About the author : Alex
Businesses have invested $77 billion in metaverse mergers and acquisitions in the last 18 months as they compete for a piece of a market that is expected to be worth $800 billion in just two years.
Buyers such as Microsoft, Snap, and the business behind the dating app Tinder believe that virtual places will define the next phase of the web. In contrast, others feel that fundamental obstacles must be overcome, not least the human urge for authentic connection.
How much is the metaverse worth?
In December last year, Bloomberg analysts raised a sensation when they announced their forecasts for the importance of the metaverse, a vision for the future of internet communication defined by interconnected 3D virtual worlds. According to experts, the global metaverse business might be worth $800 billion by 2024.
“As video game developers continue to elevate existing titles into 3D online worlds that more closely resemble social networks, their market opportunity may expand to include live entertainment such as concerts and sporting events, as well as competing for a share of social-media advertising revenue,” the analysts wrote.
Other projections have gone much higher. Citi investment experts projected in March that the entire metaverse industry will be worth $13 trillion by 2030. And Nvidia CEO Jensen Huang predicted that the metaverse would generate economies of scale that would overwhelm the current economy.
“These estimates may sound too optimistic from a certain perspective, but I believe there are excellent reasons to trust in them,” says Nick Rosa, Accenture’s metaverse strategy and extended reality head.
“The metaverse is perhaps the largest digital transformation process we’ve seen in the last 20 years, since the emergence of the cloud,” Rosa says. “There’s a tremendous need for a shift in user experience, product design, and the ecosystem that will underlie it.” “As a result, it’s a tremendous opportunity for everyone concerned.”
Mergers and acquisitions in the metaverse
These increased expectations have resulted in some jaw-dropping buys. According to M&A statistics compiled by GlobalData, metaverse mergers and acquisitions totaled $77 billion in the last 18 months, with buyers snapping targets ranging from video game publishers to VR gear manufacturers.
Because current games are built on large-scale communities supported by highly compelling content – the metaverse’s underpinnings – video game firms are especially appealing targets for corporations looking to invest in the metaverse.
At the time of writing, Microsoft’s $69 billion acquisition of gaming behemoth Activision Blizzard in January was the largest metaverse-related transaction, with the corporation describing it as a “building stone for the metaverse.” Take-Two Interactive also paid $700 million for the video game maker Zynga earlier this year.
Investors are exploring metaverse methods in practically every sector of online engagement, including workplace cooperation, aside from gaming. In April, a US-based particular purpose acquisition company (SPAC) paid $655 million for EON Reality, which provides virtual-reality solutions for 3D workplaces.
Dating is also migrating to the metaverse. Match Group, which owns famous dating apps such as Tinder, paid $1.7 billion in February last year to purchase Hyperconnect, a South Korean video messaging and social media startup. Later, Match Group disclosed that it is collaborating with Hyperconnect to create ‘Single Town,’ a virtual environment where singles may meet.
Hardware suppliers that combine virtual reality and the physical world are also being acquired. Snap purchased Oxford-based Wave Optics, which manufactures the display screens for AR smart glasses, for $500 million in May of last year. TikTok’s parent company, ByteDance, paid $700 million for Pico Interactive, a developer of virtual reality headsets.
Investment in the metaverse: virtual worlds and real money
The surge in metaverse mergers and acquisitions demonstrates rising confidence that real money can be earned in virtual places. “We’ve seen how individuals worldwide can make considerable money with NFTs and other digital collectibles in games, for example, so there is a technological revolution going on right now.”
“We are approaching a new age when you can make a lot of money if you have a concept for a terrific product that can operate in the virtual world,” he says.
TECHnalysis Research, the president of market research and consulting organization, Bob O’Donnell, concurs. “These acquisitions are at an ideal moment since we are in the early phases of the metaverse when huge tech giants seek smaller startups with discoveries and incorporate them into their larger solutions.”
Acquirers are adopting what O’Donnell refers to as a ‘public R&D’ approach. Small VC-backed startups sprint into an area with many unsolved issues, and investors and large businesses choose the winners.
Adoption Roadblocks
However, there are many mysteries concerning the metaverse. Some of these are technical. “The computational power of virtual reality is directly related to the amount of heat generated by the CPU and GPU,” Rosa says. “How can we produce glass easily holding processing power that demands heat dissipation?”
Rosa is optimistic that the industry will succeed in developing more comfortable and lightweight alternatives. “The initial wave of gadgets will be very lightweight and tiny,” he says, adding that “after one or two years, there will be another generation of VR smart glasses that will allow a clear projection of virtual pictures into your retina.”
Other concerns are more human, such as the effect of extended virtual reality use on mental health and whether wearing headsets will be socially acceptable. Rosa argues that this is dependent on a “critical mass of use cases” that extend beyond Gen Z’s interests.
The metaverse has an even more significant challenge: the underlying human desire for physical interaction. “In a post-pandemic world, what does everyone want to do?” “Do we want to spend more time on screens or hanging out with real people doing real things?”.
“I believe it’s symptomatic of our human nature and how we feel after a pandemic, and I don’t think that’s going to change anytime soon simply because there’s some new device that can do some amazing things.”
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