Earlier this year, tech giant Apple Inc. became the first company in history to reach a market value of more than $3 trillion. Four of the world’s top-five listed companies are involved in online business. Who would have guessed that what once seemed like a blast from the past in 2000 would now be a $10 trillion industry? Last year, the Metaverse was seen as the next-generation development goal for the Internet. Can the Metaverse continue the tech-stock miracle or is it just the investment community deliberately speculating?
In March 2021, Roblox, an online video game company, used the word Metaverse for the first time in the prospectus promoting its IPO. In October, Facebook announced that it had changed its name to Meta. Since then, the concept of the Metaverse has become popular overnight and is now one of the most searched queries globally. At the same time, companies involved with the Metaverse have attracted considerable attention from capital markets and received indiscriminate funding. Investors must therefore conduct extensive research before making any decisions regarding Metaverse companies.
In 2017, Roblox introduced its virtual reality (“VR”) experience. In the future, VR will increasingly move towards the Metaverse where players can put on VR headphones and goggles, then enter a game world full of virtual characters. Here, they can not only compete or socially interact with other players on the platform but also build their own Lego-style living space and create and sell virtual assets. The platform has its own trading currency, Robux, which is essentially a prototype for the virtual economy.
At present, Roblox has 43.20 million daily active players, about 86% of whom are children and young people aged under 24. Its popularity with young players attracted famous sports brand Nike which has built Nikeland, a virtual paradise on the platform. This kind of brand building in the Metaverse is becoming a common marketing tool.
To win a greater share of this young market, Nike acquired RTFKT, a virtual sports shoe company, late last year. Users can now wear Nike’s virtual shoes in the Metaverse. These limited edition NFT (non-homogeneous tokens) which are meticulously designed by famous artists can sell for as much as $10,000, their actual price in the real world! A characteristic RTFKT creation is Cyber Sneaker, inspired by Tesla’s science-fiction Cybertruck. Various netizens later changed their picture to Elon Musk, one of the world’s richest men, to wear these fashion shoes. Since then, RTFKT’s reputation has grown exponentially, leading to its acquisition by Nike.
Patrice Louvet, CEO of US fashion brand Ralph Lauren, recently declared that the virtual world is helping his brand connect with the younger generation and that the Metaverse fulfils his vision of being in the dream business. He noted that the company has joined Metaverse platforms Zepeto and Roblox, selling more than 100,000 digital fashion services in just a few weeks on Zepeto, where buyers can now dress their personal avatars in Ralph Lauren clothing.
Crossover activities between platforms and merchants are expected to become ever more popular. On one hand, merchants hope to attract young consumers through the Metaverse concept. On the other, platforms are trying to evolve by developing virtual applications other than games.
Aside from Roblox, Epic Games is a good example of a successful transformation. It has stepped out of the video game field in recent years by holding virtual concerts on its platform for American singer Ariana Grande and rapper Travis Scott, both of which were watched online by more than one million viewers. Epic Games is the developer of Fortnite, a hugely popular video game that has accumulated more than 350 million players over the years. An entire generation of young people has grown up with Fortnite, making Epic Games the target of numerous fashion brands seeking business collaborations.
The Internet was intended to be a fast, low-cost way to reach millions of people around the world. It can connect buyers and sellers, merchants and customers in real time. With gradual improvements in the quality of VR/AR hardware and more creators enriching platform content, the Metaverse can show scenes and offer experiences much closer to the real world than the previous generation of the Internet – and these are naturally highly sought after by young people.
The Metaverse is extending digital life on the Internet and the tech giants will inevitably fight over this space. Although Facebook has gained global exposure through its high-profile name change, and its new Oculus Quest 2VR glasses which have greatly improved hardware compared to the previous generation, almost none of the tech giants competing in the Metaverse are doing so from a position of weakness. Apple, Microsoft and GPU chip giant Nvidia have all revealed significant progress in developing competitive products. Apple, with its integrated hardware, software and operating systems, is considered best suited to the Metaverse ecosystem. It is developing its Apple AR Glasses and mixed reality (“MR”) devices which are making the rest of the market anxious. Microsoft with its Hololens 2 AR glasses and Mesh MR platform is another strong competitor.
The securities industry estimates that Apple could ship 22 million units of augmented reality (AR) devices by 2030, increasing the company’s revenue by 4%. By 2040, AR-related devices could account for more than 20% of total revenue, making it the third-largest revenue stream after iPhones and iOS application services.
Although the Metaverse industry is still at an early stage, it is already developing in a multifaceted way. Unlike other tech giants, Nvidia is focused on developing the enterprise market for the Metaverse, creating win-win situations by improving its partners’ capabilities. Omniverse, the company’s simulation platform, allows it to build a digital twin for its partners that is similar to a real working environment. For example, Nvidia built a digital doppelganger for BMW’s Regensburg plant in Germany to simulate the operation of a factory robot. This was rehearsed several times beforehand on the Omniverse platform, thus saving the time required to actually operate the robot. The company’s chief executive officer, Mr. Jensen Huang, said earlier that the company’s digital doppelgänger is a digital robot. The company’s CEO, Jen-Hsun Huang, had earlier estimated that Omniverse could generate up to US$40 billion in revenue for the company each year in the future.
According to the latest research by Grand View, the global digital twin market will reach $86.09 billion by 2028, representing a compound annual growth rate of 42.7% from 2021 to 2028. Over the past two years, the COVID-19 pandemic has accelerated the implementation of digital twins and these are already being used in healthcare, agriculture and government departments in many countries and regions around the world. This makes it perhaps the most underestimated business opportunity in tomorrow’s Metaverse market.
