The Metaverse Industries and Its Future Growth Potential
Updated: Nov 23, 2022
The Metaverse has been catching everyone’s attention as the next generation of the internet. Its market size is expected to reach more than $993 billion globally by 2030 as retrieved from Bloomberg. Based on the current Metaverse trends, consumers will soon be earning, spending and investing their money in shared, highly immersive virtual spaces that go beyond the possibilities in real life. Younger generations such as Gen Z and Gen Alpha are more likely to express positivity about the metaverse, due to virtual gaming since young. Although the Metaverse is still in the midst of development, veteran avatar-based social platform Second Life, video game creator playground Roblox, and blockchain-forward Decentraland have given a hint on what could be in store. Ranging from Non-Fungible Token (NFT) crypto projects, Metaverse events and GameFi, the Metaverse has the potential to disrupt an array of industries.
Here we’ll be exploring the impact of Metaverse in Retail, finance (FinTech) and gaming industries.
Technology That Power Metaverse
The next-gen immersive virtual world would rely on technologies such as Virtual Reality (VR) headsets, Advanced Haptic Feedback, Virtual Reality (VR), Artificial Intelligence, Augmented Reality (AR) and more to power the Metaverse vision. With technology’s constant upgrades and growing accessibility, Metaverse will be more user-friendly and convenient with time. For instance, VR headsets have evolved from clunky setups requiring a wired connection to self-contained, user-friendly devices.
Companies such as Mojo Vision, a startup in California, have revealed a prototype of AR contact lenses, which users can wear without obstructing the view of the real world. This discrete technology would make it more appealing to consumers. While the AR lenses are still in development, such technology makes the Metaverse promising for both consumers and businesses to hop onto the digital space.
Blockchain-based technology such as Non-Fungible Tokens (NFTs) will also play an essential role in the economy of the Metaverse. They run on smart contracts and serve as digital assets to prove ownership without a centralised verifying body. It helps to set interoperability standards and facilitate trades by reinforcing private property rights within loosely-governed virtual space.
1. Retail Industry
There are always new challenges for businesses as the retail industry changes rapidly due to technological evolution. One issue posed by eCommerce would be the need for customers to constantly return items as they miss out on the “try before you buy” experience that brick-and-mortar stores offer. However, the Metaverse could use AR technology to allow customers to view the product in the comfort of their home while still maintaining the experience of a try-on, virtually.
One example would be Dyson’s virtual store. When users immerse themselves in the Oculus environment created by Meta, they can use its AR & VR experience to virtually try out Dyson’s hair products on a variety of hair types, and see which is best suited for them. A tour is also given where they can look inside the products and understand the technology that makes this work.
The Metaverse is also giving rise to a whole new genre of retail - allowing customers to purchase items for their digital avatars in the form of NFTs. Well-established brands such as Nike and Gucci are making a shift to the Metaverse by setting up digital convertibles and products to be sold in the Metaverse.
An example of a retail-game Metaverse is Balenciaga, which created a virtual store on Fortnite. The VR store replicated the physical brand’s stores. The brand proposed to sell four signature items from its collection to serve as skins and accessories for avatars in the game. Users who made extravagant Balenciaga purchases on Fortnite can submit photos of their avatars to be included on the billboards of the game’s town square as well as enter a Balenciaga store to perform a custom dance.
However, this is barely scratching the surface of the benefits of a completely immersive shopping experience.
2. Financial Industry, FinTech
FinTech has made a consequential impact on financial services and other industries. In recent years, the banking industry has been undergoing a monumental shift, with FinTech making waves of evolutions. In the next generation of the internet, better social experience and opportunities to democratise access to and retain ownership of goods and services are some examples of the impact of the Metaverse.
JP Morgan, the first bank to enter the Metaverse this year, has opened a lounge, Onyx lounge, in one of the most popular Metaverse platforms, Decentraland. Running on currencies native to its population in the Metaverse, it offers VR banking services to facilitate foreign exchange with cross-border payments, financial asset creation, trading and safekeeping. Shortly, JP Morgan will thrive to allow users cruising its Metaverse to open an account, deposit their checks or fill out a mortgage app on a new home inside this virtual world, just as it does in the physical world. With institutions competing to make financial transactions convenient and real-time, the emergence of Metaverse combined with FinTech has the potential to improve and shake every aspect of the financial industry.
This movement has opened up banks across the globe to adopt Metaverse and leverage on leading technology such as AR and VR. South Korea’s Kookmin Bank has also hopped on FinTech to expand its customer services by providing one-to-one consultations in the Metaverse following JP Morgan’s shift to virtual banking. Now, the FinTech sector is developing its virtual world to support financial services in the Metaverse.
3. Gaming Industry
Video games have always been one of the popular means of entertainment and recreation for many people worldwide. However, traditional video game industries never go beyond the scope of centralisation as game developers possess the ultimate control. Players are unable to trade in-game collectables and other artefacts on external platforms, and they may even risk losing all in-game assets if the developers shut down the game. This is where Metaverse steps in to resolve this challenge.
As the gaming industry embraced the Metaverse earlier than other industries, many may confuse the Metaverse, an immersive virtual world, with gaming. Powered by leading technologies such as 3D reconstruction, AR, VR, Internet of Things (IoT) and more, Metaverse brings the gaming industry to the next level by enabling players to have a close-to-reality experience when gaming on the Metaverse platforms. Players can even experience a physical sense of touch using haptic gloves and jackets. As Metaverse games are based on the play-to-earn concept, their in-game items carry real-world value via the use of cryptocurrencies. This allows players to earn real money through the selling and trading of their digital assets such as NFTs in the Metaverse. Digital assets such as NFTs provide a distinct verifiable proof of ownership of digital assets on a blockchain.
The concept of integrating gaming and finance is also known as GameFi, which is another stepping stone to the Metaverse. An example of this is Axie Infinity, a game which uses its native Ethereum-based cryptocurrency to fuel the development and uses digital creatures in the game or also referred to as ‘Axies’. The Axies are basically NFTs, which allocate unique proof of ownership to players. Every Axie demonstrates a one-of-a-kind set of abilities, which determine its chances of success in battle. Players can breed, collect and raise Axies as well as build kingdoms for them. Developers of the game have claimed to generate over $16 million in terms of revenue.
This shows the revolutionary play-to-earn game that refines the notion of ownership over in-game assets while enabling new opportunities for economic potential in video games. The new play-to-earn game brings a balanced dynamic of cryptocurrencies, NFTs, and video games to create a decentralised gaming environment.
The way we interact with technologies could change due to the Metaverse, despite it being in the early stage of development. Not only can it serve the numerous industries discussed but several other industries as well. This includes trading, education, entertainment and many more. Undoubtedly, Metaverse is a huge step forward and the opportunities discussed are just a glimpse of the Metaverse’s potential to fill up gaps between the physical and digital world. In the future, strong Metaverse use-cases may be expected and for brands to make plans for the adoption of the Metaverse to keep a competitive edge in the market.
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