Digital Economy
December Vision 2024 update
Digital Economy
Accelerating potential
The digital economy drastically changes how we buy and communicate, ultimately determining our value system in day-to-day life. This report will provide key insights into the future of the digital economy. From the effect on physical products and retail to the people involved in building its infrastructure, businesses are preparing for the transition to Web 3.0.
The development of the digital economy primarily lies in the newfound ownership of cybernetic items. A collection of digital goods have become representative of the owner, acting as a second passport: a display of unique and authentic personalities. The value of digital items and currency weighs against the physical. Video games have become a testing ground for these new technologies and convince their worth through realism. In addition, a new philosophy of money has emerged from an era of side-hustle entrepreneurship from younger generations. Alternative digital currencies are accessed through a decentralised network, via trusted online idols or extended connections to a loyal fanbase.
Fast-speed connectivity is working hand-in-hand with knowledge-based data economies. The accelerated rate of production from AI generation and robotics raises questions about authenticity and ethics. Digital natives are more aware of their privacy and data than ever, forcing them to reconsider the strength of their time devoted online.
As people reconsider what’s important in their lives, we can expect the development of healthier online and offline habits as part of long-term life goals. Cultural trends suggest that this trajectory signals the development of the digital economy into everyday, meaningful routines.
Download the PDF of the report here
&Walsh uses DALL-E 2 to create campaigns on climate change
Content
Timeline
Digital ownership
Developing markets
The increase in mobile internet usage and the emergence of new communication channels have driven the Web 3.0 market. Global Web 3.0 revenue in fashion and luxury is expected to reach $50B in 2030, with markets expanding by 10% (Activation Group). Southeast Asia is a dominant figure in this department, with the digital economy reaching $200B in GMV for 2022 (e-Conomy SEA).
The investment into the metaverse in Asia is still in its early stages, but brands are using it as an outlet for contemporary interpretation and expression of traditional culture. Given the emphasis on digitisation and learning technology skills in SEA, this cultural connection may be why brands need to stay strong beyond the ‘hype’ phase.
Left to right, The Currency by Damien Hirst, ØRB SYSTEM vehicle by Krista Kim, ‘Agent0’ the first metavese citizen with a heartbeat by Teddy Pahagbia, Wire Network and Metakey collaboration for ‘earn-while-you-learn’ platform Metakademy
Closing the gap
The next step to develop this market is to close the gap between Web 2.0 and Web 3.0 users. Recent attempts have been made through user-generated content and education platforms. New models of immersive learning are implemented via virtual spaces and digital credibility (certificates). Redeemable rewards can also elevate this experience.
Attracting the ‘traditional’ fans will have to be done through simple and seamless integrations. The emphasis on available tools promotes user ownership (i.e. tokens), and Web 3.0 opportunities are designed with one click.
Investing in Web 3.0
A second passport
Digital items
Leading VR and AR technologies take the presence of the user’s avatar as a focus of the digital experience. There is an increasing appetite for the ownership of digital items, a premium on avatars and owning a digital wardrobe.
With Gen Alpha entering the digital scene, the gap between one’s online self and physical self is closing. NFT and digital fashion ownership has become a second passport to users online, transcending real-world limitations. Customisation is second nature, and anyone can create with the tools they are given.
Left to right, YOWU elf earbuds by 888vampires, Ralph Lauren and Fortnite collaboration, Maison Margiela and Samsung Z Flip 4 collaboration, Diversity of Roblox avatars
Collaborations
Fashion in the metaverse is expected to become a $55B industry by 2030 (Deloitte). Owning a digital wardrobe can stimulate users to develop their own personal style and wear original creative items.
Numerous luxury brands have collaborated with gaming platforms, especially in ‘sandbox’ environments or building-type games. Owning luxury items is more accessible and cheaper than ever before with a digital avatar. This item can be stored on your account forever - it is no wonder some users prioritise their digital wardrobe over what they have in real life.
Online identities
Powerful fandom
Trustworthiness
The value and trustworthiness of digital information vary from each user online. Fans trust their digital idols more than ever as an extension of their loyalty to the individual. The person they look up to becomes representational in everything relating to their culture, lifestyle, financial habits, and even their mood.
Global fan experiences can be grown and curated to be deeply personalised with data. The fans who are highly engaged or more likely to buy tickets can be rewarded for their loyalty through limited items or special interactions. It is all about building commitment from a passionate community.
