Alberto Saracho
Partner
McKinsey & Company

Podcast

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Expert Contributor

Creating Value in the Metaverse

By Alberto Saracho | Thu, 07/28/2022 - 16:00

The metaverse is still in the process of being defined, both literally and figuratively. However, its potential to trigger the next wave of digital disruption seems increasingly possible, with benefits in real life that are already emerging for users and businesses that adopt it.

As we have seen with previous technological changes, such as the advent of the internet, followed by social media, mobile, and the cloud, new metaverse strategies can quickly become minimum requirements for creating a competitive edge in the years to come.

The metaverse has the potential to affect everything from employee engagement and dedication to customer experience, omnichannel sales and marketing, product innovation, and community building. But the pace of the development of the metaverse will depend on multiple technological factors and user experiences and is not limited to one platform, device or even technology.

Opportunities and Challenges

Although estimates of the potential economic value of the metaverse vary widely, our view of consumer and business use cases suggests that it can deliver an impact of up to US$5 trillion by 2030, equivalent to the size of the world's current third-largest economy, Japan.

Big tech companies, venture capital (VC) and private equity (PE) firms as well as startups and established brands all want to take advantage of opportunities in the metaverse. These corporations have already invested more than US$120 billion in the metaverse just in the first five months of 2022 (much of it driven by the acquisition of Activision Blizzard by Microsoft, for US$68.7 billion), and more than double the US$57 billion invested in all of 2021.

There are several factors driving this investment, especially in the areas of technology and infrastructure needed to run the metaverse; the demographic trends; the increasingly consumer-oriented brands and marketing efforts; and the growing acceptance of users that are exploring the early version of the metaverse, driven largely by video games (some of which have tens of millions of active players), with emerging applications spanning fitness, commerce, socializing and virtual learning, among others.

Our recent Value Creation in the Metaverse survey of more than 3,400 consumers and executives revealed great enthusiasm for the metaverse’s potential. Almost 60 percent of consumers using the early version of the metaverse are excited about the possibility of moving their daily activities to it, driven by increasing connectivity between people and the potential to explore digital worlds.

Around 95 percent of business leaders expect the metaverse to have a positive impact on their industry in the next decade and 61 percent expect it to eventually change the way their industry operates. According to this report, the sectors most likely to be affected by this trend are consumer and retail, media and telecommunications, as well as healthcare. These industries are also undertaking initiatives in the metaverse.

The metaverse is actually positioning itself to become a major growth opportunity for various industries in the next decade, given its potential to enable new business models, products and services, and to act as a channel of interaction for both business-to-consumer and business-to-business initiatives.

The impact of the metaverse will vary by industry, although we believe it will eventually affect everyone to a certain degree. For example, we estimate it may have up to a US$2.6 trillion market impact on e-commerce by 2030. Similarly, we estimate it will have between a US$180 to US$270 billion effect on the academic virtual learning market; an influence of between US$144 and US$206 billion in the advertising market; and an impact of between US$108 and US$125 billion in the gaming market.

How to Capture the Value of the Metaverse?

Consumers and businesses are already beginning to explore ways the metaverse can deepen connectivity and complement everyday activities. And, a decade from now, the metaverse has the potential to concoct a very different world.

We expect the average internet user to spend up to six hours a day in metaverse experiences by 2030. By then, it's very plausible that more than 50 percent of live events could take place in the metaverse. More than 80 percent of commerce could be affected by consumers using the metaverse to discover brands and visit online stores, and most learning and development activities could also take place in the metaverse environment.

Companies that already take advantage of the metaverse can create competitive advantages. Business leaders have to develop strategies and goals according to the role they want to play in the metaverse, by launching and testing initial activities, monitoring results, adopting those that have long-term potential, learning more about users by examining their behavior, and preparing to scale their capabilities to integrate the metaverse into their operating model. They must also explore the possibility of becoming users of the metaverse themselves.

Looking Toward 2030

The metaverse poses important challenges that affect businesses, their employees, developers and independent content creators, governments and, of course, consumers. Workers will have to improve their capabilities to harness the metaverse instead of competing with it, and countries interested in becoming centers for its development will have to compete globally to attract investment and the best talent available.

The metaverse also has implications for society as a whole. Stakeholders will need to define a road map toward an ethical, safe, and inclusive metaverse experience, and develop guidelines on issues such as data privacy, security, ethics and compliance, physical health and safety, sustainability, as well as equity and fairness.

In the end, with its potential to generate up to US$5 trillion in value by 2030, the metaverse is simply too big to ignore. It will have such a huge impact on our businesses and personal lives that companies, policymakers, consumers, and citizens will need to explore and understand as much as they can about this phenomenon, the technology that will support it, and the impact it will have for both our economies and societies.

Photo by:   Alberto Saracho

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