The Metaverse?

By Justin McKennon

Ideas about the metaverse have been around for quite some time. In 1992, author Neal Stephenson in his novel “Snow Crash” actually (somewhat) predicted the development of cryptocurrency and virtual words. He is generally given credit for coining the term “metaverse”. 

In general terms, the idea of the metaverse is a virtual world that people can interact with in real time. It is a place where people can connect, communicate, and share experiences with each other, regardless of their physical location. With augmented and virtual reality (AR/VR) starting to become more and more commonplace in today’s world, this “metaverse” seems to be popping up more and more. In short, the metaverse is a purely digital world that, using AR/VR, a user can interact with in various ways. 

Some hypothesize that the metaverse could become a platform for socializing, entertainment, education, commerce, and many other purposes. Think of a 3D digital venue for conferences and meetings, allowing people to physically participate (much more than an online meeting) and truly interact with one another. Virtual real estate, virtual assets, advertising and marketing – there’s really a lot of potential for what this could be. If you’ve seen the movie or read the book “Ready Player One”, you’ve seen one possible realization of this digital world. 

Some of the largest companies in the world are heavily investing in the development of AR/VR hardware and software in preparation for the possibility of the metaverse really taking off. 

Facebook (otherwise known as Meta) is working on developing Facebook Horizon, a platform for socializing and connecting with others in virtual reality. Facebook continues to develop its line of VR headsets (Oculus Quest 2), and major game development companies have begun releasing VR versions of games and software content for it and similar devices. 

Google has a long history of AR/VR investments. Google previously developed the Daydream View, its own virtual reality headset. Google has released a number of software suites, including the popular ARCore software development kit. 

Apple has filed a number of patents related to virtual and augmented reality in recent years. Microsoft has launched its HoloLens Mixed Reality (MR) headset and the Windows Mixed Reality platform. Amazon has filed a number of patents in this sector and is rumored to be actively developing a virtual reality headset call the Amazon Sumerian (although it hasn’t been officially announced).  

As an investor, it’s always desirable to foresee major shifts in the world or markets. If you’re able to catch a rapidly growing technology sector early, the returns can be substantial. But with the metaverse and the technology being so nascent, is it worth speculating on for the average investor? I was able to catch up with Paul Farella, Managing Director at Invest with Willow and ask him.  

The potential of the metaverse and AR/MR/VR technologies is substantial. Remote learning could become significantly more interactive. 

Medical applications for MR and VR applications stand to revolutionize the way surgeries and medical treatments are performed. By pairing the processing power of computers and information stored in large databases with a real-time way to render and interact with that data, treatments can become significantly more effective. 

However, for any of this to occur, the technologies and applications/companies that lead the space need to be created and matured significantly from where they are today. 

I had a chance to catch up with Matt Freitag, VP of Financial Wellness at Lee Bank. Matt doesn’t think that the average investor should really be speculating on metaverse related plays, especially at the beginning or retirement stages of investing. Too many companies are coming and going and no real leader in the space has emerged. “Clearly it poses a long-term opportunity, but it seems too early to know how it will play out. I would suspect that if the average investor is in mutual funds or ETFs, they probably have a very small exposure to those companies anyways,” says Matt.  

Most experts agree this is a hot space to watch in the coming years. The downside, as with any investment or market shift, by the time most of us become aware that this change has happened, it’s too late. We’re staring at nascent market, with no clear leader identified yet. However, if you’ve ever watched a Sci-Fi movie based in the future – AR/VR/MR is everywhere, and it seems likely that we will get there some day. 

 In the world of cryptocurrency, one of the most recent “nascent” markets to become somewhat mainstream, many of the richest investors in the space became that way due to buying Bitcoin, Ethereum, or other major cryptocurrencies early on. The metaverse seems poised to be no different. 

Before many of these companies can be created, the tools and developer capabilities need to be matured. I’m inclined to agree with Paul’s assessment. Speculating on a company developing AR/MR/VR hardware (headsets, etc.) is probably not the correct way to get in on the ground floor of the metaverse revolution. I’m extremely intrigued with speculating on some of the foundational development companies like Epic Games, Unity, NVIDIA, and others, as their technology (or similar technologies) must be present for this revolution to occur.  

For me – I’m viewing the metaverse much the way I view cryptocurrency. There’s a lot of noise and few things being said. Once a real concrete use-case becomes prevalent, likely due to the maturation of AR/VR/MR technology, this market will be off to the races. One of the most successful ways of identifying projects like this is to look at Small Business Innovation Research (SBIR) grant awards related to AR/MR/VR technology. Many of these small businesses develop technologies that end up being purchased by larger companies. Following these as well as companies in the information technology or AR/VR/MR tech space going public through SPACs is the way to go. 

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