The metaverse is the latest buzzword circling investors’ minds, but what exactly is it?
The “metaverse” can be seen as a virtual world that combines augmented reality and virtual reality. It is an immersive 3D next generation version of the internet. However, this is not a new term. The idea of the metaverse has already been explored in popular movies such as “Ready Player One” (2011), “Snow Crash” (1992) or “The Matrix” (1999). If you’ve played an MMORPG (massive multiplayer online role-playing games) or other games such as Minecraft and Fortnite, you’ve likely come across iterations of these virtual universes. These games engage users by having them interact with each other in virtual worlds using avatars and collecting digital items.
Metaverse development has grown substantially over the past several years. Metaverse platforms are being developed to support the user in performing tasks and participating in activities. Imagine attending a concert hosted by your favourite artist or taking virtual trips across the globe. The metaverse is a place where people will be able to online shop and try on clothes in a virtual manner. As a matter of fact, Bill Gates predicts that office meetings will be held in the metaverse in the coming years. It is expected to revolutionize how individuals meet, collaborate, and work together online.
Meta Platforms (formerly Facebook), Microsoft, Nvidia, and Disney are all examples of companies that are positioning themselves in the development of the metaverse. While the metaverse development is not new, the current trend is highlighting the sharp race to becoming a winner in the metaverse.
Meta Platforms has announced that it will be spending a significant amount of time in the development in this space and is working on helping a billion people use it. Nvidia already has its own virtual platform that they call the Omniverse and are developing graphic chips to support it. While these are only examples, there are a multitude of companies engaged in the development of the metaverse.
What does this mean for investors?
The market size of the metaverse is expected to reach $800B USD by 2024 according to Bloomberg Intelligence. The market will be mostly composed of gaming, live entertainment, and social media opportunities.
The popularity and corporate commitment in the metaverse provides for a huge opportunity to invest in its growth. Investors can participate by investing directly into companies involved in its' development or a basket of these companies through ETFs. In Canada, a metaverse ETF has already been created alongside many other thematic themes like blockchain, electric vehicles, and environmental infrastructure that are all expected to transform the world. Before investing in any new technologies, speak to your advisor to discuss suitability and a strategic investment action plan.