The Metaverse Opportunity: Today and Tomorrow

The metaverse is here. Today, it’s primarily associated with immersive gaming, social media, and live entertainment events such as virtual concerts. But there are plenty of lower-profile, pioneering developments elsewhere: Healthcare companies are deploying immersive technology for research and patient care. Retailers are creating innovative options that allow consumers to try on virtual clothes or visualize what a new couch might look like in their home. Advertisers are selling space on virtual billboards and creating immersive experiences for some of the world’s largest brands.

Already, according to Bloomberg, there was a metaverse “economy” of over $500 billion in 2021—and this is projected to grow to over $800 billion by 2024.¹ And the opportunity has the potential to become exponentially larger as the metaverse matures. That’s why a thoughtful investing approach should capture the metaverse opportunity of today—while anticipating where the metaverse may go tomorrow.

Today’s metaverse shapers: Creating immersive, virtual worlds

Today, there’s a broad array of companies shaping the future of the metaverse, spanning traditional industries (like device manufacturers and data processors), major innovations (like computer visualization and virtual reality players), and big ideas (like the development of new social media platforms as well as interchange and interoperability standards). The table below shows the range of subthemes within the Solactive Metaverse Theme Index (along with examples of specific companies in each). The diversity of innovators in this space may be an opportunity for investors.  

Solactive Metaverse Theme Index: A range of subthemes

Tomorrow’s metaverse shapers: Connecting immersive, virtual worlds

Of course, an even bigger opportunity lies in the metaverse of tomorrow. Many of today’s metaverse pioneers offer immersive experiences that are separate from one another—for example, your persona (avatars, skins, etc.) in one game does not follow through to other games or the virtual concert you’re about to attend. Tomorrow, your identity, and even your virtual assets, will likely be yours from game to game, concert to concert, and, perhaps more importantly, a broader range of emerging commercial opportunities. As a result, we may soon see a transition from centrally owned, discrete metaverse environments to interconnected but decentralized ones. This will expand the metaverse experience and will also open sizable new opportunities for revenue—such as the sale of virtual real estate and virtual goods.

Of note, even in today’s environment of limited connectivity and interoperability, JP Morgan estimates a current annual run-rate of $54B on virtual goods.² Now consider the not-too-distant future: What would someone pay for virtual sneakers that could be worn anywhere in the virtual world? What would virtual prime real estate be worth if it attracted virtual “foot traffic” in an exponentially growing sprawl? And who profits?

The future of metaverse investing:

A diversified strategy around the idea  

The trouble with investing in a long-term, transformational idea like the metaverse is that even if you are directionally right, it is challenging to pick winners and losers: They are determined as technologies are established and then mature. Some transformative technologies are evolutionary and leverage the scale and existing capital investments of incumbents, while others are revolutionary and decimate the value of those existing investments. Consider Clayton Christensen’s widely read “The Innovators Dilemma,” which noted that it is often hard for incumbent industry players to take advantage of new opportunities presenting an opportunity to new entrants. Despite this, Microsoft and Apple emerged from the early days of the PC to be huge web 2.0 successes.

Today’s centrally owned and not-so-connected metaverse has some familiar industry dynamics. The MAANGs (formerly FAANGs) were born of previous eras but are leveraging their legacy footprints and scale across all metaverse segments.³ The proto-metaverse gaming industry—which is still a dominant piece of today’s metaverse pie—birthed such successes as Roblox and Unity, whose intellectual property may be valuable well beyond gaming.

The metaverse’s progression seems to be a blend of evolution and revolution. Evolutionary elements, regardless of the era they were birthed in, must be a component of a metaverse investment strategy. But there are revolutionary aspects: The notion that the interconnected metaverse of tomorrow will be a decentralized one could limit the importance of scale in many parts of the metaverse. Cryptocurrency is already in use in the metaverse, but blockchain may more broadly support not just decentralized business models, but also challenge the value of legacy investments.

In the early 1900s there were roughly 3,000 car manufacturers in the United States. By the 1930s there were fewer than 50.⁴ While it would be nice to have a crystal ball, at this stage of development, the most prudent metaverse investment strategy requires exposure to a wide range of firms, across a range of segments, with a diversity of core competencies and physical and intangible investments.

ProShares Metaverse ETF

ProShares Metaverse ETF (VERS) gives investors access to the companies that are shaping the next frontier of digital interactions. Explore the opportunity.

¹ Bloomberg, “Bloomberg Intelligencer: Metaverse may be $800 billion market, next tech platform,” December 1, 2021

² JP Morgan, “Opportunities in the metaverse How businesses can explore the metaverse and navigate the hype vs. reality,” January 2022

³ MAANG stocks, formerly known as FAANG stocks, are Meta Platforms (formerly known as Facebook), Amazon, Apple, Netflix, and Google. 

⁴AnswerstoAll.com