Real Estate Ownership and Digital Media Rights in the Age of Extended Reality Technology

Extended reality is a broad term used to describe immersive technologies, which are software and applications that create immersive environments that merge computer-generated, digital content with the actual contours of our physical world to generate a unique user experience.  Over the past several years, use of extended reality technology has dramatically increased.  Whether it be for gaming, advertising, shopping, education, remote work, or tourism, extended reality technology now permeates our digital and technological landscapes.

According to some sources, more than half of Americans have been exposed to immersive technologies, and approximately one in five Americans are exposed daily to some form of extended reality.  While the extended reality market was valued at nearly $50 billion in 2023, the market is projected to grow considerably in the coming years, with some projecting that the market value will be an astounding $520 billion dollars by 2032.  With North America accounting for approximately 40% of the extended reality market, there are ample opportunities for business growth and advancement in this sector.

While extended reality technology provides opportunities for growth and advancement generally across all industries, there are certain prospects that extended reality offers to the real estate sector, such as the opportunity to generate financial benefits from the use of real property as a marketing or advertising forum in the metaverse.  However, before integrating a specific type of extended reality into your business, it is important to understand the various kinds of extended reality technology available and how each can be strategically deployed.

What is Extended Reality?

To date, there are three main types of extended reality technology available to consumers: (i) augmented reality, (ii) virtual reality, and (iii) mixed reality.

Augmented reality superimposes digital content into the physical world, allowing users to perceive their physical surroundings while also experiencing computer-generated, digital content therein.  Augmented reality is applied in various ways, including in smartphone mapping applications and smart glasses, such as Meta’s Orion glasses.  Currently, augmented reality is the leader in the extended reality market, constituting approximately 55% of the market.

Virtual reality immerses users in a wholly digital, three-dimensional world in which users can interact with the computer-generated data and content therein.  In other words, virtual reality creates an entirely virtual world in which the user acts as an avatar and is equipped with the abilities to see, hear, navigate, and interact in the digital space around them as if it were real.  Today, virtual reality is used in a variety of ways, including in military training simulations, workplace training modules, and gaming experiences.

Mixed reality layers digital content over the actual physical world and allows users to physically interact with such superimposed digital content.  A prime example of mixed reality in application is the Meta Quest 3 mixed reality headset, which allows users to engage in gaming, fitness, sports, and entertainment within a mixed reality environment.

The Use of Extended Reality in the Real Estate Sector

There are particular applications that extended reality offers to the real estate sector, including in the purchase and sale context, whereby prospective purchasers have been able to take virtual tours of properties using extended reality technology, as well as in the real estate development context, where developers have use extended reality technology to depict how proposed plans and projects will be implemented in actual property sites.

Extended reality also offers unorthodox growth and advancement opportunities in the real estate sector.  Particularly, the increasing use of extended reality technology affords real property owners the ability to promote their real property as a marketing or advertising forum in the metaverse and derive economic benefits therefrom.  Although this novel use of extended reality has the prospect of generating sizable financial and business benefits for real property owners, many owners are unaware or unsure of how they can safeguard and monetize their property rights in the extended reality landscape.

Real Property Owners’ Digital Media Rights and Opportunities to Generate Passive Income

Real property rights have historically concerned a real property owner’s right to possess, use, control, and dispose of their physical property.  However, the use of extended reality has created a new real property right – digital media rights.  Digital media rights ensure that real property owners are able to protect their real property from unauthorized third-party use in the extended reality landscape.

At present, real property owners’ digital media rights remain amorphous.  There is no comprehensive framework or legal/regulatory structure in place that notifies real property owners when their real property is being used in extended reality technology, or which dictates how real property may be used in the extended reality landscape.  Unfortunately, the lack of uniform legislation and guidance leaves real property owners vulnerable to third parties, who may seek to exploit another’s property for their own purposes without permission or just compensation.

However, real property owners may be able to mitigate or alleviate these issues by utilizing Digital Rights Management (“DRM”) systems.  DRM systems are used across all industries to protect digital assets from being illegitimately accessed or copied without the owner’s permission.  In addition to asset protection, DRM systems provide owners with the opportunity to monetize their digital assets in a streamlined fashion.

In the real estate context, Metaverse Rights Inc.’s DRM system (“Metaverse’s DRM”) offers a block-chain powered platform where: (i) real property owners can publicly register their real property, and (ii) brands and advertisers can discover, evaluate, and request access to such real property for advertising or media licensing in the extended reality landscape.  To register in Metaverse’s DRM system, real property owners must verify their ownership of the property and provide the property’s description.  Once registered, the real property is publicly recorded in the DRM system, which is equipped with certain protections to prevent third parties from illegitimately altering such ownership records without the owner’s knowledge.  From there, third parties can freely access recorded properties and negotiate with real property owners to obtain metaverse advertising or media licensing rights regarding their property.  If negotiations lead to an agreement, users may access the DRM system’s smart contracts, which are self-executing contracts recorded on the blockchain and automatically enforced through the DRM system.  Although free to register with Metaverse’s DRM system, the system charges five percent of the gross revenues generated from any business relationship procured through the use of its software, even if such relationship extends beyond the real property owner’s use of the DRM system.

While it is yet to be seen whether DRM systems provide adequate protection to real property owners from the unauthorized use of their real property in extended reality, these systems provide a solid foundation upon which real property owners can begin to protect their digital media rights.  By utilizing DRM systems, real property owners will have the ability to capitalize on the rapidly growing extended reality market by monetizing their real property and generating passive income therefrom.

If you have any questions about digital media rights in the age of extended reality or need guidance in navigating a particular DRM system’s registration process, please contact Hinckley Allen’s Intellectual Property or Real Estate attorneys for assistance.