2022 Tech Trends: The Metaverse

Editor’s note: In a report titled 2022 Technology Trends and How They Impact Industry 4.0, Education, and Retail, a team of Orange Silicon Valley analysts with deep subject matter expertise looked at five key innovation trends and how these trends will affect the Industry 4.0, Education, and Retail sectors. This report – from Kevin Baker, David Martin, James Li, and Arpan Soparkar – is now being made available for our Orange Silicon Valley website readers in a series of five weekly articles.

This article examines the Metaverse (including XR/AR/VR). Other articles in the series include Data & AI (Artificial Intelligence); the Future of Work; Sustainability; and Cloud/Edge Computing. Each section of the report includes success stories and promising startups that play into each trend. For additional questions or information, please email David Martin.

Trend 1: The Metaverse (including XR/AR/VR)

The metaverse can be defined as a simulated digital environment that uses augmented reality (AR), virtual reality (VR), and blockchain, along with concepts from social media, to create spaces for rich user interaction mimicking the real world.

Bloomberg Intelligence expects the market opportunity for the metaverse to reach $800 billion by 2024, and Crypto giant Grayscale estimates a $1 trillion metaverse opportunity across e-commerce, hardware, digital events, and advertising. The interest will cause the gaming market to reach $400 billion in 2025.

The investor Matthew Ball describes how the Metaverse doesn’t exist today, but today there are “proto-metaverses” that are not interoperable. Ball’s definition for the future Metaverse is, “a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.” Companies will continue to innovate and iterate towards this vision.

Vertical: Industry 4.0 in the Metaverse

Buzz of the metaverse is making its way into manufacturing, though the technology supporting the concept remains nascent. Nonetheless, some have predicted the transition to an ecosystem where data and digital items/assets can be shared and easily accessible via the metaverse. By applying XR and Blockchain, manufacturing floors and tools may have unique digital identities (or digital twins) that mimic their states and functionalities in the real world. Stakeholders throughout the supply chain could and customers alike could use these virtual entities to collaborate on improving manufacturing efficiency and innovate for the creation of next-generation products.

Example

While the metaverse has yet to make a substantial impact in Industry 4.0, the automobile company, Hyundai, unveiled its vision for “metamobility” at the 2022 Consumer Electronics Show (CES) in Las Vegas. “The idea behind metamobility is that space, time and distance will all become irrelevant. By connecting robots to the metaverse, we will be able to move freely between both the real world and virtual reality,” said Hyundai’s president and head of the transportation-as-a-service division. Hyundai envisions a manufacturing ecosystem where employees can interact with machines and robotics avatars in the metaverse to perform tasks remotely.

Startups

UrsaLeo and Prevu3D offer digital twin technology that integrates 3D platforms and can be leveraged in an industrial setting.

Vertical: Education in the Metaverse

With its infinite potential, Metaverse is an exciting universe that promises to bring novel AR and VR technologies to classrooms, making learning asynchronous, alive, engaging, and customized. In the Metaverse, students can virtually step inside an enlarged human heart, study the complex biodiversity of sub-Saharan Africa and even visit vibrant Inca markets in Ancient Peru, all without leaving the comfort of their own homes. However, one needs to exercise caution amid this euphoria: As per a study by Brookings Institute, a wide communication gap persists between education scientists and so-called educational app developers, which, if not bridged effectively, can erode the content value at best, and have significant negative impacts on the development of students, at worst.

Example

Given how early we are in the metaverse development and how sensitive the concerns are around education, no clear winner has emerged yet. With its major push in this space, Meta, formerly known as Facebook, announced in late 2021 that its Facebook Reality Labs would invest $150 million in VR learning experiences. With its $69.7B acquisition of Activision Blizzard, a major gaming player, Microsoft also has jumped into this hot space in early 2022. Major breakthroughs in this space will continue to be dominated by large technology players soon.

Startups

One notable startup in this space is GRID, Gaming Revolution for International Development, based in Vienna, VA. Mariam Nusrat, the founder, featured on the Forbes Next 1000 list in 2021, envisions unleashing the power of video games to educate, engage, and empower people. Breshna, the platform developed by the team, allows users to create their own purposeful video games without writing any code.

Vertical: Retail in the Metaverse

Today’s popular Metaverses are firmly rooted in social gaming worlds, so the user base is younger and more engaged. Playtime: greater than 60% of Fortnite users play at least 6 hours per week, and 30% play 11 hours or more per week. Demographics: 63% of Fortnite users are under the age of 25, and for Roblox, the demographics skew even younger with 86% under the age of 25 and 55% under 13.

Use Cases

Developing new audiences: Brands can engage and acquire a new community of users by participating in different “Proto Metaverses” and being a part of the community early in the growth cycle.
Virtual goods & NFTs (Non-Fungible Tokens): 20% of Roblox users change their outfits daily. While we once talked about retail and eCommerce as distinct channels, the line between physical and virtual goods will begin to fade as virtual worlds occupy more headspace and people’s identity exists IRL and URL (offline and online). There’s a world where users buy a digital item and want the physical item shipped to them and vice versa.
Try Before You Buy (TBYB): Both AR and VR enable virtually trying on watches, sunglasses, shoes, makeup, clothing, and more.
Showrooming: Consumers want to shop and have new experiences together online, and many view thumbnail-based eCommerce shopping as mundane. Virtual stores in 3D can now recreate the in-person shopping and discovery experience or even build a new experience that is impossible in real life, such as shopping underwater, in a volcano, or space.
“Phygital” shopping: Digital can enhance physical shopping with digital mirrors in-store, but also with digital experiences that improve products through augmented reality. One example is the Nike + Snapchat experience of running through a city.
Brand & scale equalizer: Barbados has recently decided to launch embassies on several Metaverse platforms because they cannot afford to build physical embassies around the globe. The Metaverse is reducing the barriers to scaling for small countries and upstart brands.

Example

In December 2021, Nike acquired RTFKT for an undisclosed amount. Pronounced artifact and sometimes referred to as the “Supreme of digital fashion,” RTFKT began by selling digital versions of sneakers for USD 90,000. The company partnered with famous artists such as Takashi Murakami, and holds “forging events” to create physical versions of their digital sneakers for their customers. RTFKT has raised money from Andreessen Horowitz and recently sold 600 NFTs (unique digital files) in 5 minutes at a value of more than USD 3M. As consumers’ online and offline identities begin to merge and they want physical versions of their digital accessories, RTFKT and Nike are well-positioned to deliver on these intents. Additionally, Nike has partnered with Roblox to launch Nikeland for Nike-branded games and try-on experiences. Adidas has entered the Metaverse through Sandbox and Puma through Minecraft in a similar vein.

Startups

Obsess is a Virtual Store platform for experiential e‑commerce with customers including Ralph Lauren, Coach, Christian Dior, AT&T, and Mattel. Note: Orange has invested in Obsess as an LP through the Venture Reality Fund.