Left to right, Streamer XQC buys viewer suggested items for his room, NFT access pass for New York Fashion Week, Hong Kong Rugby Union unveils new commemorative NFT cards and marketplace, Lee HongKi’s NFT sold out in one hour
Gifting as currency
Streaming and digital media platforms sought the rise of gifting culture amongst fans. Entertainment was ‘repaid’ for by the fans and audience through digital currency (i.e., ‘Bits’ from Twitch) or even physical gifts.
Fans engage with their favourite idol with gifting as an exchange of service, an intimate connection between the two parties. A personalised gift can send a message of loyalty, commitment through time, and trust that signals back to a strong sense of community. Gifting logic relies heavily on volunteering, group identity, and enthusiasm to engage.
Curated trust
Burberry x Minecraft, Avatar and real-life collection
Going analogue
Purposeful time
People are spending less ‘aimless’ time online. Surveys show a 5% decrease in internet usage in the past 12 months worldwide (GWI). When users are online, they seek and engage with more meaningful content, whether that be YouTube documentaries or engaging with news on Twitter.
From the anxieties of ‘doomscrolling’ and the vast number of negative articles, digital natives wish to take it slow and be selective. The new age of digital anthropology is emerging, a curation of content over what is important for users online.
Left to right, Humane innovative technology, BeReal app, Google Pixel watch, ‘Cosmic fingerprint’ by James Webb Telescope
Offline, mind and body
Users are more conscious of adopting healthier habits and having control over the content they see and engage with online. There is a wake-up call for one’s health, physically and mentally. Users are taking a break and retreating from the chaotic environment of the digital world to reconsider what is truly important in their life.
It is all about finding a balance and keeping up with one’s inner circle without the addiction and distractions of technology. Be prepared to extend the digital to be a part of everyday, meaningful, and personal routines.
Digital anthropology
Hyper-personalisation
Experience economy
It is projected that 50,000 physical stores in the United States will close by 2026 (UBS). The physical commercial world has been transformed and forced to fit on a mobile screen. Digital customer experience is dominating as a result: matchmaking, and user control, all on their choices.
Digital users will expect a service alongside their product – a unique experience. This experience is almost as important as the product itself, i.e., how it is delivered to the buyer. Allowing the user to experiment and discover your product for themselves with the tools you give them will bring that next-level desire for your next release.
Left to right, Kindred exclusive home-swapping app, Crosby Studio and Zero10’s virtual clothes pop-up store, Parallel Reality by Misapplied Sciences, Walmart’s Be Your Own Model technology
Physical retail
Traditional brick-and-mortar stores will have to adjust to the shifting preferences of online shopping. Adopting digital elements in the store, whether referencing online items or interactive automation, can elevate the retail experience for customers.
Give your customers the choice to experience what they want. The space in-store should be friendly and immersive enough to keep customers coming. Adopting experimental concepts with the use of technology can help to attach memories to the location or product. Leveraging data and AI can also boost the ease of interaction between customers and locations.
Exclusive retail
Dematerialised goods
Endless value
The value of physical materials has been weighed against the dematerialised, and the future of physical shops has been signalled towards automated processes led by self-service technology.
The unpredictable nature of digital items is exciting; the boundless possibilities of owning something so spectacular that it does not exist in the real world. But who holds the materials for the digital economy, and how is it archived for preservation? The outpour of digital items is not as heavily considered a part of human history as its tangible counterpart.
Left to right, Quixel Bridge in Unreal Engine 5, TikTok star Myra Magdalen creates outfits from household objects, Design Lab collection by H&M Home, Interaction station at SYSTEM’s flagship San Francisco store
Developing programs
The development of digital modelling programs and high-latency textures has accelerated the use and impact of digital items. Video games have become a testing ground for rendering software and brands to collaborate with i.e. Unreal Engine.
The aesthetics of digital visualisations have evolved to be extremely realistic, as close to reality as possible (lighting, physics, material textures etc.). Our frame of reference for this development has always been connected to the human body and the craftmanship of ‘the image’ - what sort of objects can co-exist that can elevate the human experience?
Seamless transitions
Studio Groovido and RODRUZA, Prophecies of Dust’, Bricks in the digital era
Artificial convenience
Manufacturing with the digital twin
By 2025, the market size for digital twins is expected to rise by 40% (Research and Markets), particularly with the onset of industrial IoT platforms. A digital twin is a virtual replica of a real-world device or system.
Introducing this into the supply chain can be used as a prototype of the physical good, flexible and able to be experimented on. It can allow the evolution of the product by utilising real-life data to obtain further transparency in production. With the combination of AI and ML technologies, it can help to inform physical world processes.
Left to right, Industrial Metaverse by Siemens Xcelerator and NVIDIA, CPR filter by Snapchat and RedCross, Orlando digital twin by Orlando Economic Partnership, Destination Earth (DestinE) will showcase at COP27
Clairvoyance
Utilising digital tools will help manufacturers to rebound from the challenges that disrupt the supply chain. Taking advantage of these tools can further visibility and security along the supply chain, adding the next layer of resilience that companies need.
76% of manufacturing executives planned to adopt digital tools and monitoring technology after experiencing heavy supply chain disruption in the previous 12-18 months (Deloitte). Additionally, the automotive sector has been more proactive in adopting these tools than other industries. Businesses should be ready to build against the instabilities of the future for long-term value.
Advise tools
Automated processes
‘Roboconomy’
The use of industrial robots has reached an all-time high of 3.5 million (International Federation of Robotics). Robots are rising to take over ARA - computing-derived AI, robotics, and automation. China has been the largest adopter of this, responsible for half of all industrial installations in 2021.
Given the ageing workforce and demographic shifts of long-term worker shortages, there are growing concerns that the accelerated embrace of AI service tools will continue to take over more jobs. In this instance, the restructuring of the labour force with automation has not been seriously addressed.
Left to right, Stretch robot by Boston Dynamics, IBM Artificial Intelligence Unit chip, Speech Accessibility Project is backed by numerous Big Tech companies, Factory of the Future by Accenture and Mars
Biases
Companies should be aware of a balance when delivering and implementing AI into their product. Technology in its infant stage should require just as much fine-tuning and testing as a physical product.
A study by Cambridge University showed that AI hiring tools do not improve diversity or reduce bias and candidate scores changed when altering image contrast, brightness, or saturation. AI trained by humans will reflect the social constructs or biases present in the data. There should be some form of oversight to develop ethical software - a preparation to regularly update the data gathered, and to understand why certain results are produced.
Ethics in ML
Emerging payments
Accessible transactions
Smartphone adoption is predicted to rise globally by 2025 (GWI), and new ‘super apps’ provide experiences beyond the typical financial capabilities and transparency. The need for digital banking during Covid-19 has shifted our philosophy of money – how we use and manage it.
Entrepreneurs worldwide have been filling the gaps left by traditional banking, providing opportunities for decentralised fintech. The ‘un(der)banked’ youth have earlier access to a smartphone than their bank account. Digibanks are utilising their consumer market connections and alternative currency to reach out to young digital natives, with 1 in 8 users owning some form of blockchain internet currency (GWI).
Left to right, Launch of the e-CNY in China, Crypto app Step and Charli D’Amelio collaboration, Apple’s headset uses iris-scanning payments, Nigerian fintech start-up Okra
Community trust
E-commerce is still at an all-time high and is expected to reach 16% GMV growth (e-Conomy SEA). A facilitator of this is the elevation of the online shopping experience. Buyers online are looking to their friends and online idols to advise them on purchases and products.
Affiliate links utilise this closed circle community, purely based on trust as a decentralised channel. Direct point of contact with the customer (D2C) establishes direct opportunities for a shortened supply chain. Buyers build a relationship with their choice of influencer on their selected platform and are likely to invest in long-term subscription-based deals.
Closed circles
ZNera Space, Downtown Circle electric tram concept, Dubai
Traceable identity
Data ownership
Challenges are rapidly developing alongside the digital world, such as leveraging the decentralised digital world to break barriers to allow the free flow of data between platforms. Digital natives are more aware than ever of their privacy and use of personal information, especially with the adoption of facial recognition technologies.
Considering the amount of information we disclose on the internet, maintaining data security should be at the top of the priority list for companies. There must be a consensual responsibility to respect and preserve such sensitive material when consumers place trust in you to maintain their data.
Left to right, S650 Ford Mustang’s cybersecurity, Google Pixel 7’s free built-in VPN, Digital mask to protect patient privacy by Professor Haotian Lin et al., Level’s Lock+ can be unlocked with an exclusive Apple app
Agile approach
Web 3.0 and blockchain technology has influenced the everyday use of cybersecurity infrastructures immensely. Some novel threats are emerging as a result of the decentralised and pseudo-anonymous identities on Web 3.0. Companies have to prepare for these when launching their own Web 3.0 platform and know how to protect user information.
