Six Reasons the Metaverse is Here to Stay

A McKinsey View

There’s ample skepticism right now from people who think the metaverse is just a flash in the pan. That’s also what some people thought about the internet during the 1990s. But then, as now, one thing was clear: although we didn’t know which companies would shape this new technological evolution, consumers were flocking to it. Increasingly high levels of consumer adoption propelled fundamental change.

Similarly, the attraction of consumers to today’s metaverse indicates a major shift in the way people use technology. If the metaverse is another evolution of the internet — something we are already in rather than something we observe from a distance — marketers clearly shouldn’t miss out.

Here’s why we think the metaverse has staying power.

1. Ongoing technological advances. Technical challenges must still be overcome for metaverse experiences to be completely mainstream—for example, as a result of technical constraints, both Meta’s Horizon Worlds and The Sandbox cap the number of participants for each session. But constant improvements in computing power allow larger virtual worlds to exist. Cloud and edge computing let intensive large-data processes, such as graphics rendering, move off local devices. The rapid adoption of 5G is enabling mobile devices to access these large worlds more easily and with lower latency. And the cost of production for augmented- and virtual-reality hardware is declining. Meta shipped ten million Oculus Quest 2 headsets in 2021, and new devices like haptic gloves and bodysuits are coming on to the market more frequently as well.
2. Major investments in metaverse infrastructure. In 2021, Meta invested $10 billion in the metaverse. Other tech companies have also committed resources to building it—such as the recent launch of the design and simulation platform NVIDIA Omniverse and recent metaverse-friendly updates from Unity Engine, a game developer platform. For good reason, the metaverse dominated this year’s Consumer Electronics Show. More and more companies, large and small, are keen to participate.
3. A wider set of use cases. Gaming in the metaverse already has mainstream traction. Consumer use cases are now expanding into new immersive retail, entertainment, sports, and educational experiences. Then there are the metaverse’s sizable—but less talked about—enterprise applications and opportunities, including virtual employee training and team collaboration with avatars, virtual prototyping in manufacturing and construction, and virtual-showroom displays for products such as cars. Even government entities are experimenting with the metaverse. In South Korea, the city of Seoul announced a five-year Metaverse Seoul Basic Plan that will begin by creating a virtual Mayor’s Office and a Seoul Campus Town.
4. Online commerce is mainstream. Already, omnichannel commerce is second nature to most metaverse consumers—payment credentials are often embedded in the devices and software they use. The virtual-goods economy accounts for more than 40 percent of global gaming revenues generated by the world’s billion gamers. In the future, the long-term rise of cryptocurrencies will make any requirements to set up crypto wallet accounts on metaverse platforms less of a barrier. Already we see innovation in both physical-to-virtual and virtual-to-physical transactions, such as ordering Domino’s pizza in Decentraland for deliveries of actual pizza in the real world.
5. Demographic tailwinds. The oldest Gen Z consumers are in their mid-20s. Increasingly, they are an income-earning force to be reckoned with. These consumers are more familiar with virtual worlds, transactions, and goods than previous generations are. Gaming is leading the way: 67 percent of Roblox’s 50 million daily users are under the age of 16, which could signal the coming of a whole new generation of metaverse natives.
6. Brand marketing and engagement are more consumer led. The shift toward individual content creators is evident in the more than 50 percent increase in influencer marketing over the past five years on platforms such as WeChat and Pinduoduo in China and YouTube and Instagram in the Western world. This shift bodes well for the growth of the metaverse: a significant share of innovative and engaging experiences will probably come from these creator–users.

This insight is from a larger report from McKinsey & Company advisors Eric Hazan of the Paris office, Greg Kelly of the Atlanta office, Hamza Khan of the London office, Dennis Spillecke of the Cologne office, and Lareina Yee of the Bay Area office.