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OCT. 15, 2021

Metaverse Is Real

In today’s internet, we often access different digital platforms because they help facilitate physical world experiences. We buy products on Amazon that are shipped to our home, we share pictures on Instagram of our latest travel, or we purchase tickets online to a concert that we attend with friends. In the metaverse, digital platforms will contribute largely to digital world experiences and thanks to an immersive experience, users can work, play video games, buy digital items, socialize with friends, and consume media, all while present within the metaverse itself.

Main disruptive characteristics behind a fully developed metaverse include a functioning economy and a real time persistent world. In other words, in metaverse users can earn and spend in digital or fiat currencies and the metaverse is expected to be real time persistent with no ability to pause. It continues to exist and function even after users have left, shifting away the centricity of the user to the virtual world itself.

Early successful versions of metaverse already exist. Video game Fortnite has hosted virtual concerts with Ariana Grande and Travis Scott, where users attended to enjoy and share the experience with millions of other fans’ avatars. Similarly, Roblox’s experience Adopt Me! counts 6.2 billion annual visits since its release in 2017. Should traveling in virtual worlds and the real world become comparable, the metaverse could represent an economical form of on-demand mass transit to explore new places, people and cultures. For comparison, pre-pandemic international tourist arrivals around the globe was 1.4 billion annually. The city with the most annual international visits pre-pandemic was Bangkok with approximately 23 million. However, metaverse is expected to create further wide revenue opportunities than digital events across multiple verticals:

.  Developers and creators: similar to Apple’s ecosystem where developers sell their apps, a thriving metaverse requires a robust third party developer base that sells experiences and accessories. Similar potential exists on the creator side.

.  Ads: gaming companies are increasingly following similar paths of social media platforms, offering users free experiences that are remunerated by ads and in-game purchases. Metaverse experiences are likely to follow a similar path, featuring in-platform ads that promote real life physical items as well as ads for digital items, including games, accessories and experiences. 

.  Social commerce: e-commerce platforms could evolve from selling goods on websites to offering their products within virtual malls, where users buy digital items for their virtual life and real world items that they can have delivered to their home. In a virtual mall, one could look at items with friends, talk to an influencer about the products and digitally try out the good before purchasing.

.  Hardware: virtual reality and augmented reality headsets, graphic chips and innovative treadmills are just some of the high-tech hardware that are likely to play major roles in building an interactive and immersive metaverse.

.  Wallets and applications: as financial transactions move to the metaverse, users will need to easily convert between fiat and digital currencies, transact in digital currencies to purchase goods and custody their digital purchases. Fintechs, especially those focused on the blockchain space, could play critical roles in facilitating these transactions.

We show in the chart an estimate of metaverse’s potential total addressable market of more than $1 trillion spread across all the verticals previously elaborated.

We thank you for the continued support.

The FAM team