The way I look at it, there are two related trends happening. First, many, if not most, are happy living most of their lives online. Second, offline real physical space will be a luxury that many will not be able to afford.

We are at the beginning of societal digital transformation. Sure, we stare at phones, tables, and monitors all day long. We go down the rabbit holes of feeds and outrage. If you want, its quicker and easier to get lost online than offline. Not only is this behavior normal for adults, but children who spend hours play Roblox. “Living” online is not only for the weirdos.

We’ve had simulation games for the longest time. The Sims, and what people used to consider risque, Leisure Suit Larry. Then came the social simulation games likeSecond Life. But it was too early. The hardware wasn’t ready, people didn’t have enough bandwidth. All the technical limitations are gone. Society is open to these types of interactions. Folks playing Animal Crossing during breaks is no longer unusual.

The work from home movement plays into this. No amount of Slack will replace human interaction. Zoom is not a great substitute. Instead imagine virtual employees in virtual spaces. Digi-physically close by. There will be new types of interactions we haven’t imagined yet. We can ease the transition by replicating existing human norms. Looking over a divider to see if a co-worker is busy, grabbing coffee while heading to the conference room. WFH suffers from lack of rituals. It feels more organic when we can bring a whole version of ourselves into the environment. There is a reason games encourage customizing characters. It is one representation of how we want to be perceived. Virtual spaces take that to a new level. Selling it in to companies will not be hard.

Brands will be pushing the move online as well. The great data flood is receding. There are many reasons. Browsers are moving third party cookie support. The use of ad/tracking blockers is on the rise. Browser are even including the functionality by default. Apple is pushing their own versions of VPNs. There is a general enmity towards creepy data collection. All together, gathering potential customer attributes and intentions becomes difficult. All that gets wiped clean in virtual spaces. It will be the wild west for adtech.

For advertisers the surface area for advertising becomes limitless. You are not longer restricted to pushing banners ads and text ads on publisher websites. It will be easier creating enticing interactions in virtual environments.

All the forces are aligning for us to live fully online.

The problem is we still need the physical. Being around other humans engages all our senses. Our evolution is based on physical form in a physical world. But why build a real coffee shop when you can do it faster and cheaper online. Starbucks is not in the business of selling coffee drinks. It wants to be your third home: your actual home, your office, your neighborhood Starbucks. Imagine an architect designing with fewer limitations. Plus the ability to “sell” to homeowners instead of builders. Many B2B transactions will become D2C.

The point is there will be less investment in physical space. Do cities need to worry about roads and zoning laws anymore? Everyone will live in tall buildings, in tiny apartments, living online most of the day. Why have a furniture showroom when you can design and sell them virtually without any costs?

Demand for physical objects will plummet. The physical objects created will have premium prices. Imagine having a restaurant. Construction materials will be expensive, employees will be more expensive. The cost of dining will increase. Instead of an activity that is commonplace for the masses, it will only be enjoyed by the affluent.

How about vacation? There will be fewer cars and planes to go anywhere. Prices will be higher. Real life activities will fall into two buckets. First, experiences that can be done in real life only. Second, experiences that provide 10X more emotional value than done virtually.

You would assume with lower demand, there would be lower supply, so prices should balance out. Instead, most physical objects or experiences will be priced like Velben goods. Physical life becomes a status symbol that few can afford.