Since the first computer was built, businesses and consumers have enjoyed a progression toward simpler and more intimate interactions with technology. Professors wielding punch cards gradually gave way to business people brandishing PCs and, more recently, mobile and wearable devices. In a sense, the connection to the digital world has been mediated through a series of ever-shrinking rectangular screens. Networking and computational advancements have led users to constantly switch back and forth between their devices and physical reality. Now, as technologists recognize that screens can’t keep shrinking forever, the paradigm is shifting again, toward interfaces that take us through the glass and into immersive virtual experiences, including the digital world known as the metaverse.
The term metaverse was coined in 1992, and virtual worlds have been popular in online games over the past two decades, a marked shift has occurred in recent years. The proliferation of affordable augmented and virtual reality (AR/VR) technology and the cultural shift brought on by the COVID-19 pandemic have catalyzed the acceptance and importance of digital worlds as viable places for human connection. In addition, architectural challenges that slowed previous incarnations of immersive spaces, such as Second Life, have since been partially mitigated by the elasticity of cloud computing.
Businesses have also doubled down on virtual worlds, with tens of billions in venture capital investment in the past year, and analysts estimating a US$800 billion market by2024. Despite the hyperbole around the metaverse, leaders should consider it not as a diminished proxy for in-person experiences instead as an enriched alternative to email, text chat, and heads in square boxes. In other words, the metaverse is best thought of as a more immersive incarnation of the internet itself: “internet plus” as opposed to “reality minus.”
The next couple of years, virtual interfaces will likely continue to graduate from tech to toy to tool as companies build business models around the capabilities afforded by an “unlimited reality.” Innovative companies are likely to reduce costs, increase customer engagement, and pioneer entirely new offerings for a piece of the budding market. Investing in technologies such as edge computing and AR/VR devices may become table stakes, so intentional, strategic adoption will be crucial.
The metaverse use case that has defined the market up to now: gaming. The entire digital gaming industry is expected to surpass US$220 billion in revenue in 2023, more than streaming video, digital music, and e-books combined. Specifically, the online gaming industry is poised to exceed US$26 billion in 2023, boasting an audience of 1.1 billion gamers. Crucially, these gamers often gather online not just for gameplay but for the social and commercial possibilities offered by the immersive internet.
About a quarter of US gamers have attended an in-game event in the last year: The Fortnite concerts of Ariana Grande and Charlie Puth attracted millions of players. A striking 82% of those attending live in-game events also made a purchase because of the event, either in the form of digital goods or physical merchandise. In fact, luxury brand Gucci made news for selling a virtual handbag in the game Roblox for US$800 more than its real-world price. Such figures are emphatic proof that the economy of the immersive internet mirrors the physical world: Brands can charge a premium for providing a unique experience or signaling value to other consumers. Considering these market opportunities in existing digital worlds, brands across industries can invest now to meet today's customers where they already are.Through gaming or other means, 25% of consumers could be spending at least one hour in the metaverse each day by 2026, while 30% of business are estimated to have products and services ready. By the time the metaverse becomes a full-blown enterprise norm, a sound strategy could make the difference between winners and losers in the burgeoning market.
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