Why are Large Companies Getting Into the Metaverse?

Companies Getting Into the Metaverse

The Metaverse has been gaining popularity in searches and discussions since late October 2021, according to Google Trends. This gain in popularity has been followed by many Metaverse projects being created and wanting to jump in on the trend: we have seen Metaverse projects such as Decentraland and Sandbox increase in value over Winter 2021, as well as many new Metaverse projects such as Bloktopia and Star Atlas.

Although we are seeing through Google trends that the Metaverse is not as widely searched today as it used to be in 2022, there are many companies that are getting into the Metaverse. A great example showing this is Facebook changing its company name to Meta in order to show that it is more than a social media company; it is also a Metaverse company. So, why are so many large companies getting into the Metaverse?

One important point to notice is that very few companies even spoke about any Metaverse integration before the trend started gaining traction in late 2021. Although some people consider that the Metaverse is in many ways a continuation of the Virtual Reality (VR) trend, others consider the Metaverse to be its own standalone trend, representing a Blue Ocean industry full of opportunities.

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No matter what, many companies could be noticing that there may be an opportunity in the Metaverse space, and may prefer to be one of the early adopters (and even perhaps leaders) of the Metaverse instead of being left behind. Some large companies could be experimenting with the Metaverse idea, such as Nike creating Nikeland in the Roblox Metaverse, but this does not mean that many companies are changing the core of their business in order to integrate the Metaverse.

The only large company that seems to be placing a large bet on the Metaverse is Meta (formerly Facebook), in the hopes of becoming a leader in the space.

Will the Metaverse be widely adopted by large companies?

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Many analysts are predicting that the Metaverse will eventually become a large industry. Certain Bloomberg analysts are predicting the Metaverse to be an $800 billion opportunity, and certain analysts at Morgan Stanley see the Metaverse becoming an $8 trillion industry in China alone.

The number of analysts releasing bullish reports about the Metaverse industry in late 2021 increased massively, which may have helped instill hype and FOMO into the industry. Based on the reports, it would make sense why many companies would want to allocate at least some capital into the Metaverse, and develop some sort of Metaverse-related projects into the Metaverse.

Morgan Stanley also mentioned that mainstream adoption of the metaverse will “take a long time, given major technological and regulatory hurdles.”

We are already living in a digital world, spending six hours-plus per day online, so mass adoption of the Metaverse will require a significantly better immersive experience versus the current mobile internet offerings. – Morgan Stanley.

Also it’s worth considering regulatory steps like the Chinese government concerned about the increasing focus on minors’s addiction, cybersecurity and the safety of personal information. 

Although many analysts are predicting that the Metaverse will be a large industry over the next coming years, very few large companies are changing their core model in order to integrate with the Metaverse.

These large companies tend to have lots of cash at their disposal, and are willing to spend a couple million dollars on a venture that may not succeed. The bullish reports may be enough for these companies to decide to take at least some Metaverse development and exposure. With the exception of companies like Roblox where the entire product is the Metaverse, even large companies that are taking huge efforts into the Metaverse are making sure that the effort does not retract from their core businesses.

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Facebook changed its name to Meta, yet knows that its core business remains its social media platform, Facebook. In general, companies with a lot of cash at hand can afford to try new ventures and new projects, even if most of them fail.

No matter what, the companies learn from their mistakes and are usually OK if the project fails drastically. These large companies tend to have so much cash at hand that it could make a lot of sense for them to be investing in every single trend or industry that is generating hype, just in case that it is the next big thing. However, these investments generally do not deter companies from their core business in any manner.

The bottom line

Overall, the consensus from analyst reports is that the Metaverse is still in its infancy stages. Nobody knows how big the Metaverse will become, or how fast it will develop. The Metaverse could very well be just like the Virtual Reality (VR) industry, where many large companies invest heavily into it yet receive very little growth compared to what was projected. At the same time, the Metaverse could be the next big thing.

No matter what the situation, it might be beneficial for large companies that have the capital to spend to actually start taking an interest into the space, just in case the industry truly reaches the levels that the analysts predict. Many still believe that the Metaverse is in a speculation phase, but that may not stop large companies from getting into the Metaverse, just in case it turns out to be the next big thing.

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