If you build it, will they come?

​Harnessing the Power of the Ecosystem: How to Create a Network Effect Around Your New Metaverse Product

Posted by Lisa M Watts

Where are all the metaverse users?
In October of 2022, metaverse pioneers Decentraland and The Sandbox were widely panned by the media for not having very many active users. Around this same time Meta announced earnings were down, the company would be laying off employees but that investment in the metaverse would continue. Headlines screamed about the coming doom: Metaverse Dream Dead in the Water as Facebook Fires 11000 META Employees and  Meta’s empty metaverse. In the digital age, the value of a platform or service is measured in the number of participants and the media is clearly skeptical about the value of metaverse related offerings, as was clear in journalist Vince Chadwick's recent tweet.

I’m here at the “gala” concert in the EU foreign aid dept’s €387k metaverse (designed to attract non politically engaged 18-35 year olds — see story below). After initial bemused chats with the roughly five other humans who showed up, I am alone. https://t.co/ChIHeXasQP pic.twitter.com/kZWIVlKmhL

— Vince Chadwick (@vchadw) November 29, 2022

It can take years to build a loyal user or subscriber base and as the EU learned, it’s not sufficient just to build it. Roblox, which is seen as a shining example of a successful on-ramp to the metaverse, was formed in 2004 and released in 2006, making the game 16 years old. Fortnite​, building on Epic Games’s overall success in the gaming industry, was released in 2017. While both of these games have extensive user bases, they have been diligent about growing their ecosystem of partners. 

This post focuses on how to leverage a partner ecosystem to increase the value of your metaverse product or platform as a critical component of creating what is generally referred to as the network effect.

What is a Network Effect and why does it matter? 
Robert Metcalfe, sometimes referred to as the “Father of Ethernet,” is credited with defining network effects in this formula, known at Metcalfe’s Law. 

 Value of a network = Number of Users²

A recent post by Carolyn Blanton on Investopedia, give us the following definition: 

​“The network effect is a phenomenon whereby increased numbers of people or participants improve the value of a good or service. The internet is an example of the network effect…As the internet experienced increases in traffic, it offered more value, leading to a network effect.”

There are plenty of articles about how to take advantage of network effects to grow your business (I have linked a few down below) but in the end, it all comes down to delivering value. 

What tactics can be employed in order to leverage your partner ecosystem to add value?

​"No Man is an Island" - John Donne
​Going it alone is certainly doable, if you are very lucky or have unlimited time and money. But for most platforms or products that rely on the number of active users, working with and scaling through partners can drastically improve time to market, create value-add for users and enable you to add capabilities more quickly. As you develop your partner ecosystem strategy, keep the following in mind: 

1. Design your product with partners in mind and provide access to the features developers need to unlock the value of your differentiated capabilities. Consider licensing code from partners to get to market faster and create a complementary collaboration. Clearly articulate the value of your product to partners and users. Work with your partners to align on your joint story.
2. Embrace open standards. Interoperability and the ability to service users across multiple devices (mobile phones, PCs, wearables) helps you meet the users where they are. It also enables technology partners to connect their services to your offering without having to learn new skills. When a standard doesn’t yet exist, as is the case in many Web 3.0 projects, keep a close eye on the standards bodies who are driving standards efforts and lend your support. 
3. Leave room for partners to innovate. Many times the best ideas for using your product or platform come from the ecosystem. So try and avoid being overly narrow in your use case definitions when working with developers and tech partners. Instead focus on clearly explaining the actual functionality. Of course, if your product is finely tuned to do one thing very well, be sure to be clear about that as well. 
4. Be strategic. Align the goals and objectives of the partnership with the strengths and capabilities of each partner and identify areas where they overlap. This enables the partnership to leverage the strengths of each partner and provide mutual benefits, helping both parties achieve their goals and stay competitive. Partnerships can also help mitigate risk and provide a competitive advantage by accessing new markets and revenue streams.
5. Theory of abundance #WAGMI. In the context of ecosystem partnerships, the theory of abundance suggests that when one partner succeeds, it can benefit the other partners as well. For example, if one partner develops a new technology that helps it grow and prosper, this success can also benefit the other partners in the ecosystem by creating new opportunities for collaboration and growth. In this way, the success of one partner can be shared by all partners, creating a win-win opportunity for everyone involved.

​As the metaverse continues to evolve and expand, it is becoming increasingly important for companies to think strategically about how they can create a network effect around their products. By harnessing the power of the ecosystem, you can drive adoption, engagement, and growth, and position your company as a leader in the rapidly-evolving world of metaverse technology. With the right approach and the right partners, you can create a powerful competitive advantage that will help you succeed in this exciting and rapidly-changing market.

Related Articles

• The Importance of Network Effects in Web3 Chainlink
• How To Harness The Power Of Network Effects - Forbes 
• Network Effect: What It Is, How It Works, Pros and Cons Investopedia
• Red Wing Shoes wants virtual homes designed in Roblox to become real homes | VentureBeat
• The Entrepreneurial Ecosystem Enabling Organization - Innov8rs conference