7 things you should know about investing in technology's new frontier
Spurred by Mark Zuckerberg's October 2021 announcement that the parent company of Facebook, Instagram, and WhatsApp would be renamed Meta, "Metaverse" has become the latest technology buzzword reverberating far beyond the tech world.
Zuckerberg's announcement of the new name and mission to be "a social technology company" helped catapult the Metaverse — a concept that might previously have meant something to gamers who play Fortnite and other tech aficionados — into the mainstream conversation as companies, brands, and regular investors look to become part of what may be the next big thing.
Meta's website says that it will "help people connect, find communities, and grow businesses." Other businesses are focusing on this same territory, and investors looking to ride a coming wave are not far behind. But questions remain for those who are new to the Metaverse or are trying to sort out what's real, what's coming, and what the implications of it all may be.
Here are few points that can help you get a handle on what's what in the Metaverse.
1. What is the Metaverse?
It's important to understand that the Metaverse isn't a single place or thing, but a step forward in digital technology and digital experiences where lines between digital and physical worlds converge. The Metaverse looks to combine aspects of social media, online gaming, augmented reality (AR), virtual reality (VR), and cryptocurrencies to allow users to interact virtually.
Think about the Metaverse as the next step in a technical evolution: web browsers connected people to content and information, social media platforms connected people to online communities, and the Metaverse takes it all one step farther to connect people to immersive virtual worlds where the digital and the physical converge.
In his letter announcing the new Meta brand, Zuckerberg said, "In the Metaverse, you'll be able to do almost anything you can imagine—get together with friends and family, work, learn, play, shop, create—as well as completely new experiences that don't really fit how we think about computers or phones today."
2. Existing technologies — and new ones — are powering the Metaverse
As major companies like Meta, not only embrace the concept, but stake their futures on it, it's worth understanding the technologies that underpin the Metaverse, in particular AR and VR. These technologies seek to either enhance real-life environments with digital elements (AR) or replace the real environment entirely with a simulated digital environment (VR.)
3. The Metaverse is a $194B market — and growing
The Metaverse might sound like something from a sci-fi future that will suddenly turn on and change everything, but it is already here. A published report from Global Industry Analysts Inc. says that the global Metaverse market is estimated at $194.4 billion in 2022 and is expected to grow to $758.6 billion by 2027.
4. Brands and celebrities are looking to gain a foothold in the Metaverse
Famous names as diverse as McDonalds, rapper Snoop Dogg, and the luxury fashion brand Balenciaga are looking to do business in the Metaverse. McDonalds has filed trademarks for a restaurant that you can enter in the virtual world to order food that will be delivered in real life. Panera Bread is looking at a similar service. After acquiring the hip-hop record label Death Row Records, Snoop Dog announced that the label will be putting out artists through the Metaverse. The fashion brand Balenciaga launched its 2021 collection through an immersive video game in which players could toggle through the latest fashions. Brands ranging from Coca-Cola to Nike to Microsoft are all working on Metaverse plans.
5. Virtual real estate is fetching real money
Real estate is currently being bought and sold in virtual worlds such as Decentraland and Sandbox, where people use avatars to interact, like in real-time multiplayer video games. The prices for plots of virtual land have risen substantially in recent months. A Sandbox player spent nearly $500,000 to buy a plot of virtual land next to Snoop Dogg's virtual mansion. There are even real estate developers operating in the virtual world.
6. Metaverse ETFs are a growing area for thematic investing
Even as companies work to understand the implications of the Metaverse on what they do, investors have begun looking to investment opportunities in the Metaverse. A number of ETF products focused on the Metaverse have launched in recent months, and Bloomberg reports that $2.2 billion in ETF assets are invested in assets focused on the Metaverse.
7. FundVisualizer can help you understand the opportunities and impacts
As client interest in the Metaverse grows, FundVisualizer can help you understand the opportunities and implications of the Metaverse on your clients' investments. Use FundVisualizer to evaluate more than 30,000 funds, ETFs, and indexes and help identify where your clients' investments may have holdings in companies investing in the Metaverse. Learn more at FundVisualizer.com.
Putnam Retail Management.