Metaverse is the new digital order that is shaping up with advancements in technology. While there is no clear definition of the Metaverse, it essentially connects our physical and digital lives so that we can socialize, transact, work and play. Businesses around the world are exploring the new market opportunity that has led to an interest in investing in metaverse.
“A key point is that there is no one virtual world but many worlds, which are taking shape to enable people to deepen and extend social interactions digitally,” JP Morgan said in a report. While most discussions surround the Western metaverse, we will look at the technological advancement from the Asia perspective.
What is the logic of investing in metaverse?
To understand how you can start investing in metaverse we first need to understand the available market for it. To put it down in numbers, $54 bn is spent on virtual goods each year, $80 mn was paid to creators in the game Second Life, the NFT market has swelled to over $40 bn, and 60 billion messages are sent daily on Roblox, as per data from JP Morgan.
Eric Sheridan of Goldman Sachs Research in a recent podcast said that the metaverse is an $8 tn opportunity on the revenue and monetization side. A Bloomberg analysis said metaverse could be an $800 bn market by 2024 with a large chunk of share held by online game makers and gaming hardware.
However, this begs the question of why Asia could be a key to metaverse development? A large chunk of the world’s population resides in Asia and almost 90% of them use smartphones with access to the internet. This presents an immense opportunity for rapid metaverse adoption in the region. Additionally, China has already taken a lead and its metaverse market is expected to hit $50 bn by mid-decade, as per Everbright Securities.
The metaverse wave has swept over Asia and several companies are announcing their plans, while start-ups are popping up to provide specialized services. “We should expect a multitude of potential metaverse platforms to be launched, many with a particular specialist usage rather than general purpose such as corporate training, social connection, but that will evolve into a small number of dominant platforms,” Will Duckworth, Asia-Pacific digital leader at EY tells South China Morning Post.
Businesses leading the metaverse development
We have already been in the metaverse for several years now – remember Farmville? Virtual worlds have been around for some time now but all of it is now culminating into an interconnected ecosystem where several digital technologies exist together. Investment management firm Neuberger Berman splits metaverse development into three sections — the virtual world, the infrastructure, and the physical gateway.
In recent months, several Asian firms have announced their metaverse plans. The world’s largest gaming company, Tencent, launched a feature on its messaging platform that allows users to socialize, watch TV shows and play games together. The company has a partnership with Roblox, owns media platforms like Soul and WeChat, has 3D simulation developer partners and has a huge cloud-computing business (Tencent Cloud).
Earlier this year, TikTok-owner ByteDance launched a social app called Paiduidao that allows users to communicate in a virtual community using avatars. Jack Ma’s Alibaba recently invested $60 mn in Chinese AR glasses maker Nreal to join rivals Tencent and ByteDance in developing the metaverse future.
Chinese PC-maker Lenovo has said it is investing $15.7 bn over the next five years on research and development for the metaverse. It plans to develop VR and cloud services in the said period.
The main hindrance to accessing metaverse has been the hardware. “Those who already spend time in virtual spaces are using old technology where the screen is the limiting factor. VR headsets and AR glasses, along with powerful 5G mobile networks, will take this to the next level,” said Reid Menge from the BlackRock Technology Equity Team.
Axie Infinity, the game developed by Vietnamese studio Sky Mavis, is known for its NFT-based format and allows players to earn real money. Singapore’s DBS Group Holdings wants to bring banking services to the metaverse and recently unveiled its technology investment plans.
Earlier this month, Japanese corporation Sony announced a $1 bn investment in Fortnite developer Epic Games to aid its metaverse ambitions. Sharp, another Japanese electronics maker, has been seeing increased revenues from shipments of VR displays.
Taiwan’s HTC used to make the iconic Vive VR headsets until production was stopped in 2020. The company has since released the demo of its own virtual world called Viverse which can be accessed using the Vive VR headset. It is also planning to launch a ‘Metaverse Phone’ for AR and VR experiences.
South Korea’s $200 bn sovereign wealth fund is undertaking investments in Silicon Valley start-ups working on the metaverse.
Means for investing in metaverse
Metaverse has fuelled a new wave of technology development, and tech firms will be at the forefront of developing the software and hardware for various applications. British bank HSBC recently launched a metaverse fund to allow its rich clients and high net worth individuals in Hong Kong and Singapore to invest in Silicon Valley’s new virtual reality.
The bank had previously said it was buying a plot of virtual land in an online game. “We see many exciting opportunities in this space as companies of different backgrounds and sizes are flocking into the ecosystem,” HSBC said in a statement.