The metaverse is still in its infancy, but is garnering roaring attention from businesses and investors alike.
Its influence is so sticky that even Web 2.0 tech giants such as Facebook have started to explore the uncharted worlds of the metaverse.
According to a recent report by Grayscale, the market opportunity of bringing the metaverse to life could “be worth over $1 trillion in annual revenue and may compete with Web 2.0 companies worth ~$15 trillion in market value today.”
Evolution of the internet
Between 1990 to 2020 we have witnessed how the internet has evolved from Web 1.0 to Web 3.0. Netscape brought us online in the Web 1.0 era. Meanwhile in the Web 2.0 era, Facebook connected us to online communities. Now we are in the Web 3.0 era, and Decentraland is just one of the classic examples of the potential it holds.
As we transitioned between these internet eras, the way we interact changed, along with the infrastructure and the medium we used.
Exhibit 1: Illustrative key features of Web 1.0, 2.0 & 3.0
Understanding Meta Web 3.0 economy
Metaverses are virtual world economies consisting of a complex mix of digital goods, services and assets that generate real-world value for users. Early metaverse worlds have been built on blockchain platforms with a host of developers contributing to games and in-game assets.
Exhibit 2: Blockchain-based gaming stack
Businesses have also sprung up in these virtual worlds. Some examples of which are:
- Sotheby’s art gallery, where owners can sell their digital NFT art at virtual auctions.
- Crypto businesses such as Binance have set up headquarters, where employees can meet and collaborate virtually.
- Digital advertising billboards where game developers can advertise to gamers for a fee.
- Atari has also announced the opening of its arcade where gamers can play featured games within Decentraland.
- Music venues where DJs and musicians can hold concerts.
Metaverse virtual economies run on decentralised protocols that interoperate and provide the technical infrastructure.
Exhibit 3: Blockchain-based virtual economy segments
The all-time number of users of metaverse have also surged since the beginning of 2020. Presently, Web 3.0 metaverse virtual worlds boast of nearly 50,000 all-time users. And the probability of growth seems infinite for metaverse virtual worlds, although it still is in its infancy when compared to other Web 3.0 and Web 2.0 segments.
Exhibit 4: Global users per select category (log)
Source: Non Fungible, CryptoSlam, Dune Analytics, Crypto.com, Goldman Sachs, Facebook
All-time value spent on Web 3.0 metaverse item sales has also crossed the $200 million mark as of 2021, and looks to further climb. Funding and deals activity in various NFT sectors have also picked up.
Exhibit 5: Global Q3 2021 NFT verticals investment activity
Source: Dove Metrics
Meta Web 3.0 opportunities
The world has only been able to scratch the surface when it comes to the possibilities that the metaverse holds. Today, nearly one-third of our lives are spent watching TV, playing games or going through the social media.
Exhibit 6: US average daily hours spent on select leisure activity
Source: Goldman Sachs
Both buying of premium games and spending on in-game assets have seen substantial growth. It is estimated to grow from ~$180 billion in 2020 to ~$400 billion in 2025.
Gaming is just one sector which is already reaping the benefits of Web 3.0, but the metaverse stands to benefit other sectors too such as social commerce, advertising, digital events and developer/creator monetisation.
Exhibit 7: Global Metaverse potential total addressable market
Source: Global X, App Annie, Zenith, Grand View Research, BCG
The whitepaper rightly highlights that the possibilities of the metaverse are limitless, with transformational abilities. “The metaverse is a digital universe that moves beyond the internet we know today. This vision for the future state of the web has the potential to transform our social interactions, business dealings, and the internet economy at large.”
