The Metaverse Economy: Which Industries and Sectors of the Economy Will the Metaverse Disrupt?

The metaverse has been one of the biggest buzzwords over the last two years, and related stocks soared in 2021. Yet to the average person, the metaverse is nothing more than a virtual reality environment that will offer new ways to play video games. In reality, this new phase of the internet has the potential to impact sectors and industries that many people wouldn’t connect it with at first.

Let’s take a look at a few of the most important.

Entertainment

The entertainment world is one of the most talked about applications for the metaverse, but investors would do well to remember it’s about far more than just gaming.

Events are increasingly moving online and giving us a new way of connecting with others. We saw a glimpse of this during the pandemic, when everyone headed to Zoom to have quizzes or karaoke sessions with loved ones, but the metaverse offers more possibilities (and arguably more appealing options). 

If virtual reality (VR) becomes effective enough, we could put on our headsets and attend all kinds of in-person events as avatars in the metaverse. This includes festivals, concerts, theater, and sports events.

Gaming platform Roblox (RBLX) is already experimenting with the concept and has held virtual concerts with the likes of Lil Nas X and Zara Larsson so far. In these performances, artists’ avatars perform to the avatars of ticket holders inside the game. It’s not quite an immersive VR space yet, but it’s getting there — and record labels are taking note, with Sony (SONY) signing a licensing deal. Companies like Twitch and Amazon have also made moves to hold virtual concerts.

This has the potential to completely disrupt traditional entertainment, especially as metaverse events can sell an unlimited number of tickets and allow people to attend from anywhere in the world. For now, the technology still needs to develop for a fully immersive experience — but investors should look out for both the headset manufacturers and the entertainment companies moving into the space.

Retail

The world of retail faces many serious challenges, and the metaverse could solve at least some of them. One is the need for customers to constantly return items since they can’t have the “try before you buy” experience that brick-and-mortar stores offer. The metaverse could use augmented reality (AR) technology to allow customers to see and experience a digital version of a product in the metaverse before deciding if they want to buy it.

But which brands should we be looking at to tap into this trend? Shopify (SHOP) benefitted from the ecommerce boom, and it doesn't plan on going anywhere soon. It has given its sellers the option to add 3D images to their stores, and the move successfully increased conversions. Yet this is just scratching the surface of the benefits a completely immersive shopping experience could bring.

The metaverse is also giving rise to a whole new side of retail: The phenomenon of people buying items for their digital avatars, perhaps in the form of NFTs. Brands like Nike seem to be moving into this space already by working with companies that can make virtual clothing and accessories.

Real estate

You might think that real estate is one of the few assets that we’ll always want in its physical form rather than some virtual version. But you would be mistaken, because virtual real estate is a fast-growing area. Someone recently paid $450,000 to become Snoop Dogg’s virtual neighbor in Sandbox, a popular metaverse platform. Decentraland is another platform hoping to capitalize on this trend, with both platforms selling virtual land parcels. 

This isn’t just about people buying their second homes in the metaverse. Businesses also have clear incentives to get involved in the world of virtual real estate since owning land in a position that gets plenty of virtual “foot traffic” will have more chances of generating customers and revenue.

While it may not pose a direct threat to real-life real estate (nobody is going to be weighing up the choice between digital or physical real estate), this opens up new possibilities for real estate companies. They could also use AR to offer 3D real estate tours — in fact, property advisor Savills (SVLPF) is already doing exactly this.

Education

In “Ready, Player One,” all children can attend a school in a virtual reality interface, where they can access an extensive online library of educational resources and take classes with students and teachers from anywhere in the world. Could we be heading in a similar direction? This offers countless possibilities. Students could learn one-on-one from AI instead of struggling in a class of thirty or more pupils. And they could head to virtual reality to witness educational experiences firsthand (e.g., life in the Roman Empire) instead of reading about it in books or watching videos.

Some schools are already taking advantage of the innovations, such as Dallas Hybrid Prep, which is giving pupils assignments that imitate gaming and paying them online for doing their tasks. Meanwhile, Axon Park is working on creating its own virtual campus, and has relationships with the likes of Harvard University and UCLA. This could threaten online course sites like Udemy and Coursera if they’re not prepared to move to the next level.

A meteoric rise

The metaverse isn’t just set to change how children play games and entertain themselves, but to have implications for all aspects of everyday life — from how we buy clothes to how our children learn. No matter what type of companies you invest in or what sector they fall into, this isn’t an area you can afford to ignore for future investment opportunities.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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