Citi experts said they believe that if the Metaverse becomes the next iteration of the internet its target addressable market could be worth between $8 trillion and $13 trillion, according to a company report. It will take a lot of work and money to turn that conditional “if” into a trillion-dollar “when,” they added.
“We estimate, in the report, the target addressable market (TAM) for the Metaverse economy to be in the range of $10 trillion plus,” said Ronit Ghose, Global Head of Banking, FinTech & Digital Assets, Citi Global Insights, and co-author of the report. “Expert contributors to the report indicate a range of users of up to 5 billion, depending on whether we take a broad definition (mobile phone user base) or just one billion based on a narrower definition (VR/AR device user base) — we adopt the former.”
Getting to that valuation will require work and lots of investment, primarily in infrastructure that would move the Metaverse away from the current mainly VR headset access. Doing so would also move the Metaverse away from entertainment uses to providing critical solutions across industries.
According to the report: “The most popular way to experience the Metaverse is via a video game played on a virtual reality (VR) headset. But in the report that follows, we discuss the possibility that the Metaverse is moving towards becoming the next iteration of the internet, or Web3. This ‘Open Metaverse’ would be community-owned, community-governed, and a freely interoperable version that ensures privacy by design. Users should increasingly be able to access a host of use cases, including commerce, art, media, advertising, healthcare, and social collaboration. A device-agnostic Metaverse would be accessible via personal computers, game consoles, and smartphones, resulting in a large ecosystem.”
Growing that Metaverse will require a lot more computational power, according to the report.
“The content streaming environment of the Metaverse will likely require a computational efficiency improvement of over 1,000x today’s levels. Investment will be needed in areas such as compute, storage, network infrastructure, consumer hardware, and game development platforms,” the report states.
Bandwidth issues need to be addressed, as well.
In a statement, the company reports: “With only 25% of the global population expected to have access to 5G by 2025, network bandwidth needs to be increased and delivered. The lags, packet drops, and network unreliability witnessed in today’s world would make the current state of the infrastructure unsuitable for an immersive Metaverse experience.”
The Metaverse will also need more interconnection between the proliferation of blockchain services and technologies.
The report states: “Interoperability and seamless exchange between underlying blockchain technology are critical to ensure a frictionless user experience. Different forms of cryptocurrency are expected to dominate, but given the multi-chain trend in the crypto ecosystem, cryptocurrency will likely coexist with fiat currencies, central bank digital currencies (CBDCs), and stablecoins.”
Citi experts also expect some real-world actions to guide virtual world development. They expect more scrutiny from global regulators, policymakers, and governments.
They write: “Issues such as anti-money laundering rules for exchanges and wallets, the use of decentralized finance (DeFi), crypto assets, and property rights will all have to be addressed.”
Citi is a global bank with approximately 200 million customer accounts. It does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.
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