Web3, touted as the next stage in the evolution of the internet as most of us know by now, is a decentralized web environment powered by blockchain technology. It incorporates concepts like token-based economics, enhanced peer-to-peer networking, and greater user control of data and privacy.
According to a report by Emergen Research, the web3 global market is expected to reach $81.5 billion by 2030, growing at a CAGR of 43.7%. The Asia-Pacific region is primed to register the fastest revenue growth rate due to consistently high demand from sectors such as banking, financial services, and insurance (BSFI); ecommerce and retail; healthcare; and pharmaceuticals.
Digitalisation has been reshaping the APAC region at hyper speed, with many of the Southeast Asia (SEA) markets leading in the adoption of future technologies. According to Meta and Bain & Company’s annual SYNC Southeast Asia report, the sub-region is also ahead when it comes to the adoption of fintech and web3; it’s seeing a higher penetration of digital wallets, cryptocurrency, and non-fungible tokens (NFTs) compared to most other APAC markets, including China and Japan. Almost 70% of people in Southeast Asia have used at least one metaverse-related tech in the last year.
The SEA sub-region has a large unbanked or underbanked population and higher trade financing infrastructure challenges, which makes consumers and businesses more open to fintech innovations. Over 70% of the population in SEA, including the micro-, small- and medium-sized enterprises that employ a majority of the labor force, have either no access to basic financial services or face problems such as an inability to get credit cards, loans, or adequate insurance, especially in populous countries like Vietnam, the Philippines, and Indonesia.
Access to permissionless financial services with just a smartphone, along with positive consumer attitudes toward blockchain and cryptocurrencies, has translated into a growing adoption of blockchain wallets, a key piece of technology for entry into web3. Beyond supporting transactions, it serves as a gateway for much of a user’s web3 experience. It allows people to manage their blockchain-based assets, including non-fungible tokens (NFTs), coins, and tokens. It also enables users to participate in various activities ranging from using decentralised apps (dApps) to joining decentralised autonomous organisations (DAOs).
WOW Pixies, founded by a Singapore-based entrepreneur, is a regional DAO and NFT collection that invests in women-led web3 projects. The DAO manages an NFT vault and hosts community events that promote knowledge sharing and upskilling for women in web3. Membership is token-gated via its WOW Pixies token, which grants benefits like access to events and the opportunity to vote on DAO activities and investments.
Cryptocurrencies and NFTs also present strong income-generation opportunities, unlocking new ways for consumers to derive value from their participation in passion points, leading to a new value exchange between brand and consumer. Take, for example, POPS Worldwide, a digital entertainment company in Southeast Asia: a DinoPOPS NFT drop inspired by the popular Vietnamese series “My Brother Is A T-Rex” allows NFT holders to own the IP and receive revenue share from YouTube streams of the series.
Another key opportunity for opening up web3 to a broader audience is blockchain-based gaming. South Korea, the fourth-largest gaming market globally, has placed a stake in the ground on its development in spite of the ongoing domestic ban by its government because of gambling concerns. South Korean gaming firm Neowiz Corporation has teamed up with Indian crypto firm Polygon to launch a web3 gaming platform, Intella X, to bring some of Neowiz’s popular gaming IPs to web3. Exercising the core principles of user ownership in web3, Intella X is designed to distribute the shares of all generated revenue back to the contributors of the ecosystem via its native IX Token. Users can also earn tokens by playing individual games and subsequently swapping any unique game tokens offered for IX through the exchange.
Kakao Games, the gaming arm of South Korean media tech giant Kakao, is expanding its operations in the region through a collaboration with U.S. blockchain gaming firm Mythical Games. The partnership will see Kakao Games’ Bora network — the network of companies supporting its Bora cryptocurrency — integrate with Mythical Games’ ecosystem, which provides creators, artists, brands, game developers, and users with the tools and a platform to make, own, and play blockchain-based games, as a means to boost P2E gaming in Asia.
The South Korean government has, however, been supporting tech start-ups working on metaverse-related projects with grants in order to boost the country’s tech sector. This has led to companies like social networking platform Zepeto pivoting to web3, to build a crypto-enabled metaverse version called ZepetoX. With over 320 million registered users, Zepeto is currently one of the largest metaverse-like platforms in Asia, where users interact through avatars that they can personalize with virtual accessories. It also has a marketplace called Zepeto Studio that allows third parties — from small digital artists to global fashion brands like Gucci and Ralph Lauren — to sell customized virtual accessories.
Web3 in most of APAC has revolved around decentralized models underpinned by crypto. However, with decentralized digital currencies having been banned in China, the market there has largely been based on consortium chains involving verified organizations that provide accountability, management, and community goals. This has resulted in web3 application in a few focused areas with the digital collection sector currently having the best development and the most engagement with users. For example, auction house Sotheby’s recently launched the Sotheby’s Metaverse to sell NFTs, similar to the way it sells fine art and antiques.
Chinese Gen Zers, in particular, have been investing in NFTs, and many brands, such as fashion house Dior, have created meta-fashion shows and virtual outfit NFTs to capitalize on their interest. Gaming companies, too, have been quick to jump on the bandwagon. Local tech and gaming giant Alibaba is rewarding players with NFTs on its first blockchain game, Ant Adventure, which can be played through the Alipay app.
Indeed, web3 will bring about a significant shift in culture, empowering communities, and individuals, and upending the current value exchange in transactions. Brands must first understand that web3 aims to return value to the individual and embrace decentralization and democratization. With web3 marketing, brands will also need to consider a wallet strategy, focus on community building, and develop content in the form of digital goods and immersive experiences.
Sharon Soh (L) is chief planning and audience officer at UM APAC and Abegail Camo (R) is associate director of strategy insights and culture at UM APAC. The opinion piece first appeared on Campaign Asia-Pacific.