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A whole new world?Exploring the metaverse and what itcould mean for youApril 2022
What’s the big deal with the metaverse?Remember when the first smartphones were launched without a keyboard? Manypeople wondered whether they would ever take off. But in just a few years,smartphones changed the experience of the internet for billions1 of people andenabled new business models that transformed transportation, hospitality,food delivery, personal entertainment, social interaction, and more.When a new technology comes along that could change howwe interact with the digital world, the implications can be staggering—not just fortech companies, but potentially for every company.That’s one reason why people are talking so much about the metaverse, a 30year-old idea that has attracted tremendous interest and substantialinvestment over the last year. Could it be the next way people access digitalresources and experiences? Could it have the kind of impact on business and societythat earlier technologies (such as the PC, the internet, or the smartphone) hadwhen they went mainstream?It’s far too soon to tell, but it’s not too soon to ask. As executives hear the buzzabout a technology generating tremendous interest and investment, they maywant to know more: What is the metaverse? (pg. 3) Why is it getting so much attention now? (pg. 4) How could it evolve over the next 5–10 years? (pg. 5-6) What should you watch for as the market matures? (pg. 7-8 and appendix)What'sat stakeThe goal of this report is to provide a brief overview of future possibilities (andpitfalls) as executives consider their entry into what some believe could be the nextnew world for almost every business.The metaverse maybecome a paradigmshift for consumer andenterprise behavior,analogous to theintroduction ofsmartphones.It could create apotentially massive newmarket, with recentestimates of thecommercial opportunityas high as 13 trillionand five billion regularusers by 2030.2A new platform couldreorder the competitivelandscape in manyindustries and create bignew winners whiledisplacing legacyincumbents.1 As of early 2022, an estimated 6.6 billion people have a smartphone. Statista, released February 20222 Ronit Ghose, et al., Metaverse and Money: Decrypting the Future, Citi Global Perspectives and Solutions, March 2022A whole new world?: Metaverse executive primerPresentation title[To edit, click View Slide Master Slide Master]2
What is the metaverse?Hardware &softwareImmersiveexperiencesSecond, the metaverse is expected to have a nativeeconomy, including digitally native assets and trade.While the internet today has an important relationshipto the economy, the metaverse could have its owneconomy.The metaverse is the popular term used to describewhat many expect to be the next significant paradigmfor how we use digital technologies and networks tointeract and collaborate with others and have virtualexperiences of all kinds.Elements of the metaverse are already here:immersive virtual worlds with avatars that interactwith one another, digital overlays on the physicalworld that provide data or commentary on what theuser sees, digitally native trade and economic activity.But the metaverse describes the context in which theyoperate together beyond the component parts.It’s not a single technology or device, and it’s not aservice of any one company. It’s the convergence ofseveral separate technologies, all of which are quicklymaturing for mainstream use. Together, thosetechnologies can create the experience of animmersive, three-dimensional environment in whichusers interact with their surroundings and other usersas if they are in a shared space.But a fully developed metaverse is more than merely avirtual space. It also has at least two other importantcharacteristics that enhance its potential as a newplatform with a wide variety of uses.First, it is likely to include both the physical and digital/virtual worlds in the user's experience. Rather thanbeing an entirely separate space, the metaverse is aplatform in which the virtual world and thephysical world can be linked, which could beimportant to how it develops both for consumer andenterprise applications.A whole new world?: Metaverse executive primerVirtual, augmented, andmixed reality devicesComputing power(e.g., cloud, edge)Volumetric scanning and 3Dmodelling (allowing photorealistic 3D rendering)Networks / connectivity(including 5G / 6G wireless)Blockchain / cryptocurrency /NFTs (which enable digitalproperty and payments)AI and machine learningInternet of thingsWhile the building blocks of the metaverse are alreadyall around us, the full realization (and adoption) islikely to be years away. Many of the necessarytechnologies still have a long way to go before the fullpotential is available at truly mass scale. As a result,trying to describe what it will be is like trying todescribe to someone in 1990 what the internet wouldbecome, or trying to imagine back in 2005 what wouldhappen when hundreds of millions of people gotsmartphones.KeyenablersPresentation title[To edit, click View Slide Master Slide Master]3
