Is the metaverse worth $800 billion?

Move over Mars, the metaverse is our next frontier. "Metaverse" is word that’s entering the vernacular more and more each day. It’s a place of limitless opportunity and somewhere that’s transforming how people play, work and connect.

In December 2021, Bloomberg predicted that the metaverse could have a market value of $800 billion as of this year. So, has the prediction come true?

The metaverse: a history

When Tim Berners-Lee created the World Wide Web, we were in Web 1.0. It was a space of limited information and no user interaction. This was the “Read era” of the internet, where users could only read what a website decided to show — sounds pretty boring, but it was a useful step. Because then this shell of the internet evolved into Web 2.0, where we are now: an interactive space of social networks, user-generated content and information overload.

A key factor in older versions of the internet is that data, content and users are confined to individual websites and platforms. Just consider how much data Facebook or Google owns for one of their users and that this data is stored within their own servers and databases — outside of your control.

Web3 is the next step: one we’re dipping our internet toes into right now. The “Read, Write, Own era” of the internet. Web3 technologies allow users of the internet to become the custodian of their own data and content. It’s an internet designed to deliver highly personalised content to every user through the metaverse, a virtual reality world.

Web3 has endless possibilities. We could, in theory, live forever in the metaverse, downloading our consciousness when our physical body fails, to remain suspended in the internet infinitely, living our lives in a virtual world we’ve built for ourselves.

Habits are changing

While we may not quite be reliving the 2022 movie Don’t Worry Darling just yet, web3 is certainly taking shape.

Most of us spend our lives online — whether it’s scrolling through social media, banking, gaming, reading, watching or creating content. At the start of Q4 2023, 5.30 billion people globally — or 66% — were reportedly using the internet.

A recent study found that Millennials spend an average of 8.5 hours online daily, which jumps to 10.5 hours for Gen Z’s. On top of this, as of September 2023, the average UK household spent up to five hours a week gaming, and metaverse-like games — such as Roblox, Fortnight and Minecraft — have around 450 million monthly active users between them.

Virtual reality stalwarts, Second Life, has over 70 million registered accounts, and around 200,000 global daily users. Within Second Life, users can create an avatar and interact with other users and user-generated content in a virtual world. It’s a precursor to our metaverse lives of the future.

If it’s not your jam, this graduation into secondary worlds that aren’t “real” may feel uncomfortable. But with its limitless possibilities — from redefining access to education and community, to giving bed-bound people a place to be free from the constraints of their bodies — web3 and the metaverse will be a permanent fixture in the future.

Brands utilising web3

It’s not just individuals making strides in this brave new frontier, brands have cottoned onto the possibilities too. From food companies like Coca-Cola to luxury goods like Gucci, fast fashion brands like H&M and auto firms like Hyundai, it’s a metaverse land grab.

One of the most publicised metaverse entrances was Balenciaga. In 2021 they teamed with gaming brand Fortnight to sell signature items from their collection for users to wear as skins in the game. Users could submit photos of their Balenciaga-clad avatars to be included on billboards within the game and visit the in-game Balenciaga store to perform a custom dance. The Balenciaga x Fortnight collection was also available to purchase in real life.

And it’s not just brands selling the tangible that have got into the game. Facebook’s parent company Meta is one of the frontrunners — perhaps unsurprisingly, given their name — and its metaverse is blurring the lines between real life and metaverse life.

Meta’s Oculus VR is a 3D world where users can immerse themselves in gaming experiences or virtual meetings and events. In Meta’s metaverse, users can work, play games, attend virtual events and simply just hang out, transforming how we learn, play and socialise.

Apple too has just recently launched its Vision Pro headset — retailing for a staggering $3,499. It’s a “spatial computing“ device blending AI, augmented reality and other tech representing Apple’s boldest new product since the iPhone.

With the headset, users can watch movies and play games, work on virtual screens negating the need for monitors and attend meetings virtually. As with Meta’s solution, it essentially opens up the world of work, play and community to a brand new space.

For others, the decision to dive into virtual reality has been a rough ride. After much hype, Disney decided to pull out of its own metaverse journey in March 2023.

In the entertainment company’s metaverse, fans could see and interact with all their favourite characters and explore their virtual theme parks, rides and attractions from the comfort of their sofa. Sadly, as part of a $5.5 billion cost-cutting exercise, Disney’s metaverse dreams were put on hold, but only momentarily.

Just recently, the company announced a $1.5B stake in Fortnite maker Epic Games. As part of this collab, Disney is lending Fortnite its characters from Marvel, Star Wars, and other franchises it owns.

The crypto connection

Blockchain underpins the metaverse and web3 economy. It’s a decentralised and transparent framework ensuring that digital assets and non-fungible tokens (NFTs) can be traded, monetised and owned securely.

Networks within blockchain also take care of the huge amounts of data required to run the metaverse, ensuring space isn’t limited and that it doesn’t get into the hands of a third party that owns or monopolises it.

Your fiat or physical GBP or USD are no good in the metaverse. It’s all run on digital assets or cryptocurrencies like MANA, Sand or ApeCoin. But the meteoric rise — and then fall — of the crypto markets, left some critics to think the end was nigh for the metaverse.

At the height of the crypto boom, deep into lockdown in November 2021, the combined market cap of four of the biggest metaverse coins peaked at $16 billion, but research suggests that as of 2023, investors have lost 98% on their investments in the space. That said, a lot of the money lost was on projects that had nothing to begin with, taking away from the legitimate projects that were successful and are still delivering value.

Decentraland was one of these major players, powered by the Ethereum blockchain. In Decentraland, users are able to create games, stores and apps, as well as purchase plots of land to build upon using Decentraland’s own cryptocurrency, MANA. Many businesses also use metaverse buildings or surfaces to display advertising, both for their own companies and others.

In November 2021 MANA was worth $5.12 — one plot on land went for a record $2.4 million (a virtual real estate record at the time) — today, a MANA is worth $0.44.

An overblown prediction?

So, after all we’ve read, was Bloomberg’s $800 billion prediction overblown? Projections by the Analysis Group and McKinsey & Company don’t think so. With more than $120 billion invested into the metaverse in 2022, they predict that within a decade it could be worth anywhere between $3 - 5 trillion.

There are a few reasons behind this assumption. One is the continued popularity of NFT’s — digital art, virtual land and gaming — worth $1.6 billion in 2023. The second is the formation of DAO’s, or decentralised autonomous organisations. DOA’s are like democratic governments of the virtual realm, voted through tokens and crowdsourcing.

Then — in the immortal words of Dr. Ian Malcolm in the 1993 blockbuster Jurassic Park — “Life, uh, finds a way”. When you give people a new place to explore, socialise, buy, sell and build, they probably will.

Yes, there have been setbacks, but as with any new technology there always will be. The metaverse’s survival is set in stone, what it looks like is yet to be written. It’ll be dependent on a wide array of factors, from economic ones to societal and technological ones. Just with any evolution, these things take time.