The metaverse market is attracting billions of dollars in investments and has the potential to generate up to $5 trillion in value by 2030, according to a new report. 

This year, businesses that range from large technology organisations, start-ups, venture capital and private equity companies have already allocated more than $120 billion to tap into the metaverse, more than double the $57 billion investments made in 2021, consulting firm McKinsey & Company said. 

The concept of metaverse, which is associated with the virtual realm, as well as cryptocurrencies, nonfungible tokens (NFTs) and other digital assets, has been attracting interest from investors, companies and consumers of late. 

“The metaverse is still being defined, both literally and figuratively. Yet, its potential to unleash the next wave of digital disruption seems increasingly clear, with real-life benefits already emerging for early adopting users and companies,” McKinsey said in its report. 

Factors driving interest 

There are several factors driving investor interest, including ongoing technological advances, consumer-led brand marketing engagement and increasing marketplace readiness, according to McKinsey. 

Among the consumers, growing connectivity is one of the key drivers. In McKinsey’s analysis, which took into account the responses of more than 3,400 consumers and executives, it was found that the majority or almost 60 percent that use metaverse are excited about transitioning everyday activities to it. 

Impact on various industries 

Around 95 percent of business leaders also expect the metaverse to positively impact on their industry within five to ten years. More than half (61 percent) also expect metaverse to have a moderate impact on how their industry operates. 

Metaverse is expected to impact consumer and retail, media and telecommunications, healthcare and other industries that have metaverse initiatives. 

“While estimates of the potential economic value of the metaverse vary widely, our bottom-up view of consumer and enterprise use cases suggests it may generate up to $5 trillion in impact by 2030 – equivalent to the size of the world’s third-largest economy today,” McKinsey said in its report. 

On the e-commerce sector, metaverse could have a market impact of between $2 trillion and $2.6 trillion by 2030. Metaverse is also expected to have an impact of $180 billion to $27 billion on the market of online learning, a $144 billion to $206 billion impact on the advertising market and a $108 billion to $125 billion impact on the gaming market. 

“These effects may manifest in very different ways across the value chain,” said McKinsey. 

Last year, the metaverse market attracted $13 billion in funding from private equity. “In 2022… investment into the metaverse space is more than double what it was in all of 2021,” McKinsey said. 

(Reporting by Cleofe Maceda; editing by Seban Scaria)