In today’s Exponential Investor:

  • Definition of the metaverse
  • If the metaverse is possible
  • Industries impacted by the metaverse

What is the metaverse?

The metaverse is an immersive, virtual reality world in which people can connect and interact with each other online, through the use of avatars, which are icons or images that represent them.

In it, you can perform many tasks that you would in the physical world. This includes interacting with friends, trading goods and services, earning income, and gaming.

It helps people to connect with each other through a revolutionary technology platform that provides unbound opportunities.

Typically, you can access it through the use of VR headsets and goggles, or through metaverse-based crypto networks (for example, Decentraland).

What does it mean for us?

In short, a fully functioning metaverse won’t completely overhaul our lives. Rather, it will likely be used as a complement to activities in our physical world and add value/convenience to our lives.

For example, a use case for it is to hold virtual work meetings, whereby employees can attend from anywhere in the world.

With this in mind, we can expect more elements of our lives to be available in the metaverse.

However, it could provide new opportunities that simply aren’t available in the physical world, such as play-to-earn gaming.

Is the metaverse actually possible?

Yes, it’s entirely possible. It’s being made possible even now, with many tech giants and crypto networks venturing into the metaverse space (more on this to come).

Of course, it is still at an early stage. A big roadblock to its adoption is the difficulty in creating “interoperability” amongst different metaverses: it is often difficult if not impossible to move easily from one to another.

This will require robust and highly complex technology infrastructure: however, this infrastructure is still very underdeveloped.

When will it launch? who created the metaverse?

Technically, it’s already here.

It’s not the broad, universal metaverse that the futurists have been envisaging: nevertheless, early versions are showing signs of things to come.

Facebook is one of the early movers in this space, introducing its metaverse platform in October 2021 alongside its name change to “Meta Platforms”.

Here, users can game and access VR meetings using Meta’s Oculus Quest headset.

In fact, there isn’t a single creator per se, with many institutions having their own versions of it.

The term was coined in 1992 by author Neal Stephenson, who created a science fiction novel which envisioned the metaverse.

What can you do in the metaverse?

The short answer to that question is: many things.

You can interact with friends, play games and join work meetings.

In addition, you can buy plots of land, on which you can develop property and sell on for a profit.

You can trade goods and services too, such as items of clothing or non-fungible tokens. NFTs are immutable, virtual assets – such as a piece of art – underpinned by blockchain technology.

Other possibilities include banking services, where you can visit a virtual version of your in-branch bank, and conduct payments.

Technology companies are working to improve the potential of the metaverse.

Is the metaverse a good investment?

Here at Southbank Investment Research, we believe that the metaverse will present interesting investment opportunities in around one-to-two years’ time – in 2023-24.

It is still at a very early stage.  There are some hurdles still needing to be overcome in terms of interoperability.

There also needs to be more clarity on how the metaverse can be incorporated into our daily lives.

At this stage, there aren’t many pure-play metaverse stocks. The main way to access the opportunities presented is through technology companies that have their own metaverses.

Garter have predicted that, by 2026, 25% of people will be spending at least one hour a day in the metaverse.

So, who are the main companies that are involved?

An obvious example would be Meta (formerly Facebook), (NASDAQ: META), which is building the Oculus Quest headsets mentioned above.

Roblox (NYSE: RBLE) provides gaming and entertainment within the metaverse, and has around 54 million users.

Nvidia Corporation (NASDAQ: NVDA) has an omniverse, which is a 3D simulation platform.

Meanwhile, Immotion (LSE: IMMO) is a provider of VR experiences at in-person exhibitions such as zoos and aquariums.

Obviously, to gain exposure, you would need go on to your broker platform and buy the shares of the companies that have involvement with it.

In truth, pure-play metaverse stocks are uncommon, with many technology companies adding metaverse capabilities to complement their existing businesses.

Industries heavily impacted by the metaverse

Even though there are specific companies involved with it, these are not the only ones that will be affected by it. In fact, many industries will be affected. Examples include:

1. Banking industry

It could foster a new banking environment, whereby people can virtually visit in-branch locations instead of physical locations.

It could boost the efficiency of a sector that is sometimes seen as cumbersome and lacking innovation.

Potentially, it would boost competition as banks vie to provide the best virtual experience for their customers.

2. The gaming industry

The online gaming industry will thrive with the metaverse.

This is because a  huge overhaul in infrastructure isn’t really required to accommodate metaverse gaming.

It will allow a new concept of gaming, known as “play-to-earn” (as noted above) to flourish.

The concept – as demonstrated by metaverse-based platforms such as Decentraland and The Sandbox – is to build a community by offering crypto tokens.

The tokens are earned – or won – through gaming exploits and can be redeemed for fiat (traditional) currency.

3. Real estate and NFTs

Imagine if you could buy or sell real estate, completing the transaction without paper and within minutes through the metaverse.

Imagine if your title to a particular piece of property was supported by a NFT that, thanks to the blockchain technology behind it, was totally secure and impossible to forge.

This use of it may sound like science fiction. However, the first housing NFT sale was completed in June 2021 in Ukraine.

4. Technology

It is a big deal for the technology industry.

As noted, some global technology giants such as Facebook, Nvidia and even Apple are moving into the space.

Each is providing its own version of the metaverse.

Others will surely follow in the next year or so.

Keeping on top

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Elliott Playle
Analyst, Southbank Investment Research