It will be a long time before the metaverse takes off in any meaningful way, but it looks like the early iterations of it will predominantly be used in the enterprise. Almost all of the limitations that are going to prevent the metaverse from taking off any time soon are much less relevant in the enterprise space, meaning that it is here where the first traction is likely to be seen.
The main reason for this is productivity, and is best explained with a phrase that I have been using for many years to describe the key difference between the consumer and the enterprise:
The consumer pays to have an experience, whereas the enterprise user is paid to have that experience.
In other words, if the experience is not good, then the consumer will not pay for it and the experience will languish.
However, if the experience produces a significant productivity benefit, then it will still gain traction, as the enterprise will have an incentive to engage with the experience, even if it is not very user-friendly.
This already exists to a very larger degree for many technologies and services in the enterprise and I think it will be no different for the metaverse.
A good example of this is the websites that suppliers use to submit their invoices compared to the market-facing websites of the same companies. The user experience on supplier portals is universally dreadful, but because suppliers need to use them to get paid for their services, there is no need to make them any better.
If the website of the company was as unusable as its supplier portals, then prospective customers, investors and partners would be less inclined to engage with the company or buy its products.
I suspect that in the early iterations of the metaverse, this same principle will apply. There are already a significant number of use cases for the metaverse in the enterprise, and it is here where I expect most of the usage to occur for at least the next five years.
Real estate, education, computer-aided design and digital twins are all good use cases that provide meaningful benefits to the enterprise. Digital twins is where a 3D digital version of an asset (station, building or venue) is created in order to facilitate the management of that asset in real-time or to run scenarios and testing that are not possible or practical in the real world.
Outside of the fledgling and niche ecosystem that Oculus has created, this is where the majority of activity is going to be found and the start-up crowd already reflects this. Start-ups need to get to revenue within a fixed period of time – this is why the majority of metaverse start-ups I have found are focused on the enterprise use case for the foreseeable future.
The consumer space is likely to be dominated by those with the deepest pockets, as the problems that need to be solved to make the experience widely acceptable are high in both complexity and number. Hence it will be Apple, Meta, Google, Alibaba, Tencent and so on who can make the investments to solve these issues meaning that their products are likely to be the first to reach consumer acceptance. This does not necessarily mean that they’ll win, but I am pretty sure that they will be first.
Again, this is quite some time away as I suspect that it will be not before 2025 that these issues begin to be solved in a meaningful way.
Hence, for now, almost all of the money and the opportunity are likely to be found in enterprise applications. This is where one should look for investment opportunities, as opposed to very long-range bets on companies who are targeting the consumer metaverse sometime in the next ten years. Investments in these companies are, in reality, investments in their current businesses (e.g. Unity – games engines, Meta – social networking) and not the metaverse.