We see a range of experiences in the metaverse—from augmented reality (AR) to full virtual reality (VR)—at various price points that will enable a large global user base.
Consumer-facing industries across media and entertainment, advertising, and even apparel will likely be active participants in the metaverse. The continued decline in computing costs and data transport, along with advancements in blockchain technology and artificial intelligence (AI), will be the key enablers in its development.
We see additional applications for the metaverse in the healthcare and industrial industries. In healthcare, we believe it can continue some of the progress made in VR-based therapy for mental health and medical education. In industrials, the metaverse could be a further extension of “digital twins”—virtual models of real-world physical objects—and also serve as an interactive forum for technical training and education.
In our view, it is still very early days for the metaverse, and this makes identifying investment opportunities somewhat difficult. We expect iterative improvements in metaverse-related experiences over the next few years, but the full realization of the metaverse may take as long as a decade. That said, we expect the next five years to see significant growth in investment across infrastructure, platforms, and enabling technologies for the metaverse.
We believe the above-mentioned sectors will continue to benefit from several positive medium- to long-term secular trends, which should help deliver above-average earnings growth over the next decade. In our view, several factors could have positive implications for the theme. Younger populations are becoming a larger part of the consumer cohort as they enter peak earnings years and are digital natives, having grown up in a world where technology was already ubiquitous.
In addition to digital acceptance more broadly, continued technological progress on metaverse features and lower compute costs help support the metaverse. The infrastructure build is still in relatively early stages, but as the groundwork is laid, more immersive experiences will begin to emerge and attract consumer attention. As the more digitally native population expands, adoption of metaverse-related activities will increase.
Read the full report Longer Term Investments: Metaverse 19 April 2023.
Main contributors: Kevin Dennean, Reid Gilligan, and Michelle Laliberte
This content is a product of the UBS Chief Investment Office.
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