Finance Monthly - December 2021

What is the metaverse? The metaverse is far from being a new concept. The term “metaverse” was coined by science fiction author Neal Stephenson in his 1992 novel Snow Crash. Stephenson used the term to mean a computer- generated universe, which is now understood as an immersive virtual world where people come together to play games and socialise but also to work. In a founder’s letter, Zuckerberg explained that the metaverse will be defined by “the feeling of presence.” “In this future, you will be able to teleport instantly as a hologram to be at the office without a commute, at a concert with friends, or in your parents’ living room to catch up,” Zuckerberg said. “This will open up more opportunity no matter where you live. You’ll be able to spend more time on what matters to you, cut downtime in traffic, and reduce your carbon footprint.” Metaverse users will be able to create avatars that resemble their real-world appearance, with Zuckerberg insisting that avatars will become as common as profile pictures on social media. As technology improves, people will be able to join the metaverse with increasing ease, simultaneously engaging with the physical and virtual in mixed reality. Metaverse Use Cases While the use cases for the metaverse are essentially only limited by human creativity, some ideas make more business sense than others. Here are three common examples: Games: Gaming is held in close association with the metaverse and understandably so, with games such as Minecraft and Fortnite, as well as platforms such as Roblox, already offering a taste of the metaverse. However, in the coming years, games are set to become increasingly immersive, increasingly social, and increasingly interactive. Travel: There is huge potential for the metaverse to someday allow users to visit tourist destinations in multiplayer mode via telepresence, potentially making world travel more accessible for millions of people. Commerce: The metaverse would allow retailers to release products into games alongside their real-world product launches. Vice versa, metaverse users will likely design their own brands and products, which may then come to exist in the real world too. Metaverse Industry Outlook Many believe that companies and investors alike cannot ignore the emergingonlinemarketplace that is the metaverse, arguing that it would be a repeat of companies dismissing the emergence of the World Wide Web. Just like the WorldWideWeb, which now plays a monumental role in day-to-day life, the metaverse will create new marketplaces that mirror those of the physical world. The potential in this space is huge, with platforms such as Roblox already seeing significant success. However, the market is expected to double with ease over the next few years. According to ARK Invest, revenue from virtual worlds will compound 17% annually to $390 billion by 2025. Meanwhile, Bloomberg Intelligence predicts that the market opportunity for the metaverse could reach $800 billion by 2025. Investing in companies engaged in the metaverse Investors may look to gain exposure by investing in companies that are actively working on metaverse applications, such as Meta Platforms (Facebook), Microsoft, and Roblox. • Meta Platforms: As Zuckerberg has made the world well-aware, Facebook is in full metaverse mode. Prior to their rebranding announcement, in mid-October, Facebook said it planned to hire 10,000 employees in Europe to build the “metaverse”, stating its construction would take place over five years. The company called its work in Europe an “exciting time” for European tech. Mark Zuckerberg Inve s tmen t 36 Finance Monthly.