The Metaverse is a concept that has recently gained
significant attention in the tech industry, describing a virtual world where
users can interact with each other and digital objects in a shared space. The
term "Metaverse" was first coined in Neal Stephenson's 1992 science
fiction novel Snow Crash, and the concept has since evolved to become a
potential new frontier for social and economic activities.
The Metaverse is essentially a three-dimensional virtual
space where users can create avatars, socialize with other users, buy and sell
virtual goods, attend events, and engage in various activities. The Metaverse
is designed to be an immersive experience that blends the virtual and real
worlds. While the concept is still in its early stages, many tech giants such
as Facebook, Microsoft, and Tencent are investing heavily in its development.
One of the main driving factors behind the Metaverse is the
growing popularity of virtual reality and augmented reality technologies. These
technologies allow users to interact with virtual objects and environments in a
more realistic and immersive way than ever before. The Metaverse takes this a
step further by providing a shared space where users can interact with each
other and digital objects in real-time.
The potential uses for the Metaverse are vast and varied.
For example, it could be used for virtual events such as concerts, conferences,
and festivals, allowing attendees to participate from anywhere in the world. It
could also be used for e-commerce, allowing users to buy and sell virtual goods
such as clothing, accessories, and furniture. In addition, it could be used for
education, allowing students to attend virtual classes and collaborate with
each other in a shared space.
The Metaverse is also seen as a potential new frontier for
social media. Traditional social media platforms such as Facebook and Twitter
are limited by their two-dimensional interfaces and lack of interactivity. The
Metaverse, on the other hand, offers a fully immersive and interactive
experience that could revolutionize the way we socialize online.
While the concept of the Metaverse is still in its early
stages, there are already a number of companies and platforms that are working
on its development. These include Decentraland, Somnium Space, and The Sandbox,
among others. As the Metaverse continues to evolve, it has the potential to
become a major new platform for social and economic activities, creating new
opportunities for businesses and individuals alike.
Metaverse Market Growth Dynamics
Drivers in Metaverse
Market
The demand for Augmented Reality (AR), Virtual Reality (VR),
and Mixed Reality (MR) technologies in the global media, entertainment, and
gaming industry has been on the rise, resulting in the industry's fastest
growth. These technologies offer a first-person perspective, act as natural
user interfaces, and provide 6-degree freedom, among other features, creating a
realistic virtual scenario to enhance the gaming experience of end-users. The
introduction of these devices and solutions has led to a manifold increase in
user experience, and the virtual experience has been the most significant
benefit that technology could offer mankind. Key players in the market have
also made significant investments in extended reality devices, attracting more
investments and developments that are expected to boost the metaverse adoption
in the gaming and entertainment industry.
Restraints in
Metaverse Market
Restraints in the Metaverse industry include the high costs
associated with installation and maintenance of high-end hardware and
enterprise-grade software. This hardware includes XR devices, sensors,
trackers, and other advanced equipment, which are expensive to produce and
require large storage and fast networking for a realistic experience.
Similarly, enterprise-grade software, such as engines, 3D modelling software, and
rendering tools, is also costly. Installation of extended reality devices and
solutions further adds to the expenses, and their maintenance costs increase
the overall investments required to adopt this technology. As a result, the
growth of the Metaverse market is expected to be hindered due to these high
installation and maintenance costs.
However, the media and entertainment, gaming, and adjacent
markets such as virtual reality (VR), augmented reality (AR), mixed reality
(MR), and digitalization in the fashion, retail, and art industries are driving
demand for the Metaverse industry. This is leading to a surge in the
restructuring of cutting-edge infrastructure design, 3D environment revamp, and
improvisation while offering a technologically-driven ecosystem to create the
best-suited experience and transactions for end-users. Additionally, brands are
shifting towards using gamification and virtual world simulators for
promotions, further expanding the scope, reach, and offerings of Metaverse to
various industries and end-users.
Opportunities in
Metaverse Market
The aerospace and defense sector has the opportunity to
incorporate metaverse and related technologies such as XR, AI, and analytics,
to improve training and simulation applications. These technologies can be used
to enable real-time data-driven experiential training, resulting in more
efficient and accurate skill transfer and knowledge retention by trainees. For
instance, XR technology is already being used to train the ground crew for
pre-flight checks in airlines, and to carry out procedures before take-off,
improving safety. The metaverse can further enhance training and simulations
for weapon training and flight training, boosting market growth.
One of the unique features of the metaverse is its use of
cryptocurrency as a currency. Each metaverse has its own collection of coins
that can be used to purchase digital assets such as NFTs and virtual real
estate. Cryptocurrency allows for the calculation of the value of digital
assets in government-issued currency, as well as the returns on those assets
over time. The use of the metaverse to buy digital assets using cryptocurrency
is gaining popularity worldwide, as it offers a multidimensional interaction
with digital content, and allows individuals to participate more meaningfully.
Investors can also make money by selling metaverse coins and NFTs directly to
purchasers, as cryptocurrencies are accessible on exchanges around the world.
