A whole new world?

Exploring the metaverse and what it

could mean for you
April 2022
 What’s the big deal with the metaverse?
Remember when the first smartphones were launched without a keyboard? Many
people wondered whether they would ever take off. But in just a few years,
smartphones changed the experience of the internet for billions1 of people and
enabled new business models that transformed transportation, hospitality,
food delivery, personal entertainment, social interaction, and more.
When a new technology comes along that could change how
we interact with the digital world, the implications can be staggering—not just for
tech companies, but potentially for every company.
That’s one reason why people are talking so much about the metaverse, a 30-
year-old idea that has attracted tremendous interest and substantial
investment over the last year. Could it be the next way people access digital
resources and experiences? Could it have the kind of impact on business and society
that earlier technologies (such as the PC, the internet, or the smartphone) had
when they went mainstream?
It’s far too soon to tell, but it’s not too soon to ask. As executives hear the buzz
about a technology generating tremendous interest and investment, they may
want to know more:
• What is the metaverse? (pg. 3)
What's
• Why is it getting so much attention now? (pg. 4)
• How could it evolve over the next 5–10 years? (pg. 5-6)
at stake The metaverse may
become a paradigm
It could create a
potentially massive new
A new platform could
reorder the competitive
shift for consumer and market, with recent landscape in many
• What should you watch for as the market matures? (pg. 7-8 and appendix)
enterprise behavior, estimates of the industries and create big
The goal of this report is to provide a brief overview of future possibilities (and analogous to the commercial opportunity new winners while
pitfalls) as executives consider their entry into what some believe could be the next introduction of as high as $13 trillion displacing legacy
new world for almost every business.
smartphones. and five billion regular incumbents.
users by 2030.2
1 As of early 2022, an estimated 6.6 billion people have a smartphone. Statista, released February 2022
2 Ronit Ghose, et al., Metaverse and Money: Decrypting the Future, Citi Global Perspectives and Solutions, March 2022

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 What is the metaverse? Hardware &
Immersive
experiences
software

The metaverse is the popular term used to describe Second, the metaverse is expected to have a native
what many expect to be the next significant paradigm economy, including digitally native assets and trade.
for how we use digital technologies and networks to While the internet today has an important relationship
interact and collaborate with others and have virtual to the economy, the metaverse could have its own
experiences of all kinds. economy.
Elements of the metaverse are already here:
It’s not a single technology or device, and it’s not a
immersive virtual worlds with avatars that interact
service of any one company. It’s the convergence of
with one another, digital overlays on the physical
several separate technologies, all of which are quickly world that provide data or commentary on what the
maturing for mainstream use. Together, those user sees, digitally native trade and economic activity.
technologies can create the experience of an But the metaverse describes the context in which they
immersive, three-dimensional environment in which operate together beyond the component parts.
users interact with their surroundings and other users
While the building blocks of the metaverse are already
as if they are in a shared space. all around us, the full realization (and adoption) is
But a fully developed metaverse is more than merely a likely to be years away. Many of the necessary
virtual space. It also has at least two other important technologies still have a long way to go before the full
characteristics that enhance its potential as a new potential is available at truly mass scale. As a result,
trying to describe what it will be is like trying to
platform with a wide variety of uses.
describe to someone in 1990 what the internet would
First, it is likely to include both the physical and digital/ Virtual, augmented, and Volumetric scanning and 3D become, or trying to imagine back in 2005 what would
virtual worlds in the user's experience. Rather than mixed reality devices modelling (allowing photo- happen when hundreds of millions of people got
being an entirely separate space, the metaverse is a realistic 3D rendering) smartphones.
Computing power
platform in which the virtual world and the (e.g., cloud, edge) Blockchain / cryptocurrency / Key
physical world can be linked, which could be Networks / connectivity NFTs (which enable digital enablers
(including 5G / 6G wireless) property and payments)
important to how it develops both for consumer and
enterprise applications. AI and machine learning Internet of things

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 Why is the metaverse getting so much attention now?
Several factors—technical, social, and financial—are converging to make the metaverse particularly significant now

A CLUSTER OF MATURING TECHNOLOGIES BEHAVIORAL SHIFTS AMPLIFIED BY COVID-19 MAJOR CAPITAL INVESTMENTS
> User interface: Extended reality - AR/VR/MR1 > Increasing “digitization” of social and work > $80B+ corporate investments in last 12
> Computation and storage: Cloud and edge interactions months2,3,4
computing; AI/machine learning > Rise of e-commerce and shift in consumer > $10B+ venture capital investment in 20215
> Networks: 5G; fiber optics preferences

INCUMBENTS' SEARCH FOR GROWTH EVOLVING DIGITAL ECONOMY

> Today’s digital market leaders and > Growth of digital-native assets and supporting
existing platforms are seeking new economic infrastructure
avenues to grow > Increasing popularity of digital asset ownership,
cryptocurrencies, and digitally native contracts
1. Extended reality, the convergence of augmented, virtual and mixed realities
2. Sarah Frier and Dina Bass, “Microsoft Makes a $69 Billion Down Payment on the Metaverse," Bloomberg, January 19, 2022.
3. Jacob Kastrenakes and Alex Heath, "Facebook is spending at least $10 billion this year on its metaverse division," The Verge, October 25, 2021.
4. Jay Peters, “ Unity to pay $1.6 billion for The Lord of the Rings VFX maker Weta Digital”, The Verge, November 19, 2021.
5. Sophia Kunthara, “VCs Will Spend Billions More To Make The Metaverse A Reality,” Crunchbase, November 16, 2021.

