Metaverse Platform Zepeto on a Global Expansion Quest
Asia’s biggest metaverse platform Zepeto is ramping up its global expansion plans as it looks to take on some of the top US big tech companies that are currently spending billions of dollars on building metaverses.
Zepeto is owned by the Korean technology group Naver and was launched in 2018. The avatar-filled virtual world has so far attracted 340 million users. Unlike other metaverse worlds, Zepeto is unique in the way it mostly attracts young female users.
The Zepeto metaverse is a K-pop and fashion-focused avatar world. It is currently valued at over $1 billion. The Korean metaverse platform has also received investment from some of Korea’s top entertainment companies including YG Entertainment, JYP Entertainment, Hybe, and SoftBank’s Vision Fund II.
Naver Z, a Naver subsidiary, says that although its Zepeto metaverse platform is still not a dominant player, the virtual world was “very much on the right track”.
Naver Z says that the Zepeto platform already has a very strong presence in the Asia Pacific region but the company is also focused on growing its presence in Western Europe and the US. The platform is already reporting high growth in France according to an FT report. The company says that its metaverse platform was also popular in Brazil. The metaverse is also working on both Arabic and Turkish language versions of its metaverse platforms as it makes a push into the Middle Eastern market.
Leading tech groups across the globe including Microsoft and Meta are investing billions of dollars expecting the virtual worlds to become the next major tech frontier.
Zepeto is highly popular in Southeast Asia. It is the largest metaverse platform in Asia with about 15 to 20 million active users. Most of its users are from Japan, China, and South Korea. 70% of users on the platform are females with the majority of them aged between 13 and 21.
Zepeto is still dwarfed by the giant online gaming platform Roblox which is valued at $50 billion and whose market mostly consists of pre-teens. Roblox has a whopping 200 million monthly active users.
Zepeto’s focus so far has been enabling users to purchase virtual items. The company says that from now onwards, the items and experiences that users buy on the platform will be focused more on the individual virtual worlds and that the metaverse platform is going for a business model similar to that of Roblox. The company also mentions the business models of other virtual social platforms such as VRChat, Rec Room, and the gaming giant Fortnite.
The company describes its Zepeto platform as similar to an Instagram or TikTok feed but filled with avatars and that this is the first such avatar-centric social network.
The Zepeto metaverse is primarily accessed via a smartphone app. The platform’s audience is also monetized by enabling them to customize their avatars. The audience on the metaverse platform can also design and trade millions of items including accessories, clothing, and hairstyles. Players on Zepeto can create and monetize their own virtual worlds. Zepeto users can also buy and trade furnishings and appliances on the platform’s marketplaces for their virtual homes.
Zepeto uses a licensing model and has formed partnerships with a number of luxury and athletic brands including Ralph Lauren, Gucci, Adidas, Nike, and Bulgari.
There are also Samsung appliances on the metaverse platform that users can use to equip their virtual homes. There are even Hyundai cars on the platform that the avatars can drive.
Naver Z, the Naver subsidiary that manages the Zepeto metaverse, has also closed IP partnerships with Universal and Disney. The platform has also hosted a virtual concert by the girl group Blackpink. Zepeto says one of its strong points is the relationship that it has cultivated with K-pop companies.
South Korea’s Robust Embrace of the Metaverse
South Korea is one of the most robust frontiers of the metaverse. Some of the country’s leading cities are building metaverse replicas and the technology, and other Web 3.0 technologies, are getting support from the highest levels of government. The South Korean government also unveiled a “Metaverse Alliance” in 2021 which brings together over 200 companies and institutions. South Korea’s 2022 budget includes an $8 billion budget that is earmarked for the country’s next digital transformation.
Although Zepeto has grown considerably, there are analysts who question its sustainability due to its limited user base. The company admits that the platform will have to grow its user base beyond its current teen base, a trajectory that both Facebook and Instagram did.
The teen market has its advantages and disadvantages. For instance, although it is an enthusiastic market, their interests are usually short-lived. Teenagers will relish stuff in the metaverse that they cannot afford in the real world but Zepeto is skeptical that this interest can be sustained into adulthood. Zepeto, therefore, wants its platform to grow with its teen users as they grow older and sustain their attention span into adulthood.
Like Meta’s Horizon Worlds, Zepeto is also facing concerns about the vulnerability of its much younger user base to different forms of abuse in the metaverse. The company concedes that abuse is difficult to police although the company is already leveraging artificial intelligence to identify any inappropriate behavior. Zepeto also has call centers that users can revert to for help. However, like in other metaverse portals, bad actors in Zepeto still bypass some of the best protections to perpetrate different forms of abuse. Academics and advocacy groups are pushing for tougher and more pragmatic measures to mitigate abuse given the platform’s predominantly teenage user base.