The metaverse may generate $5 trillion in impact by 2030, equivalent to the size of the world’s third-largest economy, Japan.
The metaverse 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 B2C and B2B purposes.
A new report from McKinsey shows that 95 per cent of business leaders expect the metaverse to have a positive impact on their industry within five to ten years, and 61 percent expect it to moderately change the way their industry operates.
Large technology companies, venture capital, private equity, start-ups and established brands are seeking to capitalise on the metaverse opportunity. Corporations, venture capital, and private equity have already invested more than $120 billion in the metaverse in the first five months of 2022, more than double the $57 billion invested in all of 2021, a large part of it driven by Microsoft’s planned acquisition of Activision for $69 billion.
Large companies are investing to a much greater extent than they were for artificial intelligence (AI) at a similar stage in its evolution, for example. Industries currently leading metaverse adoption also plan to dedicate a significant share of their digital investment budgets to it.
Industries most likely to be impacted by the metaverse include consumer and retail, media and telecommunications, and healthcare, and those industries are also among those already undertaking metaverse initiatives.
The potential impact of the metaverse varies by industry, although McKinsey believes it holds implications for all. For instance, it may have a market impact of between $2 trillion and $2.6 trillion on e-commerce by 2030, depending on whether a base or upside case is realised.
Similarly, McKinsey estimate it to have an impact of $180 billion to $270 billion on the academic virtual learning market, a $144 billion to $206 billion impact on the advertising market, and a $108 billion to $125 billion impact on the gaming market. These effects may manifest in very different ways across the value chain, however.
Companies already leveraging the metaverse may build lasting competitive advantages. Business leaders should develop a strategic stance by defining metaverse goals and the role they want to play; testing, learning, and adopting by launching initial activities, monitoring results, and examining user behaviour; and preparing to scale by identifying necessary capabilities and embedding the metaverse in their operating model. They should also explore becoming metaverse users themselves.
The metaverse also poses urgent challenges that cut across firms, their employees, independent developers and content creators, governments, and, of course, consumers. Part of the workforce will need to be reskilled to take advantage of it rather than compete with it, and cities and countries serious about establishing themselves as hubs for its development will need to join the global competition to attract talent and investment. The metaverse also has obvious societal implications.
A variety of stakeholders will need to define a road map toward an ethical, safe, and inclusive experience. Guidelines may also be necessary around issues including data privacy, security, ethics and regulatory compliance, physical health and safety, sustainability, and equity and fairness.