A new report has tipped the metaverse industry for a growth spurt, pushing its market capitalization to over a trillion dollars by the end of the decade.
According to an Allied Market Research report, the global market value for the metaverse is expected to reach $1.2 trillion before the end of 2030, a significant growth from its $41 billion value registered in 2020. This recent projection indicates a compound annual growth rate (CAGR) of 40.4%.
The rise of digital collectibles and digital assets generated an initial spike for the metaverse, underscored by a flood of institutional and retail players to the space. As the hype around non-fungible tokens (NFTs) waned, the adoption metrics for the metaverse appeared to plateau.
However, analysts at Allied Market Research are upbeat in their projections for the ecosystem, highlighting fresh capital injections and new use cases outside of gaming.
The service segment is expected to grow exponentially, racking up a CAGR of 42.7% by 2030. Conversely, the hardware segment is projected to maintain its current lead over the service segment until the turn of the decade.
While gaming has dominated metaverse use cases since 2020, experts predict the rise of content creation and social media utility in the coming years. The gaming segment could see its 20% market share shrink to 15% by 2030, with new use cases gaining traction.
By regional distribution, North America is expected to maintain its clear lead over other regions for metaverse adoption. Lagging behind is Europe, with its slew of ecosystem players and increasing enterprise adoption, while the report tips the Asia-Pacific region to display the fastest CAGR.
The report notes that new players will face an uphill climb to the top, given the established status of ecosystem players. Meta (NASDAQ: META), Roblox (NASDAQ: RBLX), Alibaba (NASDAQ: BABAF), Tencent (NASDAQ: TCEHY), and Nvidia (NASDAQ: NVDA) are expected to increase their market share, casting a dark shadow for decentralization for the industry.
“These market players have adhered to several strategies, including partnership, expansion, collaboration, joint ventures, and others, to prove their flair in the industry,” read the report.
However, achieving an industry valuation of over $1 trillion is no mean feat, and the report highlights potential hurdles for the sector, some of which are the issues of “complex security and privacy” and a slew of technological limitations, from hardware to Internet infrastructure.
The report argues that a push toward decentralized technology will provide the industry with a raft of solutions. Turning resources to global interoperability standards and enterprise applications is considered a step in the right direction for the future of the metaverse.
Industrial metaverse takes the spotlight
While traditional metaverse offerings are recording impressive adoption metrics, a separate report has highlighted the rise of industrial metaverse as enterprises embrace emerging technologies for productivity and efficiency.
According to the report, the industrial metaverse is expected to record a double-digit CAGR from 2024 to 2035, with the sector’s market capitalization ballooning to $500 billion from its present levels of around $20 billion.
The industrial metaverse revolves around the application of augmented reality (AR), virtual reality (VR), and blockchain technology for enterprise use cases. Pioneering firms using the industrial metaverse can lean on its “immersive and interactive” perks for design, production, and supply management use cases.
“By enabling digital twins, real-time collaboration, and predictive analytics, this market provides businesses with unparalleled opportunities to optimize processes and improve decision-making,” read the report.
Analysts say the frenetic push for digital transformation in traditional industries will propel the projected growth. Innovation around Industry 4.0 technologies like artificial intelligence (AI), the Internet of Things (IoT), and 5G are expected to smooth out the curve for adoption levels.
In terms of use cases, the report predicts the rise of smart factories with digital twins for improved supply chain management and VR-based employee training. While product design and prototyping use cases are mainstream, analysts predict the rise of predictive maintenance and customer interaction utilities.
Governments are expected to enter the space, with smart city infrastructure development and disaster preparedness being key use cases.
Regional distribution points to a clear lead by North America and Europe, with the report highlighting a growth spurt in the Asia-Pacific (APAC) region.
“As businesses and governments increasingly recognize the value of this transformative ecosystem, the industrial metaverse is set to become a cornerstone of future industrial strategy,” read the report.
A bumpy ride ahead
But like any other developments, there remain hurdles. The report outlines many challenges to meteoric adoption metrics, with analysts pointing to sky-high implementation costs and concerns about data privacy and security standards.
Another stumbling block is the absence of unified interoperability standards, triggering several integration challenges along the value chain. To sidestep these challenges, the report namechecks industry-wide collaboration and robust legal frameworks to ease the burden of pioneering sector players.
Watch: Omniscape’s Robert Rice looks at the state of the Metaverse
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