Last year, we wrote about the future of self-expression via digital identities. Since then, Meta has expanded their VR avatar integration and marketplace to be compatible across all of their owned platforms (Facebook, Instagram, Messenger, and Quest) and more recently, Ready Player Me (a Konvoy portfolio company) announced their $56m Series B led by Andreessen Horowitz (a16z announcement). Given this activity, we wanted to share our perspective on the framework of a universal digital identity and where we think the space is going.
In order to become the digital identity layer of the future, we believe that a successful avatar platform should serve the following needs:
For the Consumer
Goal: The user should be able to curate each aspect of their digital identity - your digital characteristics (visual representation), digital behavior, the inclusion of various aspects of your real-life identity, and even personal information (here is a great primer on this topic).
Trends to Watch:
For the Developer
Goal: Developers of third-party platforms and virtual worlds should be able to easily integrate an avatar SDK and monetize with it.
Dev Kit Features:
Trends to Watch:
Meta’s Avatar SDK was initially tested with 3rd party developers in April 2021 in the games Epic Roller Coasters, PokerStars VR, GOLF+, Synth Riders, and ForeVR Bowl before releasing publicly in December 2021 (Oculus VR). The SDK is only compatible with Unity. Meta began expanding 3D Avatars to Facebook and Messenger, and for the first time Instagram Stories and DMs, to people in the United States, Canada, and Mexico the following month (Meta). In June 2022, Zuckerberg released their clothing marketplace called the “Meta Avatars Store” for Facebook, Instagram, and Messenger and allowed users to buy digital clothes for their avatars (TechCrunch). Balenciaga, Prada, and Thom Browne were design partners (Forbes).
While no public numbers have been shared on the number of avatars created, it is possible that Meta is the frontrunner in the number of avatars created. Despite Horizon Worlds, Meta’s only 3D digital space, having only 300k MAU as of February 2022, Meta’s avatars can be used across their family of products, meaning Meta’s 3.65b MAU (across all products) have a significantly lower barrier to entry to create their avatars and link it to some of their social platforms (Meta Earnings Report).
Ready Player Me
The Ready Player Me avatar platform is free and consists of 2 parts: The Avatar Creator tool which can be integrated and accessed within any application or through the Ready Player Me website, and the SDK which developers integrate to pull user-created avatars into their platforms. Avatars can be built from scratch or with images. Using 20,000 face scans, they have built a deep-learning-based platform, which can produce real-time animated avatars in a single 2D or 3D photo (TechCrunch). The SDK supports Web, Unity, Unreal, React Native, Android, and iOS native. No Ready Player Me avatar is allowed to be on chain (Ready Player Me).
Ready Player Me manages ~5m avatars across >3,250 partners (TechCrunch). While monetization opportunities for developers and creators have not been released, as a part of their $56m Series B funding announcement, they have said this is in the roadmap (TechCrunch).
Genies was founded in 2017 and offers a mobile application for consumers to create avatars that can be used in apps such as Giphy, iMessage and Instagram. They also offer an SDK so that brands can create avatar experiences and online marketplaces directly in their apps, however, developers must apply for access (Genies).
Genies avatars are off chain, however, today, the fashion assets sold on their marketplace are NFTs. The Genies marketplace, The Warehouse, was announced in December 2021. The platform was initially invite-only with the intent to phase public access within a few months, however, 8 months later, this has not happened (Coin Central). Notably, this warehouse was a collaboration with Dapper Labs, the web3 collectibles product company and is fully integrated with their Flow blockchain.
Compared to Ready Player Me’s “bottoms-up” approach in integrating with applications and games, Genies is much more “top down” and less games focused. Although gaming is mentioned on their website, Genies are not used in any games today. Their large partnerships are with celebrities, influencers, and affiliated brands. For example, they are the official avatar and wearable NFT partner for Warner Music and UMG, and Bob Iger sits on their board.
The company began shifting their focus to be more creator-driven in 2022 by granting ownership rights of all Genie avatars and their respective assets to their creators (Genies). In late July, Genies announced their DIY Collective program (Genies). This program is a 3 week long, in-person program for creatives to launch their own avatar ecosystems using their tools with Genies funding and direct support.
Genies has raised a total of ~$270m to date, their latest funding was a $150M Series C led by Silver Lake at a $1b valuation (Venture Beat) in April 2022. The number of avatars created and platforms integrated is not publicly known.
Avatars Produced by Social Media Platforms (Bitmoji, Memoji, Facemoji)
Avatars utilized by other social media platforms have the same user base and addressable market as Meta. Snap (Bitmoji) has >530m MAU and 200m people use Bitmoji stickers every day, there are >1b active iPhones (Memoji), and the keyboard application, Facemoji, is compatible across Apple (iMessage) and Android. However, all of these avatars have a distinctly simple style and have no public gaming integrations. All usage of these avatars are either in 1:1 conversations or within a user's immediate friend group - none are used at scale for public-facing interactions.
While Roblox, Zepeto, and Second Life have their own avatars and have built very strong marketplaces supported by creators, the usage of these avatars and ownership over clothing is limited to each of the individual platforms.
NFT PFP-based projects (RTFKT - CryptoX, CryptoPunks, CryptoKitties, CryptoAvatars)
We see these “avatars'' more akin to a badge or signal of a cultural affiliation rather than something that has the potential to become a singular, holistic digital identity. These collections lack some combination of usage in 2D/3D virtual spaces, visual customization (body types, clothing), and easy developer integration. Additionally, the style of these PFP collections is necessary for identification - CloneX, CryptoPunks, CryptoKitties, etc would all be undifferentiated and unrecognizable in a fully-customizable world. The potential exception to this rule is Yuga Labs, who is currently building Otherside.
Hyper Realistic Avatars (Unity / MetaHuman / Ziva, Avatar SDK)
A majority of gaming applications do not yet support this level of fidelity and these avatar platforms have not shown that they want to be compatible and convertible with other art styles. While these avatars capture a high level of detail, some require some level of body scanning (Metahero, in3D, Texel x MetaHuman). It remains to be seen if people want their digital representations to be visually 1:1 with the real world.
Our Perspective: We are still in the early stages of digital identity adoption and those who are building are still laying the groundwork to build a sustainable network of platforms and users. We believe the winners in this space will enable a federated identity and we are looking forward to continuing to invest in digital identity and expression.