What You Need to Know
- Companies like Microsoft and Ikea just formed a metaverse standards forum to coordinate protocols.
- Citi sees a potential $13 trillion metaverse market by 2030.
- A consulting firm sees a possible 2.8% global GDP contribution by 2031.
While the precise shape and scope of the metaverse has yet to unfold, analysts expect the emerging, next-generation version of the internet to make a major impact on the global economy as it transforms numerous industries.
Leading technology firms and others, meanwhile, are laying the groundwork for what many envision as an immersive, 3D web blending physical and digital worlds.
A group of companies including Microsoft, Wayfair, Qualcomm, Ikea, Adobe and Alibaba joined with standards organizations on Tuesday to announce a new Metaverse Standards Forum, hosted by software consortium Khronos Group, to coordinate development of common open protocols for building the metaverse.
“The metaverse that is coming into existence is a 3D spatial overlay of the internet. It continues the trend of making the internet more accessible and more natural for humans by making the interface to the internet indistinguishable from our interface to the real world,” one of the founding members, software company Nvidia, said.
“The metaverse will ultimately encompass all our activities and support them with applications. Just like standardization has been an important foundation for open knowledge sharing and rapid development in the web age, the same is true for the metaverse,” said Arno Hollosi, chief technology officer of another standards forum participant, Blackshark.ai, a geospatial platform company creating a “digital twin” for the planet.
Separately, Chinese multinational conglomerate Tencent Holdings announced to its staff this week that it has formed an extended reality, or XR, division to develop both hardware and software, Reuters reported, citing unnamed sources. The news service framed the move as Tencent’s bet on the metaverse idea and noted that XR comprises the technologies needed for the metaverse’s immersive experiences.
McKinsey & Co. reports that corporations, along with private equity and venture capital firms, invested more than $120 billion into the metaverse in the first five months of 2022 — more than half from Microsoft’s acquisition of video game company Activision Blizzard — and that senior executives expect the emerging extended-reality sphere to generate more than 15% of corporate revenues in five years. Nearly 80% of consumers already active in metaverse environments have made a purchase there, according to the research firm.
The metaverse may generate up to $5 trillion in 2030 — “equivalent to the size of the world’s third-largest economy today, Japan. It is shaping up to be the biggest new growth opportunity for several industries in the coming decade, given its potential to enable new business models, products and services, and act as an engagement channel for both business-to-consumer and business-to-business purposes,” McKinsey suggests in a new report.
New and Evolving Space
Opportunities in the metaverse are likely to evolve over time, lawyers from DLA Piper wrote recently. Among other points, they noted:
- “The fully immersive metaverse is being built on a foundation of Web 3.0 technologies, including blockchain, cryptocurrencies and non-fungible tokens. … Virtual events, virtual storefronts, and digital collectibles are — and will continue to be — just some of the ways that brands and products will reach virtual consumers.”
- Online video gaming is helping to drive the tech advances needed to develop the metaverse, resulting in the “rapid evolution of an interactive virtual world for competitive play and (opening) the door for new virtual experiences, from concerts to movie premieres to NFTs of all types.”
- While some existing laws may apply in the metaverse, current regulations may fall short in addressing new technologies and problematic behavior in this digital arena. “The scope of all laws and regulations that can or might be implicated in a metaverse is practically unbounded and might generate innumerable legal issues,” with intellectual property disputes likely to figure prominently, they wrote.
- Privacy and cybersecurity issues also are likely to arise in the metaverse.
“Mankind is only beginning to arrive at the event horizon of the metaverse. As we delve deeper, organizations and individuals will increasingly embrace its use and incorporate this foundational technology into their real-world existence,” the DLA Piper lawyers wrote, adding that legal and regulatory issues will grow with it.
$13 Trillion Market by 2030?
Given expectations for transformational growth in the metaverse, it’s no wonder that tech leaders, retailers and other companies are rushing to stake leadership claims. While McKinsey sees a possible $5 trillion impact by 2030, Citi expects even more.
Earlier this year, Citi predicted the metaverse’s total addressable market could reach $8 trillion to $13 trillion, with up to 5 billion users, by 2030.
The bank, noting that a host of uses should increasingly become available in commerce, art, media, advertising, health care and social collaboration, based this forecast on the idea that the metaverse will be a large, “device agnostic” ecosystem accessible from personal computers, game consoles and smartphones.
Getting to the multitrillion-dollar market level will require infrastructure investment, Citi noted. “The content streaming environment of the metaverse will likely require a computational efficiency improvement of over 1,000x today’s levels,” according to the company. “Investment will be needed in areas such as compute, storage, network infrastructure, consumer hardware and game development platforms.”