The Metaverse, an immersive digital world that Facebook owners meta platforms (FB), Microsoft (MSFT), Roblox (RBLX), NVIDIA (NVDA) and others stoke has the potential to become a $13 trillion market opportunity, says a new report from Citi.
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The 184-page report examines numerous aspects of the metaverse, such as infrastructure, non-fungible tokens and gaming, as well as e-commerce and various business and consumer applications. The total number of Metaverse users could reach 5 billion, said Citi, which released the report late Thursday.
“We believe that the Metaverse could be the next generation of the internet – combining the physical and digital worlds in a persistent and immersive way – and not just a virtual reality world,” says the Citi report, titled “Metaverse and Money”.
Citi’s analysis of the next generation of the Internet includes a concept called Web3.
Web3 is described as an open version of the Internet that gives users more control over personal information. It also offers a method that gives users ownership of what they create, which they can also monetize. Many consider the concepts of Metaverse and Web3 to be complementary.
Web3 uses Metaverse
Web3 can use all the technologies needed for the metaverse. It also makes extensive use of blockchain ledgers, cryptocurrency, and NFTs.
In October, Facebook announced its name change to Meta, setting a new direction for the social networking giant. But work on the Metaverse among the tech giants was already well underway.
In November, Nvidia CEO Jensen Huang said the virtual world will be larger than the physical, not in terms of scale but in terms of economy.
“It’s a 3D extension of the internet that will be much, much bigger than the physical 3D world we enjoy today,” Huang said in an interview with Yahoo Finance Live at the time.
Nvidia has a platform called Omniverse, an open-source tool that allows users to create virtual worlds using artificial intelligence and 3D modeling.
A massive increase in computing power
But building the metaverse and Web3 will require improving computational efficiency by more than 1,000 times today’s levels, Citi said.
Cloud computing, edge computing, 5G wireless, gaming platforms, and network infrastructure all play a big part in helping the metaverse realize its potential, Citi said. Augmented reality and virtual reality gear will be a portal to enter the metaverse.
Use cases include commerce, arts, media, advertising, healthcare and social collaboration, Citi added.
Goldman Sachs estimates global investments in Metaverse and Web3 could exceed $100 billion. Meta invested $10 billion in the Metaverse last year.
JPMorgan and Goldman Sachs have published extensive reports on Metaverse and Web3, each seeing an $8 trillion economy.
Enterprises enter the Metaverse, Web3
The Web3 metaverse remains undefined and in an early stage of development. But enough of it has been developed Walmart (WMT), Disney (DIS), Nike (NKE), Adidas, Samsung, MC Donalds (MCD) and a growing list of other brand companies are jumping onto these virtual platforms.
Most of the Web3 platforms available today like Sandbox and Decentraland are in the gaming space where Roblox is expanding.
Also, Meta and Microsoft have developed virtual workspaces where people can hold virtual meetings.
Facebook shares gained 1.1% to close at 224.85 in the stock market today. Microsoft rose 0.4% to 309.42. Roblox fell 0.5% to 46.02 and Nvidia fell 2.1% to 267.12.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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