Users want to have full control of their data, choosing what information to share. Encrypted technologies (blockchain) can push the boundaries of data ownership, smart contracts, and peer-to-peer communication. Distributed edge computing can also support and lay the foundation for future security architecture.
Data privacy
Future cities
Accessibility
The future of cities will depend on their accessibility for all. Climate change is making citizens reconsider the reliability and long-term possibilities of transport for a low-carbon society.
The efficiency of city planning in energy, business, food, and public service can no longer be considered separate from transportation. It should be promoted through the use of automated, connected, electric, and shared mobility. The shift to digital connectivity also emphasises the urgency to develop data security infrastructure. We must consider what values we wish to embed in technology to protect human rights and improve tech accountability.
Left to right, Solar Pavilion by V8 Architects and Marjan van Aubel Studio, Telosa’s Ground to Air autonomous vehicle by BIG, Wheeliy 2.0 by Quantum and Molten, PIXCITY by PIX Moving
Responsive
The future city will address the needs of today, developed alongside IoT infrastructures. Sharable spaces and data-integrated city planning will be the norm, providing seamless access from one location to another. Buildings will have to be environmentally responsive and responsible. Autonomous transportation will depend on alternative methods of energy.
‘Smart’ cities are a hopeful and innovative goal for citizens and businesses alike, operating on knowledge-based data economies. It will take collaboration, commitment and steps in supporting integrated technological architectures before these can be fully adopted in the future city sphere.
Building blocks
Generation Alpha
Head start
Generation Alpha will is the first generation to be born entirely within the 21st century, from 2010 to 2025. They are consumers at a younger age, and the generation to have the highest purchasing power and brand influence (McCrindle). Already in 2020, 81% of under 12s worldwide influenced purchasing influence up to $500B (EDITED).
As the youngest demographic to be naturally digitally literate, they are already heavily involved in VR technologies and proto-metaverse games. It is not surprising that digital products are essential to their lives.
Left to right, Gen A YouTube Ryan Kaji (Ryan’s World) has over 33M subscribers, Luna is a health and wellbeing app targeted to 11-17 year olds, ‘That Girl Lay Lay’ star Alaya High is a major influence, Lego’s Build Big Feelings campaign
Conscious and ambitious
Considered ‘upagers’, Gen A is more socially aware at a younger age. 81% of 8 to 14-year-olds discuss world events with their family and friends at least once per week (The Week Junior, YouGov). They not only pass through a global crisis in their developmental years but also have to carry the weight of previous generations for future decision-making.
Additionally, Gen Alpha’s aspirations and ideas for future work are not too far-fetched for them. 73% of participants stated they wish to have a flexible working environment, and 63% agreed the most important factor of their future job is to “help others and have fun” (The Ellie Sparkles Show).
Entering the online sphere
Looking forward
Preparing for Web 3.0
The digital economy is accelerating at unprecedented speeds with shocks. Most daily processes have become technologically assisted, whether in manufacturing or retail. Regardless, the transformative and holistic experience of this cyber world is a priority for digital natives. Improving internet usage and giving user control over their data can significantly improve their experience. 81% of those who have heard of Web 3.0 truly believe it would positively impact their happiness and well-being (National Research Group).
It is human nature to be curious about the potential of new seamless technologies - and excel at constructing them. However, businesses and creatives should be wary of this knowledge-based data economy. Programs and artificial sentience are developing faster than our consideration for the ethics of these tools. One-third of Web 3.0 consumers are concerned over the potential for scams and cybercrime (National Research Group). How can we build a digitally-centred future and simultaneously equip ourselves with the tools to protect our information online?
To prepare for a secure and uplifting future, we must be aware of the user: by equally valuing the spark of creativity and their individuality and for the protection of their privacy.
Key take aways
Caution
- Relying on AI or automation without reassessing needs
- Not elevating the physical retail experience
- Neglecting loyal communities and fans
- Avoiding blockchain and decentralised currencies
- Inaccessible content for Web 2.0 users
Banner image, Pexels by Steve_a_Johnson
Download the PDF of the report here
Photo by This is Engineering
Look out for
+ Prepare for Gen Alpha’s entry to the web
+ Take advantage of digital twins
+ Regularly update cybersecurity infrastructures
+ Utilise the power of video game realism
+ Develop towards healthier, everyday routines
Borderless Light Museum, Tokyo