The metaverse is an integrated network of interactive and persistent virtual worlds that is considered to be the next universal iteration of the internet. The concept is centered around delivering a greater immersive experience through additional dimensions (e.g., enhanced interactions via VR/AR and haptic solutions) to interact with information and other users. The metaverse experience platforms refer to interactive and persistent virtual worlds/environments that are hypothesized to integrate and form the user-experience layer of the metaverse, facilitating activities such as collaborative remote working, education/training simulations, gaming, and social interaction.
Although the metaverse concept calls for the interoperability of all platforms, until recently, they operated in relative isolation. The creation of open standards to solve the issues associated with the interoperability of digital assets and identities across platforms are still a work in progress. Metaverse experience platforms are enabled via core technologies such as extended reality, the blockchain, cloud/edge computing, and 5G. Furthermore, the growing share of Gen Z consumers and their income levels, monetization opportunities for creators, and significant enterprise interest are likely to drive the industry forward.
Between 2020 and 2022, there was a notable surge in metaverse activity, with brands from various industries, particularly consumer discretionary, consumer staples, and information technology, launching experiences on popular platforms. This included the textiles, apparel and luxury goods, personal products, and software subsegments for their respective industries.
The primary use cases revolved around marketing and remote work, as the metaverse offered a unique opportunity for brands to engage younger demographics through immersive experiences and virtual spaces that facilitated remote collaboration, enhanced team cohesion, and streamlined communication efforts.
We have identified key MEP use cases below:
Disruptors in the industry operate in six distinct segments, with a majority of the startups being concentrated in the social gaming, pure-play social, and work platforms segments. Social gaming platforms and pure-play social platforms have the highest number of growth-stage disruptors. They are also the two highest-funded segments (November 2022), as they have been growing for relatively longer, offering traditional gaming and virtual social experiences before becoming metaverse contenders.
The social gaming platforms segment has significant incumbent activity, led by brand launches on Meta’s Horizon Worlds platform and Epic Games’ Fortnite Creative. Incumbents also have a notable presence in the Work platforms segment, which includes Meta’s Horizon Workrooms platform and Microsoft’s Mesh collaboration platform.
Meta is the leading player in the space, with its flagship Horizon Worlds platform offering social gaming experiences. The company also has a presence in the work platforms segment via Horizon Workrooms and the digital avatars segment via the Meta Avatars Store. Other notable metaverse work platforms include Microsoft Mesh and Amazon’s AWS Cloud Quest. Additionally, NVIDIA offers its Avatar Cloud Engine (ACE) for the creation of digital avatars.
The vast majority of incumbent partnerships and M&A activity is related to gaming and/or social platforms. Notable acquisitions include Meta’s acquisition of Within, the AR/VR game developer behind the popular VR workout app, Supernatural, for USD 400 million (February 2023). Additionally, Microsoft’s acquisition of ZeniMax Media (September 2020) for USD 7.5 billion and Mojang (September 2014) for USD 2.5 billion are other significant activities in the space.