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 What are the factors driving the future of the metaverse?
The evolution of the metaverse will likely depend on consumer response and the outcome of at least four key unknowns

STANDARDIZATION MARKET FRAGMENTATION

To what degree do standards and protocols How many market leaders emerge and what
converge? What is the level of interoperability consumer and commercial use cases do they serve?
among different platforms? > How much competition is there in the market,
> Is there a single unified economy across and how does this affect innovation?
platforms? > How much M&A / market consolidation will we
> Will digital goods purchased in one see (or will be allowed)?
metaverse be available in another? > Do different platforms serve different use cases?
> Are identities persistent across (e.g., one dominant consumer platform and one
platforms? dominant enterprise platform)
> Are there consistent design and
programing standards?

GOVERNANCE
USER INTERFACE How effectively and consistently are
To what degree does the user interface content and conduct regulated? Are IP
become intuitive and seamlessly and digital assets reliably protected?
integrated into daily life? > Is there strong government regulation or do
> How user friendly and mobile will the predominant platforms rely primarily on self-governance?
interface be? > To what degree are interactions and
> Does the interface enable seamless switching between transactions secure and trusted?
physical and digital worlds? > Is there an effective process governing tax
jurisdictions and legal liability concerns?

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 What are different ways the future could unfold?
Three potential scenarios for the metaverse by the early 2030s

LOW ORBIT DOUBLE STAR BIG BANG

There's not a An open, interoperable
The metaverse excels for single metaverse, but a metaverse becomes the
the things it's good at but handful of major players dominant interface through
never becomes a general- vying for share of a which we conduct most of
purpose platform. dynamic marketplace. our daily activities.
> Fragmented marketplace, with no dominant > Lack of interoperability requires users to > User interface enables relatively seamless
player and overwhelming consumer choice commit to a “home” platform merged reality between physical and digital
worlds
> User interface works well for certain uses but > Abundant capital and active M&A leads to a
is difficult to integrate into daily life highly concentrated market > Identity in the metaverse is considered
equivalent to that in the physical world
> Consumer adoption high in gaming, sports, > Competition drives accelerated technological
entertainment, and some retail innovation in hardware and software > No single provider, with many innovators and
an open, interoperable system
> Enterprise adoption limited to some team > Ecosystems compete for user attention
collaboration, virtual conferences, augmented through exclusive content and partnerships > Pervasive adoption across consumer and
training/learning, and immersive digital twins enterprise use cases
> Platforms enact strong and effective self-
> Regulation inconsistent across nations and governance > Strong governance, with strict and enforceable
regions rules around digital ownership and
privacy/security

The bottom line: A specialty market for specific The bottom line: A mainstream market for many The bottom line: The full migration of today’s
uses that will complement but not replace other applications but split among the next generation of internet and more into an immersive world in
technologies. leading platforms. which most businesses and consumers operate.

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 What do we now believe?
Initial observations to inform strategic conversations 2. But the full manifestation is
probably 5–10 years out
It will likely take at least 5–10 years for a fully
1. The foundations of the metaverse are immersive metaverse with widespread user adoption
already here and being used by millions and an established economy to emerge, while an
An immersive, persistent virtual world with its own open, fully interconnected metaverse scenario (as
native economy already exists, at least in part. While described in the “Big Bang” scenario) may be at least
use cases will evolve, the metaverse is already being a decade away. This scenario still requires significant
used for activities like gaming, social media, boutique advances in XR technologies, more bandwidth and
shopping, and virtual collaboration. processing power, and coordination around
standardized protocols and governance mechanisms,
as well as compelling use cases for consumer and
enterprise users to drive adoption into everyday use.

3. We don’t see a
“failure to launch” scenario 4. The competition for
We considered but ultimately excluded a share is likely to be fierce
scenario in which the metaverse does not take
off at all as an important technology. There is Given the attractive market opportunity,
already a tremendous amount of research and there is likely to be intense competition
innovation underway and millions of existing among multiple companies vying for
users. As technologies, capabilities, experiences, leadership of the space. These platforms are
and use cases mature, we expect the metaverse likely to compete aggressively for both
will have an increasingly visible role in daily life users and alliance partners, and the
for both consumer and enterprise users. opportunities for start-up ventures,
corporate ventures, and M&A will likely
grow throughout the decade.

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 What can executives do today?
While the future of the metaverse is still unknown, there are several actions executives can take now

Focus on
Don’t Commit to a
Take the demand and
underestimate “responsible
long view what motivates
the potential metaverse”
users

Formulate a metaverse Given the mainstream Organizations should focus Organizations should manage a
strategy but keep it flexible metaverse and corresponding on how to create captivating range of complexities and risks
enough to adapt to revenue generation are likely content and engaging in the metaverse (e.g., privacy/
changes in technology and several years out, companies experiences (e.g., exclusive security, accessibility,
consumer preferences. should take a long-term view partnerships, user generated sustainable energy
Adopt a “test and learn” on investments and consider content tools, robust data consumption) and ensure they
approach for both KPIs around consumer and and insights collection) in are proactively building a
consumer facing and employee engagement in order to establish share and "responsible metaverse" and
enterprise functions. addition to ROI. Consider remain competitive. effectively maintaining
investments in the context of consumer and employee trust.
broader digital transformation See slide 12 for additional detail
agendas.

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 Team and collaborators

Authors & project team With special thanks to

Tom Schoenwaelder Rich Nanda
Lauren Lubetsky Leader, Strategic Growth US Lead, Strategy and
Andrew Blau
Co-Lead, Strategic Futures, Transformation, Deloitte Analytics, Deloitte
US Lead, Eminence and Insights,
Deloitte Consulting LLP Consulting LLP Consulting LLP
Deloitte Consulting LLP

Frances Yu Allan Cook

Global & US Lead, Unlimited Reality Eminence
Unlimited Reality Lead, Deloitte Consulting LLP
Deloitte Consulting LLP
Amadin J. Enobakhare Michael W. Walker
Eminence Lead, Strategic Futures, Strategy & Analytics,
Deloitte Consulting LLP
Additional thanks to
Deloitte Consulting LLP
Talia Goldberg Partner, Bessemer Venture Partners
Zeynep Schoenwaelder Chief Strategy Officer and Chief of Staff to
CEO, Ralph Lauren
And our Deloitte colleagues: Chris Arkenberg,
Mike Bechtel, Ujval Chopra, Dave Couture,
Aidan Shiller Adam Deutsch, Chad Deweese, Devon Dickau,
Strategy & Analytics, Pete Giorgio, Maggie Gross, Stacy Hodgins,
Deloitte Consulting LLP Eamonn Kelly, Diana Kearns-Manolatos, Jessica
Kosmowski, Alyson Lee, Kasey Lobaugh, Mic
Locker, Jeff Loucks, Karla Martin, Heather
Rangel, Siddharth Rawat, Amy Silverstein, KS
Sivaraman, Brenna Sniderman, Tim Smith,
Francisca Villegas, Richard Walker

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Appendix
 How will people use the metaverse?
Use cases for the metaverse across industries and categories from the immediate to the long term

IMMEDIATE EMERGING LONG-TERM

Today 5+ years

CATEGORIES
Metaverse-based
Telecommuting and Immersive Digital twins of physical Metaverse-native and
Work & learning virtual collaboration professional training operations and locations
classroom tools and fully
dependent companies
metaverse-native schools

Immersive “theme park”

Entertainment & Concerts, shows, Games, movies, Interactive sports and Interactive virtual experiences that adapt to
and sports and socialization events (e.g., on the tourism
experiences spaces court, in the game) customers’ data profiles

Immersive Data analytics-powered 3D models of patients to show

Virtual wellness and Models of hospital
Health & wellness exercise classes
telemedicine and
flow and operations health insights and simulated impacts of health
therapy recommendations changes

Boutique shopping (e.g., Digital customer Data-enhanced everyday Home and

Retail pop-up shops) contact centers shopping (e.g., groceries, auto buying
Full sensory immersion
furniture and appliances) in retail experiences

Complex operational
Manufacturing Reductions of costs Predictive
Collaborative product
Enhanced quality control (e.g., supply chain,
through product maintenance of through product process and workflow)
design and modelling
modelling equipment simulations simulations to optimize
production

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 What are the complexities and risks organizations will need to manage?
Executives should consider a range of issues that will affect how the metaverse develops and its place in users’ lives

PRIVACY SECURITY IP PROTECTION

Ensure responsible collection and Establish strong security safeguards that Ensure that intellectual property and digital
storage of consumer data and anticipate and effectively block cybercrimes assets are adequately protected for the
effectively build and maintain such as phishing and data hacking. organization, partnering content creators, and
consumer trust. consumers.

ACCESSIBILITY CLIMATE IMPACT HEALTH & WELLBEING

Design the user experience to be accessible Rely on sustainable energy consumption Develop an understanding of and actively
to all consumers, including those with to power the metaverse (and associated manage the physical and mental health impacts
visual, auditory, and mobility impairments. technologies like cryptocurrency) and of metaverse experiences.
effectively measure and report emissions.

GOVERNANCE ENCODED BIAS HARASSMENT

Consider how content and behavioral norms Take measures to limit the encoding of Create environments and communities that
are set and enforced and enact measures to social inequalities (e.g., economic, are safe for all users and set and enforce policies
manage disinformation, deception, and gender, and racial) in the metaverse. on harassment and bullying on platforms.
harm to people and property.

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 Additional Resources
For more information, please refer to the following pieces that our colleagues have released on the metaverse and related topics:

What’s All the Buzz About the Deloitte launches Unlimited Reality
The Spatial Web and Web 3.0
Metaverse? | Deloitte US services – Press release | Deloitte US

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