There’s a very good reason that Mark Zuckerberg and his team decided to change the company’s listed name on the Nasdaq from Facebook to Meta Platforms Inc: they’re anticipating the metaverse initiative to be the future of the company.
They’re not alone—a Bloomberg Intelligence report predicted that the Metaverse revenue opportunity would reach $800 billion in 2024, up from roughly $500 billion in 2020.
Microsoft’s Recent Acquisition of Activision Blizzard
The opportunity for growth in the metaverse is where it is anticipating the highest return. Microsoft has recently struck a deal to buy Activision Blizzard for an all-cash deal of $68.7 billion. Meanwhile, Meta’s hundreds of patents reveal its plan to track biometric data in the Metaverse. Both moves point to big tech’s massive ambition in the gaming space. The two companies may now be poised to develop a duopoly in the emerging virtual economy with dominance over its infrastructure and content.
The deal to buy Activision Blizzard is Microsoft’s largest-ever acquisition, over 2x its $28 billion acquisition of LinkedIn. It will give Microsoft the rights to popular games like Call of Duty, Overwatch, and Warcraft. Microsoft intends to use the purchase to strengthen its Game Pass, a subscription service with over 25 million subscribers.
The acquisition instantly makes Microsoft the third-largest gaming company in the world by revenue. By creating a game-to-metaverse pipeline, this dual approach of carving out a larger market share of both the gaming sector and the metaverse could be a potent combination that sets it apart from the competition.
Metaverse as a Social Media and Gaming Platform
Some may think that the metaverse is an innovation by itself. Others say it is the intersection of a variety of existing technologies already in development. It is difficult to say with certainty at this moment what the exact definition of the metaverse is.
Essentially, the metaverse hopes to be the virtual world dreamed of in utopias and despaired in dystopias. It aims to be a place where people congregate, collaborate, interact, shop, play games, sell art, attend events, and even acquire real estate.
Virtual reality, NFTs, crypto, online gaming, social media—the metaverse already leverages these technologies to generate massive value.
Consider that people spent $100 million purchasing virtual land in the form of NFTs in just one week. One Snoop Dogg fan spent $450,000 to be the artist’s virtual neighbour in the Snoopverse, a virtual world developed in an Ethereum-based platform that monetizes online hangout spaces and gaming.
The NFT/virtual land market is simply one aspect of the vast potential contained in the metaverse. In fact, the majority of growth is likely to come from online gaming.
“Online game makers including Roblox, Microsoft, Activision Blizzard, Electronic Arts, Take-Two, Tencent, NetEase and Nexon may boost engagement and sales by capitalizing on the growth of 3D virtual worlds,” read the Bloomberg Intelligence report.
The Future of Gaming and Virtual Reality
Gaming is likely to serve as the foundation of the metaverse and as its model for growth. U.S. games spending rose 27% in 2020 to $56.9 billion. Globally, it’s projected to surpass $200 billion by 2023.
Meta is already aiming to challenge Twitch as the top gaming streaming platform, growing 210% in 2019. Furthermore, the company has already proven that it knows how to push gaming on its platform, with Farmville 2 (a game available on Facebook) at one point seeing 40 million active monthly users.
The end goal appears to be to create a virtual reality that can be both a social media platform and a gaming hub. From there, it can monetize everything from user avatars to virtual clothing to land ownership (as we’re seeing in several virtual platforms already).
Monetization of in-game goods is just an example of the massive revenue potential available to companies keen on taking advantage of the metaverse. This revenue model, often referred to as a microtransaction model, is already hugely popular. The enormous free-to-play video game Fortnite has earned Epic Games over $9 billion through character skin sales alone. This type of microtransaction model has good empirical evidence in demonstrating its revenue-generating ability.
If Meta can successfully build on that model and begin monetizing everything from virtual experiences to clothes and gaming, then it can potentially dominate the virtual reality market.
Investing in the Metaverse with MESH ETF
If you’re interested in investing in the metaverse, consider the Evolve Metaverse ETF (MESH ETF), Canada’s first metaverse ETF. MESH ETF provides investors with an actively managed diversified portfolio of companies involved in the development of the metaverse. To learn more about MESH ETF, please click here: https://evolveetfs.com/mesh/
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