Published on July 15, 2022 by Sanjay Malik
The metaverse has captured the imagination of the entire world, although the whole thing is a little perplexing for many. Still, as you can see, the technology industry is really obsessed with it. Countless brands and entrepreneurs are trying to jump on the metaverse bandwagon to gain a first-mover advantage.
What is the metaverse?
The metaverse is the convergence of augmented, virtual and physical realities in a shared online space. Content has already evolved from text to graphics to video formats, and the latest is immersive digital interactions. The metaverse facilitates virtual interactions where the physical world is recreated via digital experiences in a connected world.
For example, science fiction and video gaming, once limited to books and computers without any participation from the consumer, have now migrated to the physical world with ‘you’ in it with the advent of the metaverse. From a long-term perspective, the concept carries the potential to transform the way businesses function and personal interactions happen.
The metaverse, the unlimited reality, is going to fundamentally change the way people interact. With an increasing number of businesses, creators (designers, programmers etc) and consumers getting on board, the leaders are betting on the potential of the metaverse. In terms of market opportunity, Bloomberg expects the global metaverse market to touch USD800m by 2024.
Possible applications in the real world
The metaverse surely has the potential to transform the traditional business models in many ways. For example, the following sector-based applications will soon become a reality as the metaverse evolves. Let us take a look at how these applications, with the metaverse advantage, will transform the way business is done in the digital domain.
Fintech and Payments
One of the key benefits that the metaverse brings to the table is borderless and timeless payments. Users can use blockchain-based digital currencies to send and receive payments from across the world without worrying about the time and exchange rates or any currency conversion fees. Non-fungible tokens are also becoming increasingly popular in the metaverse as a payment method. The metaverse also enables instant and cheaper transactions as the transactions are completed almost on-demand instantaneously with add-on features of immutability and security.
Gaming is a major user of the metaverse as it allows people to have immersive experience instead of focusing on two-dimensional screens. With enhancements in areas such as augmented reality and virtual reality, blockchain and artificial intelligence, gaming companies are increasingly focusing on metaverse-based games. For example, Decentraland is a blockchain metaverse for gaming where players can play and earn tokens on the Decentraland platform. Mainstream games such as Cefiro and Eggs of Dragon City are already using Non-Fungible Tokens (NFTs), the fastest growing application of blockchain.
Retail and E-commerce
A large number of retail giants are also jumping on the metaverse bandwagon. With the advent of the AR/VR technology, the metaverse has the potential to alter the way customers interact with brands and shop, both online and in person.
For example, Gucci organised a virtual exhibition of art installation called Gucci Garden. Dyson lets customers virtually try out their hair product — consumers can virtually style their hair and decide on the perfect product fit.
While most of these brands have taken an experimental approach, Nike has gone big on metaverse investment to fully commit to a virtual future.
Media & Entertainment: The rise of virtual and augmented reality provides consumers with immersive viewing experience and an opportunity to interact with digital assets. It also provides opportunity for advertisers and marketers to create immersive marketing campaigns. The metaverse allows users to register, trade and circulate various digital assets using NFTs. Users can easily access the metaverse using their smartphones. The COVID-19 pandemic has accelerated the adoption of the virtual world in the field on entertainment.
End users of metaverse in the media and entertainment industry can be artists, Over-the-Top (OTT) platforms, music labels, film production companies, television broadcasters and others.
The pandemic has given a strong push to online learning. However, online experiences in the metaverse combined with avatars could further expand the possibilities in this area and help make it more effective. A single avatar could move fluidly between spaces; for example, from lecture halls to science laboratories. Medical students might train on a single avatar before going live with real patients.
In the metaverse, real estate means parcels of land in the virtual world! They are actually pixels but more than just digital images. They are programmable spaces in virtual reality platforms where people can socialise, play games, sell NFTs, attend meetings and concerts, and do various other virtual activities. These can be purchased and owned for passive rental income. Some of the key platforms in the metaverse domain are Decentraland, Sandbox and Axie Infinity. The metaverse is expected to be used as an immersive tool for pre-screening a property. It will include features such as a 360-degree view and a virtual tour of the property.
The digital real estate market should grow in tandem with the growth in the metaverse. In fact, in the last quarter of 2021, there has been a metaverse real estate boom after Facebook changed its name to META and indicated a focused interest in the metaverse. As its popularity continues to grow, the value of metaverse real estate is expected to register a CAGR of 31.2% between 2022 and 2028.
With the metaverse, Web 3.0, and internet of things, medical devices offer endless possibilities to reshape the healthcare domain. The combination of technologies and their role in transforming healthcare cannot be ignored. The current focus on telemedicine can evolve into virtual care and in-person experience. The metaverse holds the potential to unlock many other healthcare innovations going forward.
