The metaverse, which is being seen as the future of business and human interaction, is projected to reach $5 trillion by 2030, according to the latest report from McKinsey & Company.
E-commerce, which has grown significantly because of the coronavirus pandemic in the past two years, is poised to make up more than half of the metaverse market at $2.6tn, the consultancy said in Value Creation in the Metaverse. It will be followed by virtual learning ($270 billion), advertising ($206bn) and gaming ($125bn).
The metaverse is a digital space that allows users to communicate and move virtually in their three-dimensional avatars or digital representations. It is part of Web3, which is being promoted as the next iteration of the World Wide Web, with blockchain, decentralisation, openness and greater user utility among its core components.
“The metaverse represents a strategic inflection point for companies … it presents a significant opportunity to influence the way we live, connect, learn, innovate and collaborate,” Eric Hazan, senior partner at McKinsey, said.
Investors’ enthusiasm is at its peak, the report found. So far in 2022, companies, venture capital and private equity firms have invested more than $120bn in the metaverse, 110 per cent more than last year.
Several factors are fuelling the investment growth, including technological advances, demographic tailwinds, consumer-led brand marketing and engagement, and increasing marketplace readiness, McKinsey said.
The consultancy surveyed more than 3,400 consumers and senior executives across the Asia-Pacific, China, Europe and the US. It also analysed five industries — apparel, fashion and luxury; consumer packaged goods; financial services; retail; and telecoms, media and technology.
Today’s version of the metaverse is largely driven by gaming sector, while new applications emerge in socialising, fitness, commerce, virtual learning and other uses, the report said. Currently, more than three billion gamers worldwide have access to different versions of the metaverse.
“While the idea of connecting virtually has been decades in the making, it is now increasingly real, meaning real people are using it and spending real money and companies are betting big,” said Lareina Yee, senior partner at McKinsey.
McKinsey’s research revealed almost six in 10 (59 per cent) consumers prefer at least one metaverse experience over its physical alternative.
Some of these include shopping — purchasing physical or virtual goods (79 per cent), attending virtual social events or playing social games (78 per cent) and exercising using virtual reality (76 per cent).
Business leaders also recognise the metaverse’s potential to drive margin growth. Nearly 95 per cent of leaders admitted they expect the technology to have a positive impact on their industry within five to 10 years, while 31 per cent said it will change the way their industry operates.
Nearly a quarter of them expect metaverse to drive more than 15 per cent of their organisation’s total margin growth in the next five years.
“The metaverse has put us at the cusp of the next wave of digital disruption. It’s transformative … it will likely have a major impact on our commercial and personal lives,” said Tarek Elmasry, senior partner at McKinsey.
In the Middle East, the UAE is leading the metaverse movement.
Dubai Metaverse Strategy aims to increase the contribution of the metaverse sector to Dubai’s economy to $4bn by 2030 and increase its contribution to the emirate's economy to 1 per cent, according to official data.
In May, Dubai's Virtual Assets Regulatory Authority entered into the metaverse with the establishment of its Metaverse HQ, making it the first regulator to have a presence in the emerging digital space.
Last month, the UAE host first metaverse wedding. The technology allows couples to choose a venue, a customised cake and a wedding dress.
Members of the public can also meet and interact with Ajman Police in the metaverse, where avatars of officers will answer people's inquiries. Seven officers from Al Nuaimaiah Police Station have been trained in the metaverse technology.