The metaverse market size is set to grow rapidly over the next decade as existing industries are disrupted with a combination of new business models, hardware and software. Sizing the metaverse market is fraught with challenges. This article compares some of the different Metaverse Market size analysis and explains the methodologies that underpin them.
The metaverse describes the convergence of a set of technologies that have been in development for decades. Its implementation is set to transform many industries we interact with on a day to day basis. Over the last couple of years there has been a proliferation of articles and reports attempting to put a number to the future opportunity. These peg the future Metaverse market size at anything from $1 trillion to $13 trillion by 2030.
Why the wide range?
First, let’s start with what market sizing really is.
What does the Metaverse Market Size mean?
Calculating market size
We have explained this before for the Quantum Computing Market Size. In short, market sizing looks to understand the potential amount of revenue that is currently made in a particular market – i.e. to find the Total Addressable Market (TAM). This is used by industry stakeholders to research the opportunity in a market.
The market size of a sector in a given year is the total number of transactions (across all companies) in the sector in that year, multiplied by the price they were at.
Revenue = price (amount product is sold for) x volume (number of units sold)
Note: most companies will offer several products / services so their revenue is the summation of these different products / services
The market size of a given sector = the total revenue of all companies in said sector.
Often what is more interesting for industry analysts is the forecast market size. This predicts the total revenue of all companies in the sector at a certain point in time.
Having these two metrics (for example a market size for 2022 and 2030) allows analysts to present a forecast growth rate, typically presented as a Compound Annual Growth Rate (CAGR).
Applying market sizing to the metaverse
The Metaverse Market size can be defined as the total revenue achieved by companies involved in the metaverse market in a given year.
Metaverse market size meta analysis
The team at Metaverse Insider decided to analyze the various forecasts being shared. We reviewed forecasts from consulting companies such as McKinsey and BCG as well as generalist “research” companies.
To simplify the results, we defined the start date as reports released between 2020 and 2022, the mid-date (normally 2025) to the 2024-2026 period, with a consistent end date of 2030.
Citi’s metaverse report presents the most bullish case with a future market size of up to $13 trillion, higher than the current Gross Domestic Product (GDP) of China. Some commentators, including Clive Justice of KPMG have suggested these could be conservative estimates.
A device-agnostic Metaverse would be accessible via personal computers, game consoles, and smartphones, resulting in a large ecosystem. Using this broad definition, the total addressable market for the Metaverse could be between $8 trillion and $13 trillion by 2030, with total Metaverse users numbering around five billion. – Citi Global Perspectives and Solutions
McKinsey’s work has the most publicly disclosed detail behind it (see next section) and they have presented a Metaverse Market Size estimate of between $4 and 5 trillion for 2030, implying a 40-50% CAGR.
A McKinsey case study
The work in the recent McKinsey report is particularly interesting because – tucked away in Appendix B – is a bit more detail on the consulting company’s methodology. To summarize, they:
- Identified consumer and enterprise use cases and their respective future market sizes. These numbers were mostly based on other industry reports; and
- Made assumptions around penetration rates (i.e., how much of a sector’s spend should be classified as Metaverse related). These numbers were based on expert interviews.
Whilst the company of course acknowledge the unprecise nature of such an analysis, its worth stressing in layman terms. The McKinsey forecast is based on assumptions around assumed growth rates and the importance of the Metaverse in future markets based on expert opinions.
Sizing any market requires a significant level of assumptions-based modelling. Sizing the Metaverse market requires us to layer assumptions upon assumptions. The further forward into the future we look, the higher the impact varying growth assumptions can have on the implied total market size. Reputable sources have widely different views on the future potential. Whilst we at the Metaverse Insider are bullish on the potential on the Metaverse market, and recognize that global markets are expected to keep growing rapidly, we suggest analysts should be mindful of overestimating.