Bringing home the virtual bacon

Virtual reality and the future of work

Employees of one startup now teleport to work. High Fidelity, a project started by Philip Rosedale, develops virtual office experiences for companies with remote workforces. Building a digital analogue to the analog world is a labor of love for Philip Rosendale. In 2003, he created Second Life, the online virtual archipelago, with a thriving in-game economy. In 2006, a Dutch bank opened a virtual branch, and companies like Dell purchased an in-game property and staffed virtual storefronts with real employees, a preview of what will come when virtual reality technology catches up to our imaginations. While these businesses have since vacated as customers left for other platforms, the vision of a virtual society remains.

The concept of virtual reality has been around for a while. In 1992, Neal Stephenson formulated the idea of a metaverse, a virtual world that is organized with a downtown public area, in his science fiction novel Snowcrash. It featured virtual streets and storefronts where people could interact with each other in the form of their avatar. In Ready Player One, Ernest Cline posits a virtual constellation of worlds — the Oasis — in which people work, attend school, and hang out with friends.

But today, virtual reality is more than science fiction. Virtual reality social spaces, defined as fully artificial, multi-user, digital environments, are being used as a new medium for commercial interaction. VR enables cooperation and association over long distances. Hand gestures, facial expressions, and the ability to interact spatially make VR more experiential than 2-dimensional alternatives. But what does this mean for the future of work?

Reporting for Duty in the Uncanny Valley

The VR-adjacent workforce is multifaceted. Some industries are adopting VR platforms for workforce training, a growing number of individuals are working in the VR industry, and entrepreneurs are creating commerce inside the virtual spaces themselves. The global VR industry is valued at between $5 and $6 billion, with room to grow. By contrast, the VR industry’s less immersive counterparts mobile gaming, console gaming, and PC gaming netted $63.2 billion, $38.3 billion, and $33.4 billion respectively in 2018. VR also allows people to complement their real-world careers through telework, training, or education within VR. VR can simulate otherwise dangerous pieces of training or training environments for jobs like weldingfirefighting, or surgery.

There is a growing subset of individuals who pursue work inside virtual spaces. Rather than complement existing jobs, entrepreneurs are finding ways to make a living within the virtual space itself by streaming their VR experiences, showcasing their work, providing services, and building virtual communities. They pair VR activity with digital asset design or income from streaming services or video platforms.

For example, Twitch is a live streaming platform that features a growing subset of VR users among PC gamers. Over 300,000 twitch streamers make anywhere from fifty dollars to thousands of dollars a month. The top 10 twitch streamers earn more than $20 million per year through donations, sponsorship, e-gaming tournament prizes, advertising, subscriptions, and merchandise. But streaming isn’t all fun and games. Full-time streamers hold demanding schedules, and there is pressure to stream daily to entertain and retain subscribers. As VR continues to develop, streaming will likely be a small subset of future VR-adjacent jobs. Many modern professions, such as teachers, entertainers, and salespeople, will have a VR corollary, and some, such as dog walkers and maids, may not be compatible with VR. Many more virtual professions are unfathomable at this stage.

From Second Life to Third Life

Early VR careers will likely reflect their PC-based or real-world counterparts. For example, paid Second Life in-game careers included dancers, models, shop attendants, bouncers, builders, fashion designers, animators, event hosts, DJs, real estate agents, and teachers. In Second Life, participants can create and trade user-generated virtual property and services with one another for in-game money that can be exchanged for real currency. Top earners made over $1 million in 2009. For example, Ailin Graef is credited with becoming Second Life’s first virtual millionaire by building, selling, and renting real estate and other virtual assets and cashing out in-game currency for real-world dollars. As of 2017, Second Life still had 45,000 concurrent users, down from 88,200 in 2009.

As they do in Second Life, users in VR will likely make money from selling virtual goods — infrastructure, land, art, clothing, and other digital “assets” — and from virtual services –mainly entertainment and virtual content creation. Companies will also facilitate commerce in VR. IBM invested $10 million in Second Life, buying 12 islands for virtual work training and hosting a roundtable meeting on Smart Cities with 17 attendees. For the past three years, Japanese VR company Hikky has hosted a Virtual Market or “vket” in VRChat, a VR-capable social platform, featuring sponsorships from 7-Eleven and Panasonic. Through the platform, over 100,000 attendees could try on and purchase virtual avatars, apparel, and accessories.

Beyond innovations in commercial spaces, radical reinventions of work will emerge. For example, real estate agents can take prospective homebuyers flying over properties, artists can sculpt artforms in virtual space, and VR community members can make a living as tour guides for virtual worlds.

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An avatar in Sansar, Linden Lab’s new VR social platform. Credit: Vice

VR will also make teleworking more experiential, accessible, social, and economical for employers and employees. I need only remind myself of my 45-minute commute one-way to see the value in projects such as High Fidelity. The average worker spends about an hour a day commuting. Those that drive to work spend 19 full workdays a year in their cars. The potential for productivity gains and savings if people successfully work from home can be substantial. One estimate by Dell found that workers who worked ten days from home in a month saved $350 per month. Dell itself saved $12 million a year by consolidating office space. Nevertheless, for virtual platforms to scale, they will have to overcome significant social, technical, and economic barriers.

A Work in Progress

One challenge is that High Fidelity, or any other VR experience for that matter, doesn’t really have high fidelity. Users who look too closely may find that the illusion disappears. For example, a journalist who spent a week in a VR headset reflected with amazement the graphic quality of the real world upon removing his headset. We are going to need more natural interfaces before we find virtual life as meaningful as real life. Yet, the success of platforms like VRChat, which boasts 10,000 daily active users, demonstrates that people are willing to compromise on the quality of their viewing experience to feel present with other people.

There are many challenges to global VR adoption. Fewer than 1 million users connect each month despite total VR users numbering 171 million worldwide in 2018. There are also large discrepancies in VR adoption across demographics. While 30 percent of men have tried VR, only 16 percent of women have. Part of that may be because VR headsets don’t fit everyone, despite the variety in features like head size and retinal distance.

VR platforms also face policy challenges similar to other online platforms. For example, Section 230 of the Communications Decency Act awards intermediary liability to online platforms. This policy allows platforms driven by user-content to freely exist because it provides them with legal immunities for what users do or say. Despite its role in allowing entrepreneurial content to flourish, Section 230 has recently come under fire. Rules against pirating content, intellectual property laws, and laws against libel and slander also apply to virtual spaces. Trademark and copyright laws set limitations on what words, phrases, symbols, logos, videos, or music can be reproduced in VR and what is considered fair use.

In addition to technical and policy limitations, there is a social stigma that is often attached to gaming. It’s easy to continue thinking of video games as antisocial and as a cost to society rather than a revenue stream. But many people today are actually making a living through these platforms. It will take time to adapt as a society. As one VRChat player recounted, “there’s an entire group of people who view what we do as video game, whereas it is very clear…that it can be a lifestyle, it can be a way of making money.” If reality can be anywhere where individuals find meaning, virtual experiences can be as legitimate as physical ones. Yet, norms are going to have to evolve before people migrate to VR for work.

The rise of VR-capable social worlds foreshadows virtual economies to come. It may be decades before we apply for jobs in the uncanny valley, but the pioneers are already there, and so is the potential. After all, in VR, pigs can fly, and money can, in fact, grow on trees.

CGO scholars and fellows frequently comment on a variety of topics for the popular press. The views expressed therein are those of the authors and do not necessarily reflect the views of the Center for Growth and Opportunity or the views of Utah State University.