McKinsey: $120 billion already invested in the Metaverse in 2022

Interest in the Metaverse skyrockets in 2022, with a new report almost every week of another organization investing in Web3 or creating a new NFT product line, and a new report from McKinsey lays out the reasons behind this nascent investment. The report, Value Creation in the Virtual World, highlights that more than $120 billion has been injected into virtual worlds by 2022, more than double the total of $57 billion in 2021.

Who is investing?

Investors can be grouped into three categories: large tech companies, venture capital, and corporations and brands, the report said.

The big tech companies are Meta, Microsoft, Nvidia, Apple and Google. Facebook’s rebranding as Meta and Microsoft’s acquisition of Activision Blizzard are some of the key moves by these companies.

Venture capital is investing heavily in the space, such as NFT marketplace OpenSea raising $300 million at a $13.3 billion valuation in a Series C round led by Paradigm and Coatue and Yuga Labs (creators of Bored Ape Yacht Club). $450 million, valued at $4 billion, for building virtual worlds.

McKinsey reports that companies and brands outside of tech are devoting resources to efforts to succeed.

Disney, for example, appointed a senior executive to oversee its Metaverse strategy, while Lego invested in Epic Games (the maker of Fortnite). Epic Games also partnered with luxury brand Balenciaga, which created a dedicated Metaverse division and launched its latest collection within the virtual space.

Why invest?

McKinsey identified several factors as to why these organizations and entities are spending so much in this developing field.

First, as technology continues to advance, while significant technical challenges remain, leaders have seen that blockchain inspires a decentralized creator economy and is a key enabler of future interoperability between the virtual and real worlds The promise of the most promising current technology.

Other advancements include increased availability of back-end engines, edge computing powering virtual worlds, the advent of 5G, devices that merge physical and virtual worlds, and the development of advanced software.

Another factor for increased investment is the increasing readiness of stakeholders. With the growing importance of gaming, other use cases are rapidly emerging—including new AR/VR-based social media experiences, immersive retail, entertainment, sports, and education.

Ken Wee, chief strategy officer at Activision Blizzard, said: “Games are already very social, and social features continue to innovate. But when you’re trying to attract people who don’t identify as gamers, you need a broader set of social engagement mechanisms to Convince them to spend more time in the virtual world.”

Numerous companies are also experimenting with virtual worlds, Gucci has created many NFT drops, and Nike has Nikeland at Roblox. McKinsey pointed out that in the long run, five daily activities will take place in the virtual world: gaming, socializing, fitness, business and distance learning.

future development

Kavya Pearlman, founder and CEO of the XR Security Initiative, noted that use cases beyond gaming are not only in the future, but are already emerging. With 1.6 billion children turning to online learning due to the pandemic, according to the United Nations, this is an area ripe for disruption, with many looking for alternatives. We’re also seeing a lot of experimentation in the medical field, such as using HoloLens for assisted surgery.

Metaverse will also enable incremental improvements in the enterprise space, improving current solutions and creating entirely new products. Some of these categories include enhanced remote collaboration, reimagined learning and development, and digital twins.

“The Metaverse is at an inflection point in its evolution due to factors ranging from the size of the opportunity to the drivers of expected growth and the amount of investment,” said the report’s authors. We believe the intense interest over the past year has sparked dramatic corporate experiments that set the stage for the Metaverse to grow and likely maintain momentum for the foreseeable future. (This article is synthesized from itnews)

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