Manufacturing and Logistics: Manufacturing companies can use the concept of digital twins to emulate manufacturing and logistics processes within the metaverse. It can eventually help them reduce maintenance costs by enabling lower-cost predictive planning.
The metaverse also enables rapid manufacturing process design. This helps identify the safest and the most efficient method in a manufacturing process without the need to perform any physical testing. This also reduces the margin of error and enhances customer stickiness.
The metaverse-driven transparent logistics solutions can provide customers insights into the journey of an order -from assembling to shipping to final delivery. It can also help in raw material procurement, with 3D representations giving insights into production, distribution, lead times, transit times and shipping delays. The metaverse can also contribute in the area of warehouse designing and planning.
Summing up the metaverse
Sky is the limit for the metaverse, with the concept winning instant acceptance and recognition in today’s digitally advanced world. In addition to the above-mentioned sectors, it can make a huge difference to areas such as aerospace and defence, architecture and engineering, and travel and tourism.
The metaverse will help aerospace and defence equipment manufacturing companies maximise the value of their products and services. AR- and VR-based solutions have the potential to drastically improve the way maintenance, repair and overhaul, aircraft inspections and workforce trainings function. It will also help them set strategy, learn and adapt, and implement as per the advancing technological trends.
The metaverse can be used by architects to test unassembled structures with the help of simulations. In the metaverse, architects and engineers are not constrained by physics, material properties and construction costs, which helps unveil a new realm of architectural expression. Architects can also create beautiful designs of cities, buildings, sculptures and furniture with the help of NFT, which can be sold to people who love to collect such assets.
The COVID-19 pandemic has highlighted the potential vulnerabilities and limitations of the travel and tourism industry. The metaverse in tourism helps bridge physical distances and offers real-time experiences. Interactive virtual reality experiences can recreate real-world environments and provide travellers a clear idea of the destinations they are planning to visit. It can also streamline the booking process by providing accurate and precise information and thus boost the success rate for bookings. Hotels can use VR tours or digital avatars to provide customers a first-hand feel of the facilities and ambience.
In this post-COVID-19 era, the metaverse can revolutionise hybrid working arrangements by providing employees a virtual working environment, which is very similar to the real-life one. For example, employees can show up as their avatars and interact in a more flexible and realistic manner in a hybrid working environment with the help of the metaverse.
Value chain and its key components
The metaverse is a network of interconnected layers (components/building blocks) and applications stacked upon each other. Following are the key components that form the metaverse framework:
Challenges and uncertainties
The technology has great potential but there are many stumbling blocks on the road to the metaverse. Some of the potential risks associated with the metaverse include vulnerabilities associated with security and privacy, the requirement to make large investments in technology infrastructure and expertise, inequality in accessibility and desensitisation.
It may also impact mental and physical health. Some of these factors are yet to be contemplated.
Although the technologies are converging to bring the metaverse to life, it is still new and has just begun to emerge. Right now, it is hard to fathom the extent of the paradigm shift the metaverse will bring to this world and people’s lives. Actually it is its strong potential that makes it worthy of a patient wait.
How Acuity Knowledge Partners can help
Acuity Knowledge Partners has been providing strategy research support to diverse stakeholders in the technology sector — tech corporates, tech advisory firms and tech-focused investors — for nearly two decades. Armed with this strong technology background and experience, Acuity can support in areas such as technology development, industry intelligence, competitor benchmarking and market sizing for the continually evolving metaverse market. Acuity can also research on the metaverse potential of every sector and its findings and insights can be incorporated into the innovation roadmap of enterprises. Our unique approach, combining processes, people and technology, helps deliver faster results and drives excellence for our clients. A number of industry leaders leverage our proprietary suite of business excellence tools and offerings to unlock new levers of business growth and unmatched returns on investment.
About the Author
Sanjay is a part of Strategy Research team at Acuity Knowledge Partners, with experience across domains such as financial services, fin-tech and consulting, besides working on bespoke projects in the strategy domain. He has worked on projects involving competitive intelligence, market entry & growth strategy, market sizing, industry profiles and benchmarking studies
He is responsible for project execution and delivery, besides working closely with client teams on research tasks and managing source references across projects. He has exposure and knowledge of proprietary databases such as FactSet, Hoovers, Nexis, Bloomberg, and Thomson
He has an overall experience of 6+ years. Prior to Acuity Knowledge Partners, he has worked with a leading research firm, where he worked closely with client teams across geographies and supported corporate strategy initiatives
Sanjay holds an MBA in International Business from KJ Somaiya Institute of Management Studies and Research Mumbai and has a B.Tech (ECE) from Punjab Technical University.