The metaverse has been a key focus for media giants and start-ups over the last five years, but that could be changing.
GlobalData research suggests that investment in the sector is slowing as companies realise the immaturity of the underlying technologies and lack of meaningful use cases.
As outlined in the Thematic Intelligence: The Metaverse in Media report, the media industry is facing a number of challenges in 2023, from inflation affecting organisations’ ability to spend on marketing to falling rates of engagement across media.
Growth in subscribers to subscription-based video-on-demand services has dropped from 46% in 2020 to 16% in 2022, and 47% of respondents to a Deloitte survey said they’d made at least one change to their subscriptions due to their current financial situation. Gig-goers are facing a similar situation, with MusicRadar reporting that 50% of gig-goers are “priced out” of live music.
The metaverse may provide solutions for some of these problems, such as the series of virtual concerts on ROBLOX’s metaverse platform and Epic Games’ Fortnite. For example, Lil Nas X’s concert in Roblox was viewed 33 million times over four days and generated nearly $10m in virtual merchandise sales.
Although online viewing cannot replace live music, it can allow fans from all over the world to access experiences that otherwise would be too difficult or expensive, as well as having clear monetisation potential.
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However, the metaverse is unlikely to benefit streaming services and cinematic experiences, at least in the short term. Metaverse integration greatly increases development costs, meaning that it is likely there will be greater consolidation in the sector, and recent attempts at immersive cinema experiences have received negative reviews. It is possible that companies will improve their offering as the technology matures, but this will take some time.
Finally, there is the problem of hardware costs. Accessing metaverses in virtual reality (VR) and augmented reality, the two mediums via which most currently are, typically requires a powerful computer or games console alongside a pricy headset. The current total cost to use Sony’s PlayStation VR headset is at minimum $950.
These factors have led to a waning interest in the technology, both from media creators and system developers. Microsoft laid off its entire industrial metaverse team in February of this year, with Disney following suit in March. This is likely to trigger a bearish response in smaller companies as well.
Despite this, the relative immaturity of the sector means that it is likely to continue to grow, even if at a slower rate than previously hoped. GlobalData expects that the metaverse market will be worth $627bn by 2030, with a compound annual growth rate of 33% between 2020 and 2030.