Those of you who follow the latest tech buzz words will have come across the “Metaverse” last Autumn. It was catapulted into our vocabulary by Silicon Valley as the next stage of the internet that we will all need to be part of unless we are content to miss out on life, well virtual life anyway.
As usual when a new concept and associated word is invented, many of us are left scratching our heads as to what exactly we are missing out on. Is it a chance to make our fortune? Maybe see a whole host of new life experiences, never before witnessed in human existence? As you can imagine, it is unlikely to be either.
The Metaverse is being described as a new virtual world, if you are a movie fan this might be easier to understand; it is like a version of the Keanu Reeves’s film The Matrix, or the James Cameron mainly computer-generated movie Avatar.
You can enter the “Metaverse” by wearing a virtual reality headset, thereby seeing, and hearing all the elements of this new virtual world. Your neighbour can also enter the same world, allowing both of you to interact as the virtual versions of yourselves. It is envisaged that you will be able to attend concerts or sports events from the comfort of your own home. We’ve all seen quite enough of our homes over the past 2 years, but this will be a bit more engaging than just watching Glastonbury highlights.
Where it gets a bit more fantastical is that you could hold a virtual round of golf, but instead of coming as yourself, you could be Rory McIlroy or Arnold Palmer. Perhaps experiencing a day as Sonia O’Sullivan, Roy Keane or Michael D. Higgins would be more to your liking!
Playing make-believe aside, why does all this matter for an investor? Well, the first thing is that big-tech firms are taking it very seriously. You have probably heard that Facebook changed its parent company name to Meta Platforms, to focus on the Metaverse over the next decade. If the 6th biggest company in the world is interested, shouldn’t you be? 5 of the top 6 companies are interested and investing, (the odd one out is Saudi Aramco in case you are wondering). Why are they interested? Well, if you can interact in a virtual world, then you can spend in it, and spending dollars online is much easier and quicker than in physical life.
If it takes off like big-tech firms think it will, then there will be many beneficiaries. Semiconductor companies will be vital to build and constantly upgrade the hardware to make it all work. Cyber security and online payments will be vital to make it easy to buy goods and services. There will no doubt be need for regulations around this new world, and many firms will specialise in that.
Whilst this sounds somewhat theoretical and many years down the road, it is likely to come sooner than you may think. This is an evolution of the internet not a revolution. Popular online games like Fortnite and Minecraft already allow friends to interact within the games and spend real money. These are billion-dollar industries already, and currently confined to the perceived niche genre of online gaming.
Would you be tempted to take a tour of Ancient Rome or the moons of Jupiter? Maybe something more realistic like walking the Great Wall of China without the expense of a 16-hour flight and 2 connections? New technology is often dismissed until it strikes a chord with us and offers us a chance to explore our interests.
Now in my mid-40’s, I am both a technophobe and a tech junkie. I am very sceptical of these ideas, but at the same time, I love the latest gadget. I confess, I bought a video doorbell that cost over €100 and does the same job as a lump of brass. I find myself coming around to these ideas, eventually trying them and ultimately spending money on them, I am sure that in time, this will be no different.
I doubt (and hope) that virtual living will never substitute for the real thing, but on a dreary afternoon in Ireland, I think I would chance entering the Metaverse to meet a friend living abroad and catch up with them over a glass of Peroni overlooking the hills of Tuscany…
Gareth Walsh is a Senior Portfolio Manager at Cantor Fitzgerald Ireland.
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