Investment Institute

Five ways the metaverse could change life in the next decade

  • 07 February 2023 (7 min read)

Key points

  • The metaverse will continue to evolve, offering even more immersive user experiences
  • Businesses will change the way they operate, connecting with customers in the metaverse, while there is significant scope for sectors including healthcare and industrials to benefit
  • The companies providing the building blocks of this future are already here, providing potential opportunities for long-term investors

As the physical and digital worlds converge, we are already seeing the metaverse feed into many aspects of our daily lives. Connecting users to people, places and things, the development of the metaverse was initially driven by the gaming industry, where virtual worlds allow for a heightened playing experience. But its impact increasingly spans the way we shop, communicate and work – as well as influencing practical applications for multiple industries and sectors.

Here are five ways we believe the metaverse could change life in the next decade – and what this could mean for investors.

Experiences will become more immersive

The metaverse will continue to evolve, with experiences becoming more immersive, more varied, and more complex, as technology develops, and consumer expectations grow.

This could include more layered and nuanced virtual worlds bringing new opportunities to carry out day-to-day activities in the metaverse, such as attending an employee event or collaborating on a work project, shopping, or socialising in real time with friends. A quarter of us will spend at least an hour a day in the metaverse for work, shopping, education, social media and entertainment, according to one analysis.1

Virtual reality (VR) and augmented reality (AR) headsets will add to this immersive experience. Sales of such devices are expected to reach nearly 90 million units by 2025, from 16 million in 2020.2 Sony is planning to launch a new VR headset linked to its PlayStation5 (PS5) gaming system in February, while Apple is said to be launching a ‘mixed reality’ headset this year, combining VR and AR, with a lower cost version potentially coming as soon as 2024, which could bring such devices more into the mainstream.3

Other wearable accessories such as connected glasses or haptic gloves, that allow the user to feel as if they are touching objects in a VR environment, add to the experience. But the metaverse doesn’t need wearable accessories to be accessed – Google Earth is already a ‘digital twin’ that we can access online or through smartphones and Google Maps is rolling out an immersive view feature in selected cities using artificial intelligence, which we see as a further step towards the metaverse.4

Persistency will be a key development to a fuller experience – in metaverse terms, this means continuity of experiences. For example, in a computer game if a player cuts down a tree, the tree is there again the next time they log in. In a persistent metaverse, the tree remains felled – and other players independently entering the same space would find only a stump. This creates the continuity that is key to a realistic experience – but requires greater investment in the technology needed to allow this to happen at scale, and as a result, potential new opportunities for investors.

Many platforms, one identity

The metaverse is a network of platforms – with each platform hosting its own virtual world. Crucially, we anticipate interoperability to be a feature of the next decade, where people can move seamlessly from one metaverse to the next, retaining their digital identity and virtual assets.

This will be in the interest of developers so there is healthy competition rather than a monopoly – and in the interest of businesses that operate within the metaverse. For example, if a consumer spends money on an item of clothing or accessory for their avatar, they will want to retain that accessory as they move across platforms. Over time, separate platforms could sit side by side offering a seamless experience for consumers to play, socialise, shop, work in the metaverse, and more.

We also expect more and more platforms to surface over the next decade, with tech giants playing a major role, but that a more decentralised metaverse will emerge. We are already seeing this with the likes of Decentraland and The Sandbox, which use blockchain to create more open ecosystems, giving users more control. The more liquid investment opportunities are potentially likely to be found in the more established players, but we are monitoring smaller companies where we see potential.

Businesses will change the way they operate

Companies are already harnessing the metaverse to connect with consumers – nearly four-fifths (79%) of consumers active in the metaverse have made a purchase.5

Business across sectors as diverse as technology, fashion, media, automotive, insurers and more are beginning to operate inside the metaverse to create a unique and more personalised offering for customers. At the same time, the metaverse is creating new advertising opportunities and sales channels for global brands, transforming the way that businesses engage and operate.

Aside from e-commerce, industry and healthcare, are two of the largest potential beneficiaries of the metaverse. In manufacturing, there could be significant cost as well as safety benefits for instance by creating digital twins to test equipment in particular environments, while healthcare has seen impressive advances in using VR for patient rehabilitation, for example.

We expect to see more companies allocate resources to developing or operating within the metaverse as they embrace the possibilities. As well as capital expenditure, we could see an increase in merger and acquisition activity in relation to the metaverse, which would have implications for investors.

Digital payments will evolve

As we spend more and more time in the metaverse, we will spend more money there. Users of the metaverse can already create, buy, sell and trade unique digital assets known as non-fungible tokens (NFTs). Simply put, NFTs are a way of recording ownership of something in the metaverse – whether that is a piece of clothing bought for an avatar, a piece of digital artwork, or the land that your virtual home sits on.

Cryptocurrencies can be used to make purchases in the metaverse, alongside more mainstream digital payment methods. The growth of the metaverse could be potentially beneficial for credit card firms, digital wallet and payment providers ranging from Visa and Mastercard to PayPal and more. We could also see financial technology companies – Fintechs – developing new technologies to enable transactions in the metaverse. For example, Coinbase, a cryptocurrency exchange platform, recently launched a marketplace for NFTs.6 Alongside this, there will be a growing need for safety, data protection and cybersecurity around digital payments, as well as across the metaverse as a whole.  This could create potential new opportunities for investors in fintech.

More regulation and greater scrutiny

Safeguarding of vulnerable people including children is already paramount, and we expect to continue to see an emphasis on this area, including government policy and regulation, as the metaverse becomes more mainstream. Alongside this, we expect to see a greater consideration of accessibility and inclusiveness to create a metaverse of equal opportunities rather than increasing the digital divide, while studies have already found a gender gap in the metaverse.7 We see this as being key for responsible investors, who will need to take an active approach to potential investment opportunities.

We are also likely to see an increased focus on data protection and cybersecurity over the coming years, as well as intellectual property, ownership of digital assets, consumer protection and more, creating potential new opportunities for investors.

Investing in the building blocks now

We believe the metaverse has the potential to be one of the most significant technological developments of this century – one analysis suggests it could generate up to $5trn in impact by 20308  – but we do acknowledge that we are still some way off from the fully immersive vision of the future.

However, the companies providing the building blocks of this future are already here – and include some of the biggest players in technology as well as other industries, as well as start-ups and smaller companies. The metaverse may be virtual, but we believe the potential long-term investment opportunities are real.

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