wellness providers, behavioural change companies etc.  

• Fractionalized payment for IP – wellness journeys created by multiple stakeholders could in theory be managed by NFTs
• User journeys based on behavioural science – tying together many existing eco system partners such as insurance, health clubs, gamification and rewards, the potential of the MV to bring this to life is beyond current omni channel options that leverage apps, Web 2 and IRL
• Aggregated health data – one of the biggest challenges facing the wellness industry is the scattered nature of health records as well as the fact that individuals do not own nor have full access to their own records. Solving this problem is a major goal for big tech firms such as Apple and Amazon as they target the $10T health industry. The MV could become this single source of truth that could provide true personalisation across all of wellness for users and indeed reward them for their activity with eco system partners. This would have a huge impact on growing the pie and enhancing adherence. Rather than having individual corporations profit from this behavioural surplus (such as Google and Facebook), the balance of power would switch to the individual who could even monetise their data
• Interoperability and data sharing – despite all the APIs available, data from different wearables and platforms, data cannot truly be codified and used across multiple platforms. The MV could become the solution to this problem once interoperability is solved

Your MV Strategy

According to McKinsey (2022), these are the key marketing considerations as one thinks about the MV:

• Define your metaverse marketing goals – Why do you want to be part of the metaverse? If your brand’s consumers are there, do you want to increase awareness among new audiences, position your brand and generate favorable sentiment, or promote loyalty? Is your goal to spark innovation in your marketing team? For the near term, the primary goal of brands shouldn’t be driving sales directly, since sales of virtual items are still far smaller than sales of physical ones.

• Identify the platforms that provide the best opportunity and brand fit – Right now, Roblox, Fortnite, Decentraland, Minecraft, and Meta’s Horizon Worlds are just a few of the metaverse games and platforms out there. Some will be better than others for specific purposes. There is ample opportunity to experiment with multiple platforms to see what works.

• Experiment with money-making models – Direct sales may not be front and center on the metaverse right now, but that doesn’t mean brands shouldn’t be thinking ahead and planning to capture the future potential. Direct-to-avatar sales of virtual goods are already a $54 billion market, and some forward-thinking brands are testing different opportunities to generate revenues.

• Create, leverage, and partner for new metaverse capabilities – For the metaverse, as for any new venture, brands should assess the skills they will need, identify which they already have and which they must acquire, and appoint someone to lead the development and execution of a coherent strategy to capture value. Brands should also aim to work with and learn from others, including the independent developer and creator communities that are active on the platforms already.

• Rethink how you measure marketing success – Measuring the returns on marketing spend is always critical, but the appropriate metrics for the metaverse may not be what you expect. Digital marketing typically focuses on metrics such as the number of visitors, conversions, “likes,” and shares, as well as the cost of acquiring customers. With the metaverse, marketers may need to define new engagement metrics accounting for the unique behavioural economics at play (such as the “scarcity” of NFTs, which are supposed to be unique).