The promise and peril of the metaverse

22
855
The metaverse has the potential to radically transform the digital—and global—economy, but many questions remain.
With the metaverse in its early stages, organizations and people have the opportunity to shape the metaverse responsibly. In this episode of the At the Edge podcast, Matthew Ball, renowned metaverse expert and author, speaks with McKinsey’s Mina Alaghband to discuss what the metaverse can be at its best, how to ensure positive outcomes, and what worries him the most.An edited transcript of the discussion follows. For more conversations on cutting-edge technology, follow the series on your preferred podcast platform.

I believe absolutely that the advent of graphics-based computing and 3-D environments is going to change many of the technologies, standards, conventions, and monetization models. It’s going to have profound generational change. And, most importantly, it’s going to reach many of the categories we’ve long hoped would be altered by mobile and the internet and yet haven’t been” – Matt Ball

 

Mina Alaghband: That’s Matt Ball, foremost metaverse expert, investor, and writer. He joins me today.

This is the second episode of a three-part series on the metaverse. I’m Mina Alaghband. Welcome to At the Edge, a production of McKinsey’s Technology Council.

Matt, welcome to the podcast. I wanted to start by asking you a little bit about where the metaverse is heading, because funding and media and public interest in the metaverse have really exploded over the past year. And some listeners might be thinking, are Web31 and the metaverse really going to change business models, interpersonal relationships, and identity in the ways that you’ve described in some of your writings, or is this really just gaming 2.0?

Matt Ball: The raw technology required to produce what we would understand to be some sort of simulacrum of the metaverse—which is to say it passes a critical threshold of visual fidelity, of functionality, of the number of people who can participate—we recognize that as having changed over the past few years, and that’s a matter of broadband penetration, of latency, and of graphics processing units (GPUs).

On top of that, we see a number of different cultural events that are shown through behaviors in commerce and time. You go back seven years, and very little money was spent on in-game virtual goods—roughly about $5 billion in 2015. Last year, putting aside NFTs, we had about $60 billion or $70 billion spent on purely cosmetic, nonfunctional virtual goods. Fortnite has sold, in each of the past four years, more in virtual apparel than some luxury brands. Those are new cultural moments. We’re also seeing more recently an influx of traditional brands, including many of the biggest, most sacred brands, investing in these virtual spaces. And we’ve also seen a very large destigmatization of time spent in virtual worlds.

What does this mean collectively? It means that this idea that we’ve thought of for decades is now a little bit more tangible, even if in the virtual sense. There are hundreds of millions of people connecting to these environments every day. There are many of the most storied companies on earth building a presence, and we have commerce in the tens and soon to be hundreds of billions of dollars.

Mina Alaghband: As you look forward over the next 12 to 24 months, what are you expecting to see that will confirm to you that this isn’t sort of a hype cycle and that this is really a shift of the economy into the metaverse?

Matt Ball: We’re really going to see two waves. The first is that we’re going to see more brands, more investment, more M&A, and more users in all things 3-D and real-time rendered. These are all trends that have been going on for multiple decades, and there’s no reason to believe that time spent online, the number of smartphones in use, and the criticality of digital to our economy are going to reverse.

At the same time, we should expect some sort of backlash to the metaverse as a theme, as an investment case, and as a point of shareholder prioritization, because the narrative, at least in my perspective, has outstripped the products and the revenues that we see.

Companies of course need to be investing long before the revenue, the products, and the disruption are here. Never before have we so collectively said, “The metaverse is here; the products are here.” Bill Gates has said that he believes in the next two to three years that the majority of meetings will happen in the metaverse. The reality is that it’s going to take a decade or longer for that to happen. And so we’re going to have to go through that hump in the interim.

LEAVE A REPLY

Please enter your comment!
Please enter your name here