Metaverse: New horizons for the digital economy
The full white paper will give you additional information on how we narrow down the broader market to what we'd consider a superior investment universe that captures opportunities across the Metaverse Value Chain.
The Metaverse was catapulted into the public’s imagination last year by the re-naming of Facebook to ‘Meta Platforms’. This happened against the backdrop of the pandemic, which accelerated cultural trends and behaviours (including the adoption of virtual technologies) that need to be in place for widespread acceptance of the Metaverse, particularly for Generation Z – the cohort likely to drive its growth.
Technology plays an ever-growing role in our everyday lives. This has brought with it significant economic growth in what some have classed as the start of the ‘fourth’ industrial revolution. In our view, the Metaverse represents the next phase of this revolution, the next step in the evolution of the internet, a megatrend that we are only in the first innings of.
We believe the Metaverse represents a major economic opportunity for a wide range of innovative companies that can help facilitate, create, or benefit from the growth of immersive virtual worlds.
McKinsey estimates the Metaverse may generate up to US$5 trillion by 20301.
Citi believes that the overall revenue opportunity could reach US$8-13 trillion by 20302.
Emergen Research expects the market to register a compound annual growth rate of 43.3%3.
We believe this is too big an opportunity for companies to ignore. As costs come down and adoption rates climb, there’s potential for explosive growth opportunities to emerge, with new competitors likely to be able to enjoy speed to scale that could destroy entire revenue pools for incumbent players over the longer term.
In our opinion, investing in the Metaverse doesn’t have to be a rollercoaster ride. Let’s explore the growth potential that can be found across the Metaverse Value Chain together.
1 McKinsey & Co as at June 2022. “Value creation in the metaverse: The real business of the virtual world”, page 6. McKinsey & Co is a global management consulting firm.
2 Citi Research as at March 2022. “Metaverse and Money: Decrypting the Future”, page 12. The ‘total addressable market’ (the overall revenue opportunity that is available to a product or service. A device-agnostic Metaverse would be accessible via personal computers, game consoles and smartphones, resulting in a large ecosystem. Using this broad definition, total Metaverse users would number around five billion.
3 The compound annual growth rate, or CAGR, measures the average annual growth rate of an investment over a period of several years.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