Why is the metaverse getting so much attention now?Several factors—technical, social, and financial—are converging to make the metaverse particularly significant nowA CLUSTER OF MATURING TECHNOLOGIES User interface: Extended reality - AR/VR/MR1 Computation and storage: Cloud and edgecomputing; AI/machine learning Networks: 5G; fiber opticsBEHAVIORAL SHIFTS AMPLIFIED BY COVID-19 Increasing “digitization” of social and workinteractions Rise of e-commerce and shift in consumerpreferencesINCUMBENTS' SEARCH FOR GROWTH Today’s digital market leaders andexisting platforms are seeking newavenues to grow1. Extended reality, the convergence of augmented, virtual and mixed realitiesMAJOR CAPITAL INVESTMENTS 80B corporate investments in last 12months2,3,4 10B venture capital investment in 20215EVOLVING DIGITAL ECONOMY Growth of digital-native assets and supportingeconomic infrastructure Increasing popularity of digital asset ownership,cryptocurrencies, and digitally native contracts2. Sarah Frier and Dina Bass, “Microsoft Makes a 69 Billion Down Payment on the Metaverse," Bloomberg, January 19, 2022.3. Jacob Kastrenakes and Alex Heath, "Facebook is spending at least 10 billion this year on its metaverse division," The Verge, October 25, 2021.4. Jay Peters, “ Unity to pay 1.6 billion for The Lord of the Rings VFX maker Weta Digital”, The Verge, November 19, 2021.5. Sophia Kunthara, “VCs Will Spend Billions More To Make The Metaverse A Reality,” Crunchbase, November 16, 2021.A whole new world?: Metaverse executive primerPresentation title[To edit, click View Slide Master Slide Master]4
What are the factors driving the future of the metaverse?The evolution of the metaverse will likely depend on consumer response and the outcome of at least four key unknownsSTANDARDIZATIONMARKET FRAGMENTATIONTo what degree do standards and protocolsconverge? What is the level of interoperabilityamong different platforms?How many market leaders emerge and whatconsumer and commercial use cases do they serve? Is there a single unified economy acrossplatforms? Will digital goods purchased in onemetaverse be available in another? Are identities persistent acrossplatforms? Are there consistent design andprograming standards?USER INTERFACETo what degree does the user interfacebecome intuitive and seamlesslyintegrated into daily life? How user friendly and mobile will the predominantinterface be? Does the interface enable seamless switching betweenphysical and digital worlds?A whole new world?: Metaverse executive primer How much competition is there in the market,and how does this affect innovation? How much M&A / market consolidation will wesee (or will be allowed)? Do different platforms serve different use cases?(e.g., one dominant consumer platform and onedominant enterprise platform)GOVERNANCEHow effectively and consistently arecontent and conduct regulated? Are IPand digital assets reliably protected? Is there strong government regulation or doplatforms rely primarily on self-governance? To what degree are interactions andtransactions secure and trusted? Is there an effective process governing taxjurisdictions and legal liability concerns?Presentation title[To edit, click View Slide Master Slide Master]5
What are different ways the future could unfold?Three potential scenarios for the metaverse by the early 2030sLOW ORBITThe metaverse excels forthe things it's good at butnever becomes a generalpurpose platform.DOUBLE STARThere's not asingle metaverse, but ahandful of major playersvying for share of adynamic marketplace. Fragmented marketplace, with no dominantplayer and overwhelming consumer choice Lack of interoperability requires users tocommit to a “home” platform User interface works well for certain uses butis difficult to integrate into daily life Abundant capital and active M&A leads to ahighly concentrated market Consumer adoption high in gaming, sports,entertainment, and some retail Competition drives accelerated technologicalinnovation in hardware and software Enterprise adoption limited to some teamcollaboration, virtual conferences, augmentedtraining/learning, and immersive digital twins Ecosystems compete for user attentionthrough exclusive content and partnerships Regulation inconsistent across nations andregionsThe bottom line: A specialty market for specificuses that will complement but not replace othertechnologies.A whole new world?: Metaverse executive primer Platforms enact strong and effective selfgovernanceThe bottom line: A mainstream market for manyapplications but split among the next generation ofleading platforms.BIG BANGAn open, interoperablemetaverse becomes thedominant interface throughwhich we conduct most ofour daily activities. User interface enables relatively seamlessmerged reality between physical and digitalworlds Identity in the metaverse is consideredequivalent to that in the physical world No single provider, with many innovators andan open, interoperable system Pervasive adoption across consumer andenterprise use cases Strong governance, with strict and enforceablerules around digital ownership andprivacy/securityThe bottom line: The full migration of today’sinternet and more into an immersive world inwhich most businesses and consumers operate.Presentation title[To edit, click View Slide Master Slide Master]6
