Value creation in the metaverse

By McKinsey & Company

The metaverse is still being defined, both literally and figuratively. Yet its potential to unleash the next wave of digital disruption seems increasingly clear, with real-life benefits already emerging for early adopting users and companies. As we saw in previous shifts in technology such as the emergence of the internet followed by social media, mobile, and cloud, novel strategies can quickly become table stakes.

The metaverse has the potential to impact everything from employee engagement to the customer experience, omnichannel sales and marketing, product innovation, and community building. Examining its potential effect should be part of strategy discussions, with leaders accelerating their analysis of how the metaverse could drive a very different world within the next decade. Of course, many questions remain, including how virtual worlds will be balanced with the physical world to ensure the metaverse is built in a responsible manner, how it can be a safe environment for consumers, how closely it will align with the “open” vision of the next iteration of the internet, and whether technology can advance quickly enough to build the metaverse of our imagination. This report examines the metaverse’s building blocks, investment flows, and what is driving them, and how consumer and business behavior is evolving, its potential economic impact, and actions leaders should consider to capture value.

— There continue to be questions around the longevity and potential of the metaverse, with an extreme view regarding it as merely a rebranded gaming platform of little wider interest. We do not share that skepticism and believe the metaverse has the potential to be the next iteration of the internet. It may seamlessly combine our digital and physical lives by featuring a sense of immersion, real-time interactivity, user agency, interoperability across platforms and devices, the ability for thousands of people to interact simultaneously, and use cases spanning activities well beyond gaming. But the pace of its development will depend on multiple technological and user-experience factors, and is not limited to one platform, device, or even technology.


— The metaverse’s technology stack has four core building blocks: content and experiences, platforms (such as game engines), infrastructure and hardware (including devices and networks), and enablers (such as payment mechanisms and security). Ten layers span these components, providing the critical building blocks on which all metaverse experiences are based. One primary question about the future evolution of the metaverse is the extent to which the interoperability of these elements can be advanced.

— Large technology companies, venture capital (VC), private equity (PE), start-ups, and established brands are seeking to capitalize on the metaverse opportunity. Corporations, VC, and PE have already invested more than $120 billion in the metaverse in the first five months of 2022, more than double the $57 billion invested in all of 2021, a large part of it is driven by Microsoft’s planned acquisition of Activision for $69 billion. Large technology companies are the biggest investors—and to a much greater extent than they were for artificial intelligence (AI) at a similar stage in its evolution, for example. Industries currently leading metaverse adoption also plan to dedicate a significant share of their digital investment budgets to it.

— Multiple factors are driving this investor enthusiasm, including ongoing technological advances across the infrastructure required to run the metaverse; demographic tailwinds; increasingly consumer-led brand marketing and engagement; and increasing marketplace readiness as users explore today’s early version of the metaverse largely driven by gaming (with some games boasting tens of millions of active players) with applications emerging that span socializing, fitness, commerce, virtual learning, and others.

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