Economic impact of metaverse could be $3 trillion by 2031: report

The economic potential of the metaverse is yet to be realised, and likely won't be until the necessary infrastructure and technology is deployed globally, according to a new report. But there is potentially trillions in economic benefit that can be captured, according to modelling by Analysis Group.

The report, The Potential Global Economic Impact of the Metaverse explained once the infrastructure is in place and adoption is underway, it opens the door for the development of endless endeavours built by creators, developers and businesses, as has been the case with the Internet and mobile technology.

According to the authors, ""If we assume that metaverse adoption were to begin today, in 2022, then we can also estimate the metaverse’s potential contribution to GDP in dollars and compare it to industry projections of the potential size of the metaverse. Our model implies that if metaverse adoption began today, it would have a contribution to global GDP of $3.01 trillion (measured in 2015 U.S. dollars) in 2031."

They describe their estimate as within the range of existing industry projections, of anywhere from  $800 billion to $2 trillion over the next few years based on opportunities in  gaming, social media, eCommerce, and live entertainment, and into longer estimates ranging from approximately $3 trillion to (and warning, crazy-cracker alert) over $80 trillion!

The growth of the metaverse faces a number of opportunities and hurdles, the report notes they are infrastructure and technology requirements, adoption requirements and on-ramp experience.

According to the report, the metaverse will require many new technologies, innovations, and discoveries before it can be fully realised. New metaverse-specific protocols will evolve, new companies and innovations will come into existence, and new industries will emerge that directly or indirectly sustain or are sustained by the metaverse.

Concurrency infrastructure refers to the technology that will support the simultaneous presence of millions of users in a shared synchronous experience.

The report authors explain, “The metaverse will require computational infrastructure to enable many-to-many server connections that can interact persistently and concurrently, in contrast with the current Internet infrastructure of one-to-one server connections. Standards and protocols will also be needed to actualise the level of interoperability envisioned for the metaverse.”

One company or a handful of companies will not own or be the metaverse; rather, individual companies’ products will be destinations in the metaverse or support the metaverse.

Achieving this level of interoperability will require collaboration on a massive scale, including consolidation and uniformity of the existing protocols and standards as well as creation of (and agreement on) new protocols and standards, the authors note.

The on-ramp experience requires critical-mass adoption of the metaverse by creators.

“So, unless the metaverse has something exciting to offer both creators and users, it may be challenging to achieve widespread adoption of the metaverse may be a challenge to overcome,” the report said.

The report also suggests that if the metaverse is successful in the future it has the potential to have various impacts on different sectors in the economy.

The Analysis Group's report explained that impacts of the metaverse are likely to be felt differently in different sectors of the economy, in different regions, at different points in time, and for different people.

While the industry impacts may be predicted to vary, the report notes that estimating the economic impact of the metaverse presents substantial challenges as the metaverse is still developing.

“It is impossible to predict all of the areas in which metaverse technologies will be used, the extent and timing of their adoption, the innovations that will be developed that build upon the metaverse, and all of their associated economic impacts,” the authors wrote.

The metaverse is still in an early stage, with many contributors from around the world helping to plan its inclusive design and construction.

Business leaders are currently witnessing the early phases of development, including the rolling out of infrastructure and technologies that will likely support the metaverse.

The hardware and software factor

The development and adoption of hardware and software also present potential challenges for metaverse adoption and retention.

As the metaverse is based on VR technologies, a vast adoption of these technologies is needed.

According to the report, the adoption rate of VR headsets is expected to depend on price, ease of use, proliferation of apps, and user experience in the virtual environment.

“Early users of VR hardware have complained about the headsets being hot, uncomfortable, having subpar battery life, and being difficult to operate with eyeglasses, and it is unclear how much time per day users will be willing to wear VR headsets,” the authors said.

Software and operating systems for VR headsets are expected to remain one of the biggest challenges influencing adoption and retention.

Current users of smartphones and personal computers are used to typing information on a screen, which in VR is replaced by a 40-inch virtual floating keyboard.

Fundamental functions such as messaging, searching, moving files are currently multistep processes that confuse even the most technically advanced users.

The authors said it takes time, and with a two-hour battery life limit, the VR experience can become frustrating for users unless software and operating systems quickly develop and address these challenges.

“Developing a seamless user experience for the metaverse is expected to take time and is anticipated to materialise in phases, as more individual and business users adopt the technology,” the authors wrote.