How Could The Metaverse Transform Business?

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How Could The Metaverse Transform Business?

We are living in a world where technology is constantly evolving and producing fascinating new innovations. One of the most interesting technological innovations that has exploded in recent months is the ‘metaverse’. It has become a hot topic of conversation with a lot of people wondering how much of an impact it could have in the real world and what it could mean for certain business sectors.

The COVID-19 pandemic has contributed to the rise of the metaverse due to the impact it had on digital-based economies and the major disruptions it caused to various companies’ business models. According to Fortune Business Insights, the global metaverse market size was valued at US$63.83bn in 2021 and is projected to reach to US$1,527.55bn by 2029, experiencing a compound annual growth rate of 47.6%.

We are already in the middle of a shift towards a digital economy and these statistics prove that this shift will continue. So, as we get to grips with learning exactly what the metaverse is, what could it promise to bring to the world of business?

What Is The Metaverse?

The metaverse is an amalgamation of three elements of technology – virtual reality interfaces, digital ownership, and avatars that provides a digitally rich cyberspace where people can do things such as work, socialize and shop.

Tech giant Meta (formerly Facebook) has made it a priority to build the metaverse, with CEO Mark Zuckerberg aiming to transform the social media site into a “metaverse company” within the next five years. Zuckerberg also claimed that the metaverse “could be the next best thing to a working teleportation device.”

Other big players in the world of technology including Microsoft, Apple and Amazon are also keen on developing a metaverse of their own. Global spending on VR/AR, the metaverse’s foundation technologies, is expected to rise from $12 billion in 2020 to $72.8 billion in 2024. Therefore, showing leaders in various industries are hungry to exploit this growth and place themselves in a strong position to grow their business. In addition to the financial growth, the metaverse also offers benefits such as an enhanced level of connectedness, mobility, and collaboration, just to name a few. But which business sectors could experience largest levels of innovation?

Manufacturing

This is an industry which involves several complicated technical and logistical areas, a key reason why strategies within the industry are contingent on optimizing for various targets. It is key to ensure that there is a balance between inventory, labour costs and overheads. What can be explored through the metaverse to help make sure there is stability is to go through the full production cycle virtually? Parts of production such as product design, trial production testing and marketing can all be simulated and substantiated within the metaverse community prior to transferring the whole process to the real world. One company that has already explored the use of production simulation is BMW. Production strategy leader at the car manufacturer, Markus Grüneisl, said: “We now have a perfect digital twin of our real-time production.” Even though the software they are using is the Omniverse and not the metaverse, it shows that some are already testing the waters.

Financial Services

If the metaverse experiences the same levels of development as NFTs have in the past year, financial services are bound to explore the opportunities. There is the potential for there to be a rise in virtual-to-physical redemptions and financial systems that support payments and financing within the ecosystem. Additionally, we can predict that VR sophistication will reduce the difference between offline and online, navigating increased participation and engagement in financial services, and therefore nourishing the connection of traditional services to a new modern age of technological innovation.

Like the manufacturing industry, there are some within the financial sector already probing the possibilities. Investment banking giants JP Morgan became the first bank to enter the metaverse in February. In a statement, they said: “We believe the existing virtual gaming landscape (each virtual world with its own population, GDP, in-game currency and digital assets) has elements that parallel the existing global economy. This is where our long-standing core competencies in cross-border payments, foreign exchange, financial assets creation, trading and safekeeping, in addition to our at-scale consumer foothold, can play a major role in the metaverse.” Other major banks including HSBC have followed suit and “now is the perfect time” according to CEO of crypto banking platform Banxe USA, Anthony DiMarsico.

Retail and Ecommerce

With the rise of digital consumption, many brands have already been looking into different ways to evolve their approaches in interacting with their consumers. Now, with the emergence of the metaverse, and with millions of people logging into the digital world, it opens yet another option for major players such as Amazon and eBay to exploit from organic marketing to brand new revenue streams.

3D and AR technology, aspects of metaverse technology, have already been tapped into by certain companies and present the capability to engage with brands and products using something like a personalized avatar. Consumers can make better and more structured decisions, leading to lower levels of product returns and improving convenience and efficiency. Ecommerce giant, Shopify, has released figures that indicate the potential of the technology. Merchants on the site who include 3D content to their stores have experienced a 94% conversion lift. With stats like these, the metaverse is set to be the next big thing to reshape the industry.

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What’s to Come?

What is sure is that the metaverse will have an enormous influence on consumer and business practice going forward. Countless industries will be impacted, with numerous opportunities for businesses to break the boundaries between virtual and reality. We are at a very early stages in the development of the metaverse, and will take a few years before it reaches its genuine potential. But it is a possibility that we could witness the technology growing to such importance that it could even replace certain aspects of real world interactions.

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