- MAP Asia Pacific Ltd
A CEO’s guide to the metaverse
It’s too big to ignore—yet its future is far from certain. Companies need to dip a toe in the water and plan to take the plunge should developments warrant.
Suddenly, the metaverse is in the zeitgeist, for better or worse. Investment more than doubled in 2022 powered by big moves (such as Microsoft’s $69 billion acquisition of Activision Blizzard, now under antitrust review) and small ones (about $12 billion to $14 billion of venture capital and private equity investment). Everyone has heard about the successes racked up by some big gaming companies: Roblox reported more than 58 million daily active users in 2022,1 while Fortnite had more than 20 million in 2020 and generated more than $9 billion in sales between 2018 and 2019. And others are investing; Meta continues to spend at least $10 billion annually on metaverse development. Yet investors are asking questions of metaverse companies about when they can expect tangible, near-term results from these companies’ investments.
How should CEOs view the metaverse? Is it a big opportunity or a big risk? Our answer: the opportunity is enormous—and the risk is not what you think it is. The companies that are building the metaverse see it as the next iteration of the internet (see this McKinsey Explainer for more). And as with any technology so vast and all-encompassing (it’s similar to AI in its scope), the potential is enormous. We estimate that the metaverse could generate $4 trillion to $5 trillion in value by 2030; see our report for all the details.
On the other hand, there are clear risks. Don’t be distracted by the debacles in crypto and nonfungible tokens (NFTs); those are Web3 technologies that are related but not exactly the same as the metaverse. Rather, the biggest risk is missing the wave of change that breakthrough technologies such as the original internet, AI, and the metaverse can unleash. In our April 2022 survey, some 95 percent of business leaders expect the metaverse to have a positive impact on their industry within five to ten years, and 61 percent expect it to change the way their industry operates.
In this article, we’ll briefly summarize the reasons for optimism and the factors that suggest the metaverse is truly a CEO issue. We’ll also look at the significant obstacles that will have to be overcome if the metaverse is to realize its full potential. We’ll conclude with a suggestion of three steps that CEOs in several sectors—both consumer and enterprise—could consider to make sure the metaverse train, if and when it gets going, does not leave the station without them.
The case for optimism
When we estimated the market value of metaverse activity in June 2022, we calculated that it was between $200 billion and $300 billion. It’s larger now, and in eight years or so, it could be $4 trillion to $5 trillion (exhibit), which is roughly the size of Japan’s economy, the third largest in the world. Exponential growth is possible because of an alignment of several forces: the metaverse’s appeal spans genders, geographies, and generations; consumers have already shown they are ready to spend on metaverse assets; they are open to adopting new technologies; companies are investing heavily in the required infrastructure; and brands experimenting in the metaverse are finding that customers are delighted.
Read More at https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/a-ceos-guide-to-the-metaverse