Challenges in
Metaverse Market
The COVID-19 pandemic has caused a significant economic
slowdown globally, which has impacted the manufacturing and supply of extended
reality devices. However, the unexpected lockdowns in various regions have
increased the demand for such devices due to the rising trend of remote work,
virtual meetings, and conferences. Additionally, the metaverse offers promising
prospects by providing increased access to the marketplace for consumers in
emerging and frontier economies. With virtual reality environments, education
has become more accessible and affordable. While the metaverse blurs the
distinctions between B2B and B2C, it also offers companies the opportunity to
grow their traditional consumer bases while avoiding corporate traditions.
According to a 2023 survey conducted by the National
Association of Manufacturers (NAM), the COVID-19 pandemic has impacted supply
chain operations for over 39% of respondents in the manufacturing industry in
the US. Over 53% of respondents expected changes in their operations in the
coming months. Several key industrial companies have closed their facilities
and are considering layoffs to control the virus's spread and address economic
reasons. The pandemic's severe impact on the manufacturing industry has led to
a halt in the supply of extended reality devices globally, and it has reduced
consumer expenditure on non-essential items. As a result, the growth of the
metaverse market in the short term may be challenged.
Ecosystem of Metaverse Market
The metaverse market ecosystem consists of various
components, including software and hardware. During the forecast period, the
software segment is expected to hold the largest market size, primarily driven
by the high demand for extended reality software. The market is dominated by AR
and VR web app development tools, mobile app development tools, studios, SDKs,
and cloud-based tools. Additionally, 3D mapping, modeling, and reconstruction
tools, along with volumetric video tools, play a crucial role in designing virtual
worlds and games in metaverse platforms. The software market for metaverse
platforms is growing at a rapid pace due to the emergence of centralized and
decentralized gateways, avatar identity makers, play-to-earn games, virtual
worlds, and metaverse-based social media. Several startups are focusing on
leveraging technologies such as blockchain, NFT, cryptocurrency, and
virtualization to design their platforms and decentralized solutions, resulting
in a high potential for growth in the metaverse and financial platforms market.
On the other hand, the hardware market is expected to grow
at the highest CAGR over the forecast period. The introduction of HUD in the
entertainment sector is expected to fuel the growth of the AR devices segment,
which combines the real world with virtual objects, making them highly demanded
across various applications. Among AR devices, AR smart glasses are currently
the most popular in industrial applications. Haptics and gesture-tracking
devices are an integral part of VR hardware due to their increased usage in
consumer applications. Gaming with gesture-tracking devices provides an
enhanced experience of the virtual world. Microsoft HoloLens 2 and Magic Leap
One dominate the MR devices segment and are expected to gain popularity in
experiencing the metaverse.
During the forecast period, the Consumer segment is
projected to hold the largest market share, which is mainly composed of two
sub-segments: gaming & social media and live entertainment & other
events. Various entertainment applications, such as theme parks, museums
(archeology), art galleries, and exhibitions, are included. The combination of
Metaverse and XR technology offers stunning visual effects, especially in
gaming and sports broadcasting. The gaming industry has been at the forefront
of embracing new technologies, including 3D, VR, and MR. These technologies
have the ability to enhance players' gaming experiences by generating virtual
objects and characters that are tied to specific locations in the real world.
Players can engage and interact as if it is a real-time game, thanks to
precisely designed engines and 3D modeling software. Live entertainment and
events, such as sports, circus, music concerts, and other events, such as trade
fairs, exhibitions, and seminars, are also part of this segment.
During the forecast period, North America is expected to
have the largest market size for metaverse solutions compared to other regions.
This can be attributed to the region's technological advancements and
development, making it a leader in developing cutting-edge technologies used in
display devices. Furthermore, the growing expenditure by both companies and
individuals on digital solutions and advanced technologies in the region is
also driving market growth.
North America has a significant share of the global market
due to the adoption of AR technology in consumer electronics, which is boosting
the growth of the AR market in the region. Additionally, several industries in
the region, including aerospace and defense, healthcare, consumer, and
commercial applications, have adopted metaverse technologies for education and
training purposes. Global companies that offer AR devices and solutions, such
as PTC, Magic Leap, Microsoft, and Google, have a presence in the US. Moreover,
the increased acceptance of metaverse technologies by enterprises to market
their products in a modern way is a key factor driving the growth of the
metaverse market in North America.
In 2023, the desktop segment contributed to the highest
revenue share of 44% in the metaverse market. Although computers were
previously the primary way to access the metaverse, the introduction of
wireless networks and smartphones has caused a shift in this trend. Virtual
desktops have emerged as a popular tool that enables users to utilize their
computers in virtual reality using headsets such as HTC Vive, Oculus Rift/Rift
S, WMR, and Valve Index. With virtual desktops, users can browse the internet,
watch movies on platforms like Netflix, and even play games on a large virtual
screen.
Virtual desktops are gaining popularity due to their
compatibility with VR devices. With the rise in popularity of smartphones and
mobile networks, access to the metaverse has become more convenient and widely
available. Users can now share large amounts of data in networked cyberspace,
upload photos and videos, and communicate with others using messaging and video
conferencing apps. Additionally, multiplayer games allow users to interact with
each other while playing. As smartphones continue to gain popularity, they are
rapidly becoming the primary way for users to connect with the metaverse.
The BFSI industry is expected to generate the highest
revenue, accounting for 26% of the total revenue in 2023 based on end-use.
However, the media and entertainment industry is projected to grow at a
compound annual growth rate (CAGR) of 39% during the forecast period due to the
surging gaming industry worldwide. Virtual music concerts are becoming
increasingly popular among businesses, which is expected to further boost
revenue growth in this segment.
Meta Platform, Inc recently organized a series of virtual
reality concerts featuring popular celebrities such as Young Thug, DJ David
Guetta, and The Chainsmokers on its Horizon Venues metaverse platform. Warner
Music Group has also announced the launch of a virtual music theme park through
The Sandbox platform. These initiatives are expected to drive growth in the
media and entertainment industry.
The automotive and manufacturing sectors are also
experiencing disruptions due to the adoption of digital twin technology, which
covers the complete product lifecycle management (PLM), from design and
engineering to operations and service. Digital twins offer significant business
potential by enabling future predictions rather than just evaluating the past
performance of the manufacturing process.
Moreover, the use of autonomy in the manufacturing process
enables efficient responses to unexpected events in an intelligent way, which
could increase customer satisfaction and loyalty. The implementation of digital
twins is escalating as computing and storage costs are becoming cheaper.
Dominating Companies in Metaverse Market
- NVIDIA
- ROBLOX CORPORATION
- UNITY TECHNOLOGIES
- META PLATFORMS INC.
- WAYRAY
- EPIC GAMES
- TECH MAHINDRA
- MICROSOFT
- XR LABS
- QUALCOMM
- DECENTRALAND
- SANDBOX
- HYUNDAI MOTOR COMPANY
- VOLKSWAGEN AG
- BMW GROUP
- NISSAN MOTORS
- VOLVO
- GENERAL MOTORS
- ASTON MARTIN
- MG MOTORS
- HONDA MOTOR COMPANY
- TOYOTA MOTOR CORPORATION
- JIDU AUTO
- TATA MOTORS
- VARJO
- CARZSO
- TERRANET AB
- CARCIVIC
- SOMNIUM SPACE
- METAVRSE
- SONY CORPORATION
- OXBOTICA
- HYPERLINK INFOSYSTEM
- HOLORIDE
- HOLO-LIGHT
- INFINITEWORLD
- UPLAND
- XR CENTRAL
Recent Developments in Metaverse Market
In 2021, Epic Games, the developer of popular video game
Fortnite, acquired Sketchfab, a platform that allows users to create, publish,
and share 3D content online. The acquisition was aimed at expanding Epic Games'
offerings in the field of metaverse development.
In 2020, Roblox, a leading user-generated gaming platform,
acquired Loom.ai, a startup that specializes in creating 3D avatars and
animations. The acquisition was aimed at enhancing Roblox's metaverse
capabilities and improving the user experience on its platform.
In 2019, Facebook acquired CTRL-Labs, a startup that
develops technology for controlling computers and other devices using signals
from the human brain. The acquisition was aimed at enhancing Facebook's
metaverse ambitions and expanding its offerings in the field of virtual and
augmented reality.
In 2019, Unity Technologies, a leading game development
platform, acquired Obvioos, a French startup that specializes in creating
photorealistic 3D content. The acquisition was aimed at enhancing Unity's
metaverse capabilities and improving the quality of virtual experiences created
using its platform.
In 2018, Tencent, a Chinese multinational conglomerate,
acquired 11% stake in Epic Games, the developer of Fortnite and Unreal Engine.
The partnership was aimed at strengthening Tencent's position in the gaming
industry and expanding its offerings in the field of metaverse development.
Roblox acquires Guilded: In December 2021, Roblox, a popular
gaming platform, announced that it had acquired Guilded, a communication
platform for gamers. The acquisition was aimed at enhancing Roblox's
communication capabilities and expanding its offerings for creators and
players.
Nvidia acquires Arm: In September 2020, Nvidia, a technology
company that specializes in graphics processing units (GPUs), announced that it
had acquired Arm, a UK-based semiconductor and software design company. The
acquisition was aimed at expanding Nvidia's capabilities in the AI and data
center markets, as well as helping to build the metaverse.
Facebook partners with Ray-Ban for smart glasses: In
September 2021, Facebook announced that it had partnered with Ray-Ban to
develop smart glasses that would allow users to capture photos and videos, make
calls, and access social media. The glasses were seen as a step towards
creating a metaverse-like experience for users.
Epic Games acquires Sketchfab: In July 2021, Epic Games, the
company behind the popular game Fortnite, announced that it had acquired
Sketchfab, a 3D asset marketplace. The acquisition was aimed at enhancing Epic
Games' offerings for creators and players, as well as expanding its
capabilities in the 3D space.
Roblox partners with Hasbro for NERF experience: In
September 2021, Roblox announced that it had partnered with Hasbro to create a
NERF-themed experience on the platform. The partnership was aimed at creating an
immersive and interactive experience for Roblox players and NERF fans alike.