Metanomics: How Generation W Will Create A Virtual Market Worth US$5 Trillion By the end of the current decade, growth in services relating to metaverses and the sale of virtual goods will outpace everything else, taking an aggregate market share of 82% by 2030.
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.
In the finale of Stanley Kubrick's 2001: A Space Odyssey, the Starchild appears. From the depths of space, the newborn superhuman gazes at the earth, the blue planet being just one possible world in an infinite universe for it. This iconic scene depicts perfectly what is happening with human civilization right now.
Every day for the last two years -since the start of the COVID-19 pandemic- people are being born with a perception of reality that is radically different from ours. I call them Generation W -"double you"- because from the moment they are born, they have a "double" identity, one physical, and one digital. Very soon, all global industries and markets will be refashioned to suit their specific preferences. And businesses will have to be flexible, because the key value for Generation W will be not simply freedom of choice of goods and services, but instantaneous switching between different life modes– in effect, shifting between worlds.
The foundations of the W economy have already been laid: by the end of 2021, the market in which the virtual worlds will be rapidly created in the coming years was worth $500 billion. Today, the biggest segment of this market, accounting for 40.2% or roughly $201 billion, is gaming, including software and hardware. It also encompasses virtual goods (10.8% or $54 billion), non-fungible tokens or NFTs (8.2% or $41 billion), and augmented, virtual, and mixed reality (AR/VR/MR) technologies (5.6% or $28 billion). And over a third (35.2% or $176 billion) of the market consists of other services connected with the development of metaverses. This is where the most powerful driver of future exponential growth is to be found.
However widely expert forecasts of the relative growth of individual segments of the W economy may vary, one thing is indisputable: the balance will inevitably change in favor of the metaverse. By the end of the current decade, growth in services relating to metaverses and the sale of virtual goods will outpace everything else, taking an aggregate market share of 82% by 2030. And it is Generation W that will drive this leap.
Image courtesy the author.
How will the behavioral patterns and values of people, who, from childhood, are accustomed to existing simultaneously in digital and physical environments, set the new economic paradigm? I believe the answer lies at the interface between information technologies and marketing– in the logic of customizing. From the outset, computer software and, subsequently, web editors have allowed for multiple choices of settings– functions, plugins, and filters. Back at the end of the last century, according to the leading new media theoretician Lev Manovich, this principle applied across the communications sphere, including B2C interaction. In the same way that users could optimize software for their own requirements or build an avatar in a computer game, they could receive personalized goods and services, create objects from modules, and use a system of personal recommendations.
But improvements in targeting algorithms and customization of consumer items are merely derivatives of a much more sweeping cultural and civilizational shift, facilitated by the diversity of social networks. Zoomers are constantly customizing their identity, adding on ever more detail, specifications, and settings. They compile this identity from an extensive catalogue, starting from the basic menu choices such as origin, gender, and social status, before moving on to additional options, such as vegan, K-Pop fan, or life coach. It is my belief that Generation W will customize reality in a similar way.
The ability to customize your own environment, to model your living space, and, moreover, enjoy unlimited freedom to select from a multitude of different worlds are fundamental values for Generation W. And the platform for implementing this need will be provided by metaverses. Virtual cities, offices, and recreation centers, superimposed on the physical world, and material reality augmented with digital objects and interfaces, will connect via 3D internet networks to provide an immersive experience unlike anything previously known to mankind. And they will create a market potentially worth up to $5 trillion by 2030.
The metaverse will not only consign classical marketing strategies to oblivion but also eliminate the very concept of "consumer behavior." Generation W will not purchase and consume in the conventional sense: whatever they might call it, they will pay to be- pay to continue existing within one or several preferred universes. Today's paid subscription and game monetization services are but a faint outline of the business models that will emerge in the metanomics of the future.
Image courtesy the author.
It is already clear that working with Generation W will require, above all, the development of techniques for engagement and retention. Users will assess the quality of a digital product from directly inside it. Competition will unfold not between physical and digital reality but between a multitude of hybrid, convergent and mixed environments. It is predicted that by 2028, the global AR/VR/MR technology market will be worth $250 billion, while the usability and convenience of "gateways" for entry into the metaverses will also improve.
The metaverse will become not so much a way of life as a means of living: by 2030, the human avatar market will be approaching $530 billion, with NFTs and digital art worth over $200 billion and digital fashion $55 billion. And, of course, the gaming segment will also expand considerably- to almost $550 billion. But it will undergo structural changes and find itself tucked inside the metaverse and Web3 like a Russian doll. Generation W will communicate, work, study, rest, travel, and love within a digital space modelled for them by information technology corporations and tech startups, all the while considering it their own, because customization and extended personalized settings will raise each participant to the status of "coauthor" of the new virtual environments- literal creators of their own universes.
With a deep understanding of these trends, I do not regard as overoptimistic a prediction by global investment bank Citi that the number of metaverse users could reach five billion by the end of the decade. After all, having created their own universes, Generation W will not want to abandon them. And following the logic of customization, they will be prepared to invest in maintaining and developing those universes. The question of how "real" cryptocurrencies, digital assets, virtual reality, products, and services are will lose any meaning. Human civilization will move into the metaverse, while global industries and markets will become incorporated into metanomics by means of ready-made modules.