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In brief

First described and named almost 30 years ago, a true metaverse is still years away. Computing power, headsets, software protocols, and networking capacity just aren’t ready yet to support the fully immersive and shared metaverse imagined by techno-utopians. But many of the building blocks (below) are already here or nearing maturity.

Contents

In brief
In conclusion
In depth
In brief
In brief
In conclusion

In brief

What is the metaverse?

Why should I care?

What should I do?

In conclusion

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How to thrive in the ecosystem economy

PwC’s 2023 Trust Survey

Next in auto: Automotive
industry trends

Seven imperatives for moving beyond digital

Tapping ecosystems to power performance

Though many of the activities center on entertainment and other business-to-consumer initiatives, several companies are making investments and introducing products that help other businesses function more effectively. These include Apple’s 2020 acquisition of Spaces, which makes VR software for conferencing; Epson’s introduction of Moverio AR smart glasses; and Nvidia’s rollout of digital twinning tools.

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pwc.com

May 2023

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Illustrations by Aad Goudappel

Finding real-world value in virtual reality.

The metaverse: What is it? And why should I care? These questions are on the lips of marketers, strategists, technologists, and other business executives whenever the concept comes up. Is it a multitrillion-dollar opportunity that will change life as we know it? Or is it just the “meh-taverse”—yet another social media space where people can interact awkwardly, only this time with legless avatars?

The reality is a middle ground. Driven by the applied force of Moore’s law and the consistent application of human imagination, digital experiences are always evolving. And history shows the perils, reputational and otherwise, of prematurely dismissing new technologies. Indeed, world-changing innovations from AC electricity to the car to the computer were blithely written off at just the moment they were poised to take off (as you’ll see in the parade of memorably misguided prognostications that unfurl along the left side of the page).

Real business value in the metaverse is already emerging, with companies making investments, staking claims, and introducing products. Creating digital twins for factories, designing virtual bank branches, expanding the reach of marquee cultural events—these are just a few of the ways work is getting done in the metaverse. And despite negative news stories and much-publicized tech-industry layoffs, opportunities await—not just for imaginative world-builders but also for those who can provide privacy protections, technological backbones, and ways to integrate new technologies into operations.

Those elements, combined with improved interoperability between metaverse environments, promise a richer, more powerful experience that will, like the internet did, alter the way we communicate, entertain ourselves—and work.

The earliest telegraph messages, sent in the 1840s, traveled from Washington, DC, to New Jersey in seconds—and then had to be typed out and ferried across the Hudson River to New York. In the pre-cable television age, people had to fuss with antennas to get reception. And the memory of excruciatingly slow internet connections from the 1990s still haunts many of us. It’s one thing to demonstrate the feasibility of a new technology platform; it’s quite another to make it work—and work seamlessly—for everybody. With the metaverse, that means users can move freely among multiple experiences. That’s not happening just yet because of a lack of interoperability among providers.

But in a recent interview with strategy+business, excerpted below, Matthew Ball, the author of The Metaverse: And How It Will Revolutionize Everything, says attaining interoperability is just a matter of time:

A metaverse that works for everyone

Dive deeper:
PwC’s February 2023 Global Consumer Insights Pulse Survey

Dive deeper:
Demystifying the metaverse

Alex Ruhl
Metaverse Technologies, Senior Manager, PwC UK

Matteo Bonente
Partner, PwC Italy

Jeremy Dalton
Metaverse Technologies, Director, PwC US

Emmanuelle Rivet
Global Technology Industry Leader, PwC US

Roberto Hernandez
Global Metaverse Leader and Chief Innovation Officer, PwC US

Julie Coates
Partner, PwC UK

Scroll for a brief history of getting it really wrong

1825: Rail travel

—The Quarterly Review

“The gross exaggerations of the powers of the locomotive steam-engine…may delude for a time, but must end in the mortification of those concerned.”

In depth

Automated systems and AI
that make the metaverse function seamlessly and continually

Digital reflections
that harness technology to create user experiences that feel real

Hyperconnected networks
that leverage 5G

Digital payments and assets
made possible by the decentralization of finance and the economy, and supported by blockchain technology

Immersive hardware interfaces
supported by cloud-technology processing power and storage

Extended reality user experience (UX)
that encourages interaction and engagement

Dive deeper:
Demystifying the metaverse

Interoperability is not a technical challenge; it’s a human one. We need many rival platforms and ecosystems to agree not just on common technical standards but also on financial systems—and to connect with one another, too.

We faced the same challenge with the internet. Few believed that could ever happen, for the same reasons, and from the 1970s until the 1990s, we had what was called the “protocol wars.” Indeed, there was a time where the US Department of Commerce was pushing an alternative to the internet protocol suite that the Department of Defense had pioneered! Yet the utility and network effects of a common stack won out.

I suspect the arc of the metaverse will be similar. There’s an economic gravity driving us toward interoperability. It might take 20 years, but we’ll eventually settle on more and more shared standards, solutions, and related conventions in the same way that in the physical world as global trade has grown, we’ve seen de facto standards such as the US dollar, the metric system, the English language, and the intermodal shipping container emerge.

Placing big bets and putting down stakes

—William Henry Preece, Chief Engineer of the British Post Office

“The Americans
have need of the telephone, but we do not. We have plenty of messenger boys.”

1878: The telephone

—Henry Morton, President of the Stevens Institute of Technology

“Everyone acquainted with the subject will recognize [Thomas Edison’s experiments] as a conspicuous failure, trumpeted as a wonderful success.”

1879: Light bulbs

—Thomas Edison

“Fooling around with alternating current is just a waste of time. Nobody will use it, ever.”

1889: AC electricity

—Literary Digest

“The ordinary horseless carriage is, at present, a luxury for the wealthy; and although its price will probably fall in the future, it will never, of course, come into as common use as the bicycle.”

1899: The automobile

—Marshal Ferdinand Foch, Supreme Commander of the Allied Armies in World War I

“Airplