A report by McKinsey on ‘Value Creation in the Metaverse’ begins by pointing out that with its potential to generate up to $5 trillion in value by 2030, the metaverse is too big for companies to ignore. To put this in perspective, this is the same size as the world’s third largest economy, which is that of Japan.
In 2022 alone, according to McKinsey, upwards of $120 billion has been invested in metaverse projects, 79% of consumers already using the metaverse have made a purchase, and over 15% of corporate revenue is expected to come from it in the next five years. And looking at the inflow of investment, it’s important to note that in 2021, the investments were only worth $57 billion, which is significantly lower than the first six months of this year.
Interest in the metaverse is also growing, according to the McKinsey report. It says, Google searches for ‘metaverse’ skyrocketed by 7,200 percent in 2021, and Roblox, an online gaming platform, reported over 55 million daily active users in February 2022. Meta has committed $10 billion to its Reality Labs division and
Microsoft is planning a $69 billion acquisition of gaming company Activision Blizzard. As we can see, some of the Big Tech names are already steaming ahead here.
What is driving investors to the metaverse?
The answer is that there are numerous factors that are attracting investors. The advances in the technology needed to run the metaverse is one, a growing demographic of those who are in favour of a metaverse (hello Gen Z), an a rise in consumer-led brand marketing that is attracting users to the earliest versions of the metaverse. This has largely been driven by gaming, as well as the emergence of metaverse apps for socialising, fitness, retail, virtual learning and more.
There is also consumer excitement building around the concept. McKinsey surveyed 3,400 consumers and company executives. The research found that around 60% of consumers using early versions of the metaverse “are excited about transitioning everyday activities to it,” and mentioned connectivity with other people as being one of the biggest drivers of interest. They are also interested in exploring digital worlds.
The sectors where growth is expected
Significantly, 95% of business leaders expect the metaverse to have a positive impact on their industry within a decade, with 61% thinking it will only have a moderate impact McKinsey’s report says the metaverse is the biggest new growth opportunity for several sectors in this decade, namely consumer packaged goods, retail, financial services, technology, manufacturing and healthcare.
Although the growth impact will vary amongst these sectors, McKinsey suggests the market impact on e-commerce by 2030 will be in the range of $2 -2.6 trillion.
Virtual learning is likely to see revenues of $180 billion to $270 billion, while advertising could rake in up to $206 billion. Interestingly, the gaming market, which is where a lot of metaverse action is happening right now, may only see revenues of up to $125 billion.
How to capture the value of the metaverse
The report states that by 2030, more than 50% of live events could be held in the metaverse, and that over 8-% of commerce could feel the impact of consumer behaviour in the metaverse. So, how can business leaders make the most of this new opportunity? McKinsey offers a three-step strategy:
- Develop a value-focused strategy by defining your goals and the role you want to play that will generate value
- Test, learn and adapt by launching activities, monitor the results and refine the activity
- Prepare to scale by aligning talent and tech capabilities and embed them in your business strategy and operating model.
This report makes it clear that the appetite for this virtual world is growing on both the consumer and business sides. Clearly it has much to offer beyond where it is now, but there is a lot of educating to do along the way, of both consumers and businesses.