Billions of dollars are flowing into the metaverse, and investors should take note.
Meta, formerly Facebook, pledged to invest more than ten billion dollars a year to develop virtual worlds and the technologies that they are based on.
Microsoft is also investing heavily in the metaverse. As a reminder, it has recently purchased Activision, a game developer, for almost $70 billion.
As we said in the past, gaming is shaping up to be not only one of the key industries to benefit from the metaverse but also one of the key technologies that the virtual worlds of the future will be based on.
The monetization of the gaming industry through metaverse is happening right now.
As investors, however, we always ask ourselves the question of “what’s next?”
In our view, gaming is going to be followed by the retail and travel industries.
If you are interested in the metaverse, you should put these two on your radar and watch the companies that start establishing themselves in virtual reality.
Retail Enters the Metaverse
The retail industry is a $25-trillion market. It is poised to grow to about $27 trillion in 2022.
This tells us that even if 10% of retailers move to the metaverse, which, in our view, is likely, we are looking at another trillion-dollar development in the capital markets.
We already see signs that this is happening.
Forever 21, a fashion retailer, has partnered with one of the existing metaverse companies to do a multi-million-dollar experiment.
It established virtual clothing stores in the metaverse. Users could buy clothes there and even have their avatars get their eyelashes done.
And before skeptics start pointing out that this is a niche market, we would like to point out that in-game content is already a $53-billion industry.
By 2025, it could grow to over $74 billion.
In addition to clothes and makeup procedures, avatars are treated to “celebrity experiences” where their avatars walk on a red carpet, dressed in the just-purchased virtual clothes while being photographed by virtual media.
This trend is more powerful than many investors think.
The age of social media has conditioned millions of people to seek the “celebrity” or “influencer” status. This craving for fame has created a need to get recognized.
The metaverse can provide this, and the retailers who join the metaverse trend could, in our view, benefit from customers’ desire to look fashionable and achieve high status, even in a virtual world.
For the retailers, the metaverse is a high-margin business (the cost of creating an additional piece of garment is minimal), and it gives their story a tech angle that investors, in our opinion, tend to appreciate.
This is why Forever 21 is not alone. Nike, the sports brand, and Chipotle, a “fast-casual” food brand, are also jumping on the metaverse bandwagon.
Nike has filed seven trademark applications exclusively for the metaverse back in November 2021.
In addition to that, it posted job offerings for “virtual material designer” and other digital-only design roles.
Company representatives said that this space is a “priority.”
To us, it means that more brands could follow suit.
But clothes are just one part of the metaverse. Being able to seamlessly travel between worlds is another, and “metatravel” is quickly becoming another emerging trend within the metaverse.
Digital Travel Takes Off
Meta’s chief executive, Mark Zuckerberg, said that teleporting between locations is going a big part of the metaverse experience.
For example, The Sandbox, a metaverse game, has over 200 partnerships with various brands. One of them is with Warner Music Group, which will allow the gaming company to build a music-themed world.
In the post-pandemic world, traveling to music concerts and festivals is still challenging. So to meet this pent-up demand for entertainment, virtual reality companies are working to provide their customers with the best online music experience.
Think of it as “Disneyland for adults.” Any activity, any place could be represented in the digital world. And, with the right hardware, the difference between attending a virtual festival and a real one could be smaller than many think.
Plus, you get the benefits of zero travel time. No airport checks, no heavy luggage to carry around, no layovers. Getting to any virtual place instantly will be, in our view, exactly what millions of people will prefer over real-life traveling.
There are already metaverse travel companies, and we are watching this space closely. If an exciting opportunity in this space shows up, we will update you on the state of the metaverse travel.
We are still in the early stages of the multi-trillion-dollar metaverse trend. Between gaming, retail, and travel, investors might, in our view, be looking at hundreds of opportunities in this emerging area shortly.
Thank you for your loyal readership,
The Financial Star team