Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

How do we navigate a virtual world that is still taking shape?

Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

Recently, the world-renowned consulting firm McKinsey released the latest research report “Value Creation in the Metaverse”, arguing that the Metaverse will significantly affect our business and personal lives.

Since 2022, more than $120 billion in investment has flowed into the Metaverse; 79% of active users have made purchases in the Metaverse; 25% of executives said they expect more than 15% of the company’s revenue to come from the Metaverse in the next five years.

It could be worth $5 trillion by 2030 and could be the biggest new growth opportunity over the next decade across multiple industries including consumer goods, retail, financial services, technology, manufacturing and healthcare.

01 Composition of the Metaverse

The concept of the Metaverse originated in the 1992 science fiction novel “Avalanche”. Author Neal Stephenson (Neal Stephenson) in the novel depicts a surreal virtual space “Metaverse”. People communicate and live in virtual identity in this parallel space. In just 30 years, with the rapid development of digital technology, sci-fi bridges have gradually come into reality. Nowadays, various industries have invested in the Metaverse craze and actively explored application scenarios.

A “complete” Metaverse experience is characterized by immersive visual effects, diverse social interactions, and a decentralized and distributed organizational structure. In a space different from reality, people create and trade freely in virtual identity.

According to a new McKinsey research report, the Metaverse consists of ten layers that can be broken down into four core building blocks: content and experience, platform, infrastructure and hardware, and enablers.

Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

content and experience

Content: Enrich the Metaverse experience – including first-party content, developer content, creator content, UGC, and more.

Applications: Relevant to specific Metaverse use cases – from learning to collaboration to events to industry specific applications

Virtual worlds: environments where large numbers of users can gather, interact, create, and move in and out of different experiences

platform

Access and Discovery: Platforms that facilitate content, experience, app distribution and discovery – including browsers, search/visual search, app stores, in-app storefronts

Creator/3D Development Platform: A core set of tools and platforms for building 3D experiences – including design, game engines, AI services, creator tools

infrastructure and hardware

Devices, Operating Systems, and Accessories: Device hardware, components, accessories/peripherals, and operating system layers that are part of the HMI layer

Infrastructure: Infrastructure across clouds, semiconductors, networks, and more, powering the Metaverse

enabling factors

Security, Privacy & Governance: Security, Identity & Data Governance, Privacy & Content Moderation Platform

Identity: A platform for managing digital identities, avatars and social graphs

Payments and monetization: platforms and tools (eg, advertising, asset stores) to enable virtual world economies

In a nutshell, the progress from Web 2.0 to Web 3 gave birth to the Metaverse.

Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

02 Three types of gold masters promote Metaverse investment

The realization of the Metaverse experience relies on a series of basic and applied technologies. Importantly, money is flowing into this tech stack.

More than $120 billion in investment has flowed into the Metaverse so far this year; more than double the $57 billion invested in all of last year. The large investment shows confidence in the development potential of the Metaverse.

Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

Metaverse’s broad investment environment is dominated by three types of investors:

— Big tech companies like Meta, Microsoft, Nvidia, Apple, and Alphabet are taking deliberate actions to shape the Metaverse. The most prominent examples are Facebook’s rebranding of Meta, cementing its intention to become a leader in the field, Microsoft’s interest in acquiring Activision Blizzard, Sony’s PlayStation VR2 headset to be released at the end of this year, and the possibility of Apple’s entry into AR.

— 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; Metaverse tech firm Improbable raising $150 million; Yuga Labs ( Bored Ape Yacht Club) raised $450 million at a $4 billion valuation.

— Brand companies outside of tech are investing resources to succeed. For example, Disney appointed a senior executive to oversee its Metaverse strategy, while LEGO invested in Epic Games (the makers 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.

The Metaverse, the universe of interconnected virtual worlds, has become the vision of the next generation of computing.”The Metaverse puts us on the cusp of the next wave of digital disruption,” said Tarek Elmasry, senior partner at McKinsey & Company. “It’s transformative. It could have a major impact on our business and personal lives, which is why business , policymakers, consumers and citizens may want to explore and understand as much as possible about this phenomenon, the technologies underpinning it, and the implications it may have for our economy and wider society.”

03 Evolution of Consumer and Business Behavior

McKinsey research shows that consumers are excited about transforming their lives into a virtual world, with almost six in 10 (59%) preferring at least one virtual world experience over its physical alternative.

Among these consumers, certain types of activities are most favored in the immersive world: shopping – buying physical or virtual goods (79%); participating in virtual social events or playing social games (78%); exercising using virtual reality (76%).

Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

Another 79% of respondents said they had purchased items in the Metaverse in its current form, with 47% saying they had purchased items in-game, 37% saying they had purchased virtual cosmetics, and 33% Indicates that real-world goods have been purchased through virtual platforms.

Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

Changes in consumer behavior have allowed business leaders to see the potential of the Metaverse to drive impact and profit growth. Ninety-five percent of executives said they expect the Metaverse to have a positive impact on their industry within five to 10 years, and 25 percent expect Metaverse technology to drive more than 15 percent of their organization’s total profit growth over the next five years.

Of course, innovators are also looking for different capabilities if they are to implement the Metaverse initiative, especially in building business models, infrastructure and back-end engineering, blockchain and e-commerce payments, product design, and branding and enterprise.

Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

04 The potential of the Metaverse

Based on consumer and enterprise use cases, McKinsey predicts it could generate as much as $5 trillion in value by 2030.

The potential impact of the Metaverse varies by industry and could be $2 trillion to $2.6 trillion for the e-commerce market; $180 billion to $270 billion for the virtual learning market, and $144 billion to $206 billion for the advertising market , with an impact of $108 billion to $125 billion on the gaming market.

Value Creation in the Metaverse: Exploring the Business of Virtual Worlds

Metaverse offers retailers the opportunity to reimagine and personalize store environments. For example, Boson Protocol has a shopping mall in Decentraland that allows users to explore digital goods and buy NFT vouchers that can be redeemed for that item in the real world.

The fashion industry’s early experiments with virtual worlds were mainly through the launch of virtual clothing, and the long-term opportunity for fashion brands is to attract consumers through NFTs. As the virtual world develops and customer attention increases, funding for virtual experiences will become more active.

As the Metaverse brings together online social networks, games, cryptocurrencies and increasingly diverse digital assets, financial services companies have joined to explore potential opportunities in the virtual world.

Additionally, the Metaverse presents huge opportunities for tech companies, particularly in the three areas of infrastructure, developer tools and platforms, virtual worlds and content.

Clearly, the Metaverse could bring about widespread social change. People can work and play in virtual worlds, own virtual assets, consume virtual land and goods, socialize in virtual spaces, and create worlds and objects. At the same time, they may also pose risks to individuals and society.

“From a cybersecurity perspective, it’s not just about servers, nodes or networks anymore,” said Pearlman of the XR Safety Initiative. “The attack surface has expanded into our human brains and our living spaces because we can now Extending screens and activities into our real-world environment.”

It also heralds the need for a roadmap for an ethical, safe, and inclusive Metaverse experience by a variety of stakeholders, and possibly guidance around issues such as data privacy, security, ethics, and governance.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/value-creation-in-the-metaverse-exploring-the-business-of-virtual-worlds/
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