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The past 12 months have taught us that the metaverse is regarded by many as the next major frontier for tech. The furor caused by Facebook’s conspicuous rebranding to Meta has shown that the 21st century’s biggest technological space race will be fought on the battlegrounds of Wall Street — but the stock market has also helped to identify some of the forgotten players that will be integral to the mechanics of this brave new world.
The race for the metaverse is a unique prospect for the 21st century, primarily because there is little understanding of what such a revolutionary mixed reality digital space will actually look like in practice — or how businesses will be looking to capitalize on the new technology.
So, who will succeed in profiting the most from the metaverse? To solve this puzzle, it’s important to understand the form that the metaverse is likely to take, and how technology will need to adapt to the sheer scale of what’s promising to be the biggest technological innovation of the century so far.
According to forecasters, the metaverse is expected to grow at an astounding rate throughout the decade, accumulating a market value of more than $1 trillion in a matter of years.
According to PwC data, the value of the global metaverse market is expected to reach more than $1.5 trillion by 2030. This sheer rate of growth helps to illustrate why companies like Facebook have been willing to undergo a name change in order to accommodate this emerging market whilst positioning themselves with the best possible chance to establish themselves as an early market leader.
As a result of this, the freshly rebranded Meta has shocked Wall Street investors with its name change —causing a heavy stock sell-off which was exacerbated by a wider tech stock downturn in the wake of rising inflation rates.
Today, Meta (NASDAQ: FB) stock has fallen around 35.5% from its share price upon the announcement of its name change. However, it’s likely that CEO Mark Zuckerberg has factored in the prospect of a short-term downturn in company stocks and embraced short-term losses with the wider metaverse growth over time firmly in mind.
The most memorable technological phenomenon that triggered such a clamor that extended to global stock markets and beyond was the dotcom boom at the turn of the millennium; however, the race for the metaverse seems fundamentally different due to the fact that it’s prompted battles between some of the biggest names on Wall Street as firms look to cash in on the market’s vast potential.
Here, we can see companies like Meta and Microsoft adopt vastly different strategies in a bid to earn some important early prominence before the drive for widespread adoption of the technology takes hold.
According to Maxim Manturov, head of investment advice at Freedom Finance Europe, Facebook’s rebranding to Meta may have signified the firing of the starter pistol in a race that’s set to engulf large cap stocks across both the NYSE and NASDAQ.
“It is likely that ‘the tide will raise all boats,’ and Facebook’s actions have allowed many companies to discover new products or sales channels. For the most part, the strong hype around other companies was due to their size, given that FB is a tech giant, then for smaller companies like Roblox or Unity, the metaverse creates more accelerated growth opportunities, which was momentarily reflected in the price and which is why there was such interest from investors,” Manturov explained.
Meta’s rebranding in November 2021 has paved the way for other stocks intrinsically linked to the metaverse to emerge. Although many of these tech stocks have been heavily impacted by recent inflation-driven tech stock sell-offs, many firms that have been intrinsically linked to the mechanics of the metaverse are having their movements scrutinized on Wall Street — providing investors and analysts alike with some of the most reliable indications as to how the metaverse will actually work.
With this in mind, let’s take a deeper look into what Wall Street is telling us about the architecture of the metaverse:
The architecture of a new frontier
Despite the very public actions of Meta in recent months, very little attention has been drawn to the mechanics of the metaverse, and how such a significant technological development is going to be made possible.
According to Raja Koduri, who is VP of Intel’s accelerated computing systems and graphics group, to power the metaverse will require 1,000-times more computing power than we have available today.
Koduri added that to place just two people in a realistic virtual space would require significant computational power to render lifelike avatars equipped with detailed and varied clothing, hair, and skin. To be able to create speech capabilities and accurate motion requires sensors that can track audio and physical data inputs, as well as the ability to interpret real-world objects to interact with. To bring such avatars to life, an extremely high bandwidth would need to be paired with low latency, and this would have to be replicated hundreds of millions of times over to accommodate users at the scale that many experts are predicting the space will reach.
With this in mind, it’s worth looking at how, and more importantly, who can deliver such computing power?
For this, Nvidia appears set to tap into its fluency in GPU solutions to turn the metaverse of tomorrow into an accessible frontier.
Nvidia’s Omniverse is a digital space that’s currently very likely to be used, at least in part, to develop the fully-fledged metaverse of tomorrow. At present, over 50,000 individual creators have downloaded Omniverse since its beta arrived in December 2020. The volume of creators participating in Omniverse has opened up recently owing to integrations with other key platforms like Blender and Adobe – enabling millions of additional users to work within the framework.
Tellingly, NVIDIA’s stock (NASDAQ: NVDA) stands as an example of a firm that’s remained relatively strong and stable amidst mass stock sell-offs. In fact, the company has grown more than 100% in value in just a one-year period.
This insight shows that, despite a mammoth level of development in computer graphics being required to deliver the metaverse tomorrow, investors are confident that NVIDIA’s GPU heritage will be capable of providing the power needed to create a functional digital space for tomorrow.
Businesses challenging to become metaverse leaders will need to accommodate the central role that big data and artificial intelligence will invariably play in the new technological landscape.
The metaverse will usher in a multitude of new challenges, and the recent rise of AI solutions is likely to form a central role in the continued progress of data modalities like speech, language, and vision – which are native modalities for the World Wide Web.
As Joelle Pineau, co-managing director of Facebook AI Research, acknowledged that big data and AI will need to work extremely hard to create a mass distributed seamless experience for the huge volumes of metaverse users online at any given time.
The sheer volume of data that we will be inputting into the metaverse will require unprecedented levels of machine learning capabilities to interpret our gestures, voices, and browsing habits in order to respond in real time.
Pineau concedes that whilst the demands of the metaverse will open up new opportunities for AI, it will also require ‘some major progress in our AI models’.
For the metaverse to truly be as widely distributed as companies closest to it suggest, it’s essential that data and AI models are unified between different endeavours to achieve their goals. Establishing a ‘world model’ may well be essential in delivering a metaverse that truly works on a global scale.
The metaverse space race is being competed by many different companies operating on different fronts. Alongside the very public movements of industry leaders, we’re also seeing firms like Microsoft leverage a string of strategic acquisitions in a bid to build an industry-wide monopoly in the field of gaming.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” claimed Microsoft chairman and CEO Satya Nadell in a statement following the company’s $68.7 billion acquisition of video game giant Activision Blizzard in early 2022.
Microsoft’s purchase of Activision Blizzard stands as one of the more recent acquisitions in a flurry of video game and digital media company purchases by the tech giants.
The strategy has been widely acknowledged as a strategic bid by Microsoft to become a metaverse market leader through the development of compatible video games – which the company believes will form the first frontier of the new technological ecosystem.
Microsoft’s approach may mimic the company’s launch of its free-to-use Internet Explorer browser in the mid-1990s as a means of drawing a huge flurry of customers to its Windows software as the World Wide Web was still in its fledgling stage.
Again, Microsoft’s acquisition-based approach has helped its Wall Street performance to outperform the likes of Meta, Roblox, and other firms bidding to emerge as market leaders in the space.
There’s a long way to go until we’re all using the metaverse to hang out with friends and go grocery shopping in virtual reality. But, with companies very publicly scrambling to accommodate the fledgling digital space, we’re able to see major tech stocks battle it out in real-time on Wall Street. With this in mind, the markets are likely to deliver the strongest indicator yet of where the metaverse space race will be won and lost.
Dmytro Spilka is the head wizard at Solvid.