What do we now believe?Initial observations to inform strategic conversations1. The foundations of the metaverse arealready here and being used by millionsAn immersive, persistent virtual world with its ownnative economy already exists, at least in part. Whileuse cases will evolve, the metaverse is already beingused for activities like gaming, social media, boutiqueshopping, and virtual collaboration.3. We don’t see a“failure to launch” scenarioWe considered but ultimately excluded ascenario in which the metaverse does not takeoff at all as an important technology. There isalready a tremendous amount of research andinnovation underway and millions of existingusers. As technologies, capabilities, experiences,and use cases mature, we expect the metaversewill have an increasingly visible role in daily lifefor both consumer and enterprise users.A whole new world?: Metaverse executive primer2. But the full manifestation isprobably 5–10 years outIt will likely take at least 5–10 years for a fullyimmersive metaverse with widespread user adoptionand an established economy to emerge, while anopen, fully interconnected metaverse scenario (asdescribed in the “Big Bang” scenario) may be at leasta decade away. This scenario still requires significantadvances in XR technologies, more bandwidth andprocessing power, and coordination aroundstandardized protocols and governance mechanisms,as well as compelling use cases for consumer andenterprise users to drive adoption into everyday use.4. The competition forshare is likely to be fierceGiven the attractive market opportunity,there is likely to be intense competitionamong multiple companies vying forleadership of the space. These platforms arelikely to compete aggressively for bothusers and alliance partners, and theopportunities for start-up ventures,corporate ventures, and M&A will likelygrow throughout the decade.Presentation title[To edit, click View Slide Master Slide Master]7
What can executives do today?While the future of the metaverse is still unknown, there are several actions executives can take nowDon’tunderestimatethe potentialFormulate a metaversestrategy but keep it flexibleenough to adapt tochanges in technology andconsumer preferences.Adopt a “test and learn”approach for bothconsumer facing andenterprise functions.A whole new world?: Metaverse executive primerTake thelong viewGiven the mainstreammetaverse and correspondingrevenue generation are likelyseveral years out, companiesshould take a long-term viewon investments and considerKPIs around consumer andemployee engagement inaddition to ROI. Considerinvestments in the context ofbroader digital transformationagendas.Focus ondemand andwhat motivatesusersOrganizations should focuson how to create captivatingcontent and engagingexperiences (e.g., exclusivepartnerships, user generatedcontent tools, robust dataand insights collection) inorder to establish share andremain competitive.Commit to a“responsiblemetaverse”Organizations should manage arange of complexities and risksin the metaverse (e.g., privacy/security, accessibility,sustainable energyconsumption) and ensure theyare proactively building a"responsible metaverse" andeffectively maintainingconsumer and employee trust.See slide 12 for additional detailPresentation title[To edit, click View Slide Master Slide Master]8
Team and collaboratorsAuthors & project teamAndrew BlauUS Lead, Eminence and Insights,Deloitte Consulting LLPAmadin J. EnobakhareEminence Lead, Strategic Futures,Deloitte Consulting LLPWith special thanks toLauren LubetskyCo-Lead, Strategic Futures,Deloitte Consulting LLPMichael W. WalkerStrategy & Analytics,Deloitte Consulting LLPTom SchoenwaelderLeader, Strategic GrowthTransformation, DeloitteConsulting LLPRich NandaUS Lead, Strategy andAnalytics, DeloitteConsulting LLPFrances YuGlobal & US Lead,Unlimited RealityDeloitte Consulting LLPAllan CookUnlimited Reality EminenceLead, Deloitte Consulting LLPAdditional thanks toTalia Goldberg Partner, Bessemer Venture PartnersZeynep Schoenwaelder Chief Strategy Officer and Chief of Staff toCEO, Ralph LaurenAidan ShillerStrategy & Analytics,Deloitte Consulting LLPA whole new world?: Metaverse executive primerAnd our Deloitte colleagues: Chris Arkenberg,Mike Bechtel, Ujval Chopra, Dave Couture,Adam Deutsch, Chad Deweese, Devon Dickau,Pete Giorgio, Maggie Gross, Stacy Hodgins,Eamonn Kelly, Diana Kearns-Manolatos, JessicaKosmowski, Alyson Lee, Kasey Lobaugh, MicLocker, Jeff Loucks, Karla Martin, HeatherRangel, Siddharth Rawat, Amy Silverstein, KSSivaraman, Brenna Sniderman, Tim Smith,Francisca Villegas, Richard WalkerPresentation title[To edit, click View Slide Master Slide Master]9
Appendix
How will people use the metaverse?Use cases for the metaverse across industries and categories from the immediate to the long termIMMEDIATEEMERGINGLONG-TERMToday5 yearsCATEGORIESWork & learningTelecommuting andvirtual collaborationImmersiveprofessional trainingDigital twins of physicaloperations and locationsMetaverse-basedclassroom tools and fullymetaverse-native schoolsMetaverse-native anddependent companiesEntertainment &experiencesConcerts, shows,and sportsGames, movies,and socializationspacesInteractive sports andevents (e.g., on thecourt, in the game)Interactive virtualtourismImmersive “theme park”experiences that adapt tocustomers’ data profilesHealth & wellnessVirtual wellness andexercise classesImmersivetelemedicine andtherapyModels of hospitalflow and operationsData analytics-poweredhealth insights andrecommendations3D models of patients to showsimulated impacts of healthchangesRetailBoutique shopping (e.g.,pop-up shops)Digital customercontact centersData-enhanced everydayshopping (e.g., groceries,furniture and appliances)Home andauto buyingFull sensory immersionin retail experiencesManufacturingReductions of coststhrough productmodellingPredictivemaintenance ofequipmentCollaborative productdesign and modellingEnhanced quality controlthrough productsimulationsComplex operational(e.g., supply chain,process and workflow)simulations to optimizeproductionA whole new world?: Metaverse executive primerPresentation title[To edit, click View Slide Master Slide Master]11
What are the complexities and risks organizations will need to manage?Executives should consider a range of issues that will affect how the metaverse develops and its place in users’ livesPRIVACYSECURITYIP PROTECTIONEnsure responsible collection andstorage of consumer data andeffectively build and maintainconsumer trust.Establish strong security safeguards thatanticipate and effectively block cybercrimessuch as phishing and data hacking.Ensure that intellectual property and digitalassets are adequately protected for theorganization, partnering content creators, andconsumers.ACCESSIBILITYCLIMATE IMPACTHEALTH & WELLBEINGDesign the user experience to be accessibleto all consumers, including those withvisual, auditory, and mobility impairments.Rely on sustainable energy consumptionto power the metaverse (and associatedtechnologies like cryptocurrency) andeffectively measure and report emissions.Develop an understanding of and activelymanage the physical and mental health impactsof metaverse experiences.GOVERNANCEENCODED BIASHARASSMENTConsider how content and behavioral normsare set and enforced and enact measures tomanage disinformation, deception, andharm to people and property.Take measures to limit the encoding ofsocial inequalities (e.g., economic,gender, and racial) in the metaverse.Create environments and communities thatare safe for all users and set and enforce policieson harassment and bullying on platforms.A whole new world?: Metaverse executive primerPresentation title[To edit, click View Slide Master Slide Master]12
Additional ResourcesFor more information, please refer to the following pieces that our colleagues have released on the metaverse and related topics:What’s All the Buzz About theMetaverse? Deloitte USA whole new world?: Metaverse executive primerDeloitte launches Unlimited Realityservices – Press release Deloitte USThe Spatial Web and Web 3.0Presentation title[To edit, click View Slide Master Slide Master]13
This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial,investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, norshould it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that mayaffect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any personwho relies on this publication.About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network ofmember firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (alsoreferred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US memberfirms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain servicesmay not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn moreabout our global network of member firms.Copyright 2022 Deloitte Development LLC. All rights reserved
What's the big deal with the metaverse? 1 As of early 2022, an estimated 6.6 billion people have a smartphone. . (e.g., cloud, edge) Networks / connectivity (including 5G / 6G wireless) Volumetric scanning and 3D modelling (allowing photo- . Ensure that intellectual property and digital assets are adequately protected for the organization .
