McKinsey surveys the metaverse

This month, McKinsey released a report titled “Value creation in the metaverse” to clarify what the metaverse is and what it means for business.

By the consultancy’s calculations, the metaverse drew $13 billion in venture capital and private equity last year and has drawn more than $120 billion this year. McKinsey expects the metaverse’s value to reach $5 trillion by 2030.

For consumers

The report finds that 59 percent of consumers are “excited about transitioning their everyday activities to the metaverse” and that consumers in general are looking to the metaverse for socializing, entertainment, gaming, travel and shopping. For the moment, though, gaming is the thing. According to McKinsey, about 79 percent of metaverse users have made a purchase within the metaverse, and the top reason (56%) is to “improve my in-game experience,” and the following reason (27%) is to “gain benefit in games.” To “acquire an asset” – the nonfungible token (NFT) phenomenon – was third (10%).

Purchases in the metaverse break down as follows:

• In-game purchases (47%)
• Virtual cosmetic items (37%)
• Real-world items (33%)
• NFTs (20%)
• Virtual real estate (13%)
• None of the above (21%)

For corporations

“Metaverse-aware companies,” meanwhile, are for the most part (57%) metaverse adopters and are looking to it for marketing, employee training, meetings, events, product design and digital twinning (virtual versions of real-world products). A survey conducted by McKinsey in April of 450 senior executives in Asia-Pacific, China, Europe and the Americas suggests a number of obstacles to full adoption, chief among them the business model, the coding of products, the back-end set-up, the set-up for blockchain/commerce/payments, product design, legal matters, cybersecurity and analytics.

The same executives consider the top three metaverse technologies to be cryptocurrency, artificial intelligence and augmented/virtual reality (interfaces). Blockchain – one flavor of which, Ethereum, underlies such gaming platforms as Roblox and The Sandbox – ranks sixth. Nonfungible tokens (NFTs), though central to the metaverse ventures of such sports brands as Nike and Adidas, rank eighth.

What is the metaverse?

It is curious that interoperability should rank last, at number 11, among executives’ concerns yet be central to McKinsey’s view of the metaverse’s future. In that view, the metaverse “at its most basic” will have “a sense of immersion,” “real-time interactivity” and “user agency,” but “ultimately” it will have “interoperability across platforms and devices,” “concurrency with thousands of people interacting simultaneously” and “use cases spanning human activity well beyond gaming.”

McKinsey believes that “there are not multiple metaverses,” even though, as the consultancy concedes, the metaverse is currently spread between multiple platforms. In this sense, it is fitting for McKinsey to conceive the metaverse as the next iteration of the internet, which is itself a cobbling of distinct platforms. At some point, by analogy, we will be able to switch from one to another as easily as we can now swap files between PCs and Macs.

A more daring prediction in the report is that “the actual metaverse does not represent a choice between the virtual and the real worlds. The best, superior version of the metaverse will complement rather than compete with the real world, enhancing our real-life experiences rather than supplanting them.” Later in the report, however, McKinsey observes that “devices merge the physical and virtual world.” This refers to AR/VR. Gloves and bodysuits, “some with haptic feedback,” are hitting the market and could enjoy a “breakthrough” in sales “in the near future.” For instance, Meta (formerly Facebook) says it shipped ten million Oculus Quest 2 headsets in 2021.

Potential of the seamless network

The advent of 5G, with its promise of much faster networking speeds, should in turn boost edge computing, in which data is “captured, stored, and processed locally across smart devices and local networks rather than in the cloud.” In other words, with the proper infrastructure in place, you can eliminate long supply lines, saving time and energy. A faster network will produce a more detailed and perhaps more immersive virtual world for the user, but it will also enable the virtual world to examine the user.

Richer interfaces between users and the metaverse will take analytics to a new level. McKinsey cites six kinds of eye tracking:

• Eye opening and closure (blink duration and frequency; average distance between eyelids)
• Eye movement (gaze fixations, saccades, smooth pursuit, ocular tremor)
• Eye status (reddening, wateriness, dryness)
• Pupil properties (size, reactivity)
• Iris characteristics (color, texture)
• Facial attributes (wrinkles, eye shape, skin color, expressions)

And from these, the consultancy believes, it will be possible to infer personality traits, mental health, skill and abilities, sleepiness, cognitive processes, drug consumption, age, biometric identity, cultural background, physical health, geographic origin, gender and mental workload.