How growth in the metaverse could power real-time growth for enterprise

Some companies and enterprises have seen the potential in this revolutionary technology, and have shifted to accommodate it

Some companies and enterprises have seen the potential in this revolutionary technology, and have shifted to accommodate it
Some companies and enterprises have seen the potential in this revolutionary technology, and have shifted to accommodate it

Abhishek Singh Rajpurohit

In the 21st century, particularly in the 2020s, humans are more connected than ever. Long gone are the days when the only ways to connect were through phone calls web-2 based internet platforms and physical meetings. With the advent of web-3 and the metaverse, communication between humans now occurs in ways we never thought possible. Distance has now become an inexistent barrier, and the world of augmented/virtual reality has become closer.

Some companies and enterprises have seen the potential in this revolutionary technology, and have shifted to accommodate it. This shift, for most of them, proved to be a game-changer. These companies have witnessed massive growth, and have begun to rake in profits. Most of these companies and tech giants are headed towards broader horizons in the foreseeable future, and one of them is Meta.

Meta and the business opportunities of the metaverse

On Thursday, October 28th, 2021, founder and CEO of Facebook, Mark Zuckerberg, announced the company’s new name, “Meta”, during a virtual event. In the event’s video feed, Zuckerberg unveiled a series of new developments, focused on how the company’s rebranding signalled its key involvement in the metaverse. Before changing the company’s name and making the shift, however, Zuckerberg and the Facebook team have been working in that direction for years. After a $2 billion acquisition of virtual reality enterprise, Oculus VR in 2014, the team created Facebook’s “Reality Labs”; as a way to speed up the development of AR/VR technologies.

Financial implications of Meta’s shift

In January of 2022, Mark Zuckerberg shared the running cost of his company’s transition into Meta. Facebook’s Reality Labs division (makers of virtual reality goggles ANS glasses among others), lost more than $10 billion. That figure was more than five times the amount that was used to purchase the Oculus VR enterprise in the first place. It is also ten times the amount Facebook paid to acquire Instagram in 2012.
This shift hit the company hard, as its quarterly profits fell 8% to $10.3 billion from October to December 2021. And yet, their overall revenue rose from 20% to 33.7% over the same period. Proving that while a shift toward the metaverse would naturally attract some loss, the mere mention of the words, “metaverse”, augmented reality”, or “virtual reality,”; can have great impacts on a company’s finances.

Challenges with Meta’s rebranding

To be realistic, rebranding and investment in the metaverse is a long way from being fully profitable. Especially since most of the technology the metaverse hinges on are still in development. The metaverse most definitely will soon emerge. But that day isn’t today. Meta’s spending towards its rebranding is unlikely to reduce or yield its full rewards anytime soon. Especially now that other tech giants have emerged and are now competing for facebook’s spot as the leading social platform. One of such companies is the well-known social app TikTok.

Other companies that have made the shift

Facebook is not the only company that has made the shift. Some other companies have also seen the potential of the metaverse to generate revenue from combining virtual reality, online shopping, wearable tech, artificial intelligence, crypto, NFTs, and many, many more. Facebook might be the most popular example, but a handful of others have jumped right on the bandwagon. Some of them are better known than others, and here are a few.

Microsoft
Next to Facebook on lists like these, the tech giant, Microsoft, always seems to follow. This is unsurprising, as Microsoft is an avid investor in various tech niches like security, spyware, video gaming, and hardware/mobile devices to mention a few.

During the covid-19 pandemic, Microsoft’s employees began to feel the effects of a lack of social interaction. As a solution to this, Microsoft announced a branch-out towards metaverse technology and unveiled its ” Mesh For Microsoft Team” that will be fully available in 2022.” Mesh is a mixed reality overlay that enables its users to meet, socialize and hold meetings in virtual spaces. This new branch will utilize the power of mixed reality goggles and VR headsets, much like Meta’s Reality Labs.
Microsoft mesh is built on Azure, creating a space for real-time virtual meetings where its users can join going Hololens 2 virtual reality headsets, PCs and even smartphones/tablets. Despite having such a large revenue base, ($168 billion) in 2021, Microsoft has delivered an unflinching ~15% average revenue growth rate over the past 5 years. Microsoft mesh is set to enable connection with “holograms”; and mixed-reality. (MR). It is predicted to grow from its current valuation of around $16.7 billion in 2022 to over $227 billion by 2029. A 45% increase.

Nvidia

Leading microchip manufacturers and tech giant Nvidia is also one of the companies that have shown an interest in the potential of the metaverse. Every day, people use Nvidia’s chips to access immersive video games featuring realistic virtual worlds. The company’s interest in virtual reality is, therefore, no surprise. Nvidia has since created its software platform "omniverse" for creating virtual spaces. Nvidia currently has recorded quarterly revenue of $7.64 billion (up to a 56% increase from 2021). Coincidentally, Nvidia also announced the general availability of its Omniverse platform in April 2021.

Some would argue that the omniverse platform had a part to play in the company’s revenue explosion. Nvidia is a market leader in the production of high-performance graphics cards or GPUs. A major contributor to metaverse technology. Its GPU market was worth $22 billion in 2020 and is expected to grow at a CAGR (compounded annual growth rate) of 31.87% till 2028. By then, its market valuation would have hit $165 billion. Nvidia’s focus on high-performance GPUs as well as the metaverse, is a perfect illustration of the saying, “in a gold rush, sell shovels.” In all, Nvidia currently rakes in annual revenue of around $2 billion, a meteoric rise of 61%. All in a year, coinciding with the explosion of the metaverse and their involvement in it.

In conclusion

The concepts of virtual realities, while not full-fledged at the time, have been around for quite some time. Especially since the advent of Snapchat filters and games like Pokèmon Go. In 2019, research and markets predicted that the global mixed reality (MR) market could reach a $2.8 billion valuation by 2023. A predicted growth factor of 77% at the time. When mixed, virtual and augmented reality technologies are combined, however, the market valuation is predicted to hit $120 billion by 2023, and a whopping $300 billion by 2025.

The author is co-founder, CMO of Acknoledger

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