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The next phase of the digital revolution has begun. What the new world brings, which stocks offer the best opportunities. By Florian Hielscher, Euro on Sunday
The equivalent of 4.3 million euros, that's how much the property was worth to the American investor Republic Realm. The property is not in New York or Los Angeles, but in the virtual world "The Sandbox" in which users can play, build and trade virtual goods. By its own description, The Sandbox is a virtual metaverse. This new dimension of the digital world is considered a potential trillion market of the future.
The term metaverse is composed of the Greek prefix meta, meaning after or beyond, and verse, meaning universe. Many CEOs of large technology companies use the term when reporting on their vision for the future. The term is not a new invention of Silicon Valley, but comes from the science fiction novel "Snow Crash" by the American author Neal Stephenson, which was published in 1992. In it he describes a world in which people flee into a parallel world in order to escape violence and poverty. In this virtual world, they move as avatars, i.e. artificial embodiments of the users, in a virtual, three-dimensional space and live their lives there. It also has its own currency.
Such a world seemed pure fiction at the time, but in times of rapid technological progress it could become reality faster than expected. Facebook founder Mark Zuckerberg also has big plans: "We believe that the Metaverse will be the successor to the mobile Internet."
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More and more companies are presenting plans for the Metaverse, after all this could be a huge market of the future. There are different forecasts for the economic potential: According to the market research company Vantage Market Research, the Metaverse could reach a potential sales level of 800 billion dollars by 2028. Analysts from Morgan Stanley predict an annual market potential of around eight trillion dollars. This would be more than double the German gross domestic product in 2020. These figures make it clear why many companies, especially the large tech groups, are working on the implementation of the Metaverse, although the development and extensive usability are likely to be years in the future .
One example is the Meta Group: Zuckerberg changed the name of the company holding company from Facebook to Meta Platforms, or Meta for short. For the new focus on virtual worlds, 10,000 new jobs are to be created in Europe alone. In 2014, the Zuckerberg Group acquired Oculus, a company that manufactures headsets for virtual reality (VR). When used, the real world is hidden, the users penetrate completely into the artificial world using VR glasses.
Battle of the tech giants
The competition also wants to get involved in view of the market potential. There are always rumors that Apple could soon release its own hardware in the field of virtual worlds. In addition to virtual reality, this could also enable the use of augmented reality (AR).
With this "extended reality" the perception of the real world is supplemented by virtual elements. The users do not immerse themselves completely in the virtual world, but record additional virtual elements through AR glasses or similar devices. For example, additional information about places and buildings could be displayed during a city trip. Many have already had their first, albeit rudimentary, experiences with it: The game "Pokemon Go", released in 2016, enabled users to see and catch the popular pocket monsters in the real world via mobile devices. Suddenly a virtual Pikachu is sitting in your own living room or a deafsi on the meadow in the middle of the park.
In addition to extensive software and VR-capable glasses, powerful hardware is required for a comprehensive user experience so that the technical and graphic requirements of the Metaverse can be mastered and made comfortably usable. These include high-performance chips and processors as well as graphics cards. Since the metaverse is to consist of huge digital worlds, enormous computing power is required to create and use them. The semiconductors and graphics processors required for this could come from Nvidia, for example. However, other companies in the industry such as Intel or TSMC also want to benefit from the hardware upgrade required for the Metaverse.
Enormous financial power
Given the projected market size, how does the Metaverse make money alongside selling VR and AR-enabled devices and eyewear? The foundation for this lies in the possibility of having possessions in the game-like worlds, just like in real life.
This is made possible by the blockchain. This technology acts as a kind of shared database through which information can be transmitted in a decentralized and tamper-proof manner. This also allows the owner of virtual goods to be clearly determined. Such a good is called a non-fungible token (NFT), i.e. a non-replaceable digitally protected good.
NFTs can be anything from crypto art to just an animated cat. The item only has to be digital. Users can also craft and sell items themselves. Just like Neal Stephenson's novel, it uses its own currencies.
Cryptocurrencies of the same name based on the well-known cryptocurrency Ethereum exist for online gaming worlds such as The Sandbox and "Decentraland". These virtual goods sometimes change hands for horrendous sums: An anonymous user bought a mega yacht in the world of The Sandbox and paid about 150 Ether (coin of the cryptocurrency Ethereum) - these were worth more than 570,000 at the time of the transaction Euro.
Game developers will play a big role in the development of the Metaverse. One of them could be Roblox. The US company operates one of the most popular gaming platforms and has 50 million users every day. The aim is to create a virtual world in which all goods, from land and houses to pets, can be bought and traded. In addition to Roblox, other companies in the gaming industry are also working on developments towards Metaverse.
One of them is the US company Epic Games, a provider of software and games and best known for the global game hit "Fortnite". "Fortnite" and Roblox are among the most popular applications among the younger generation and are used intensively accordingly.
The major shareholder in Epic Games is the Chinese Internet giant Tencent, which in turn holds countless stakes in other companies. These include game providers and the social media company Snapchat, which, according to a study by Goldman Sachs, plays a leading role in the field of augmented reality.
Zuckerberg is also positioning his group in the gaming sector. Recently, Meta released Horizon Worlds in the United States, a virtual reality game in which users can not only explore existing worlds, but also create their own elements and team up with other players, for example to experience adventures together . According to the Oculus website, whose VR glasses can be used for the game, users should not just be spectators, but part of the whole.
virtual concerts
It's no longer just about playing a game, the possibilities should go much further. Virtual concert visits by real artists should be possible. A beginning for this has already taken place in the present: After the live tour of the US rapper Lil Nas X could not take place due to the pandemic, he gave a virtual concert in the world of Roblox, in which the audience was moved to different landscapes during the songs .
Companies in the entertainment sector are also discovering the potential and are striving for the metaverse. The Japanese entertainment group Sony is supporting the game developer Epic Games with around 200 million dollars in a billion-dollar project to develop the Metaverse. Sony could then use its Playstation network to distribute the software. The Japanese also want to play along with their own VR glasses on the Metaverse topic.
Free time and work in the Metaverse
Disney also wants to play a major role in the future megatrend. Its strong franchises enable the group to generate completely new forms of entertainment by fusing real and virtual elements. For example, a virtual Disneyland or the expansion of the existing theme parks with AR elements would be conceivable. The in-house streaming service Disney+ also offers potential and could be expanded into the company's Metaverse platform in the future.
But not only leisure time should take place in the Metaverse, work could also be relocated there. In the future, conferences are to be held via avatars in virtual conference rooms. Microsoft has already presented an approach for this, which is intended to further develop the video conferences that have become numerous during Corona. The concept is called "Microsoft Mesh" and represents a kind of further development of Microsoft Teams, which allows meetings to be relocated to virtual space. Using VR or AR headsets, the conversation partners appear as avatars in a virtual environment. It should also be possible to use it without the appropriate headsets, but then you can only see your colleagues as avatars in the classic video conference view and you can interact with them. Compared to future visions for the Metaverse, this doesn't sound that spectacular, but Microsoft Mesh should be available in the first half of 2022.
The Metaverse could revolutionize social coexistence if the necessary developments succeed and there is sufficient acceptance. It has the potential to radically change the way people work and socialize by largely mimicking real experiences in virtual form. However, it will probably not replicate them completely or even make them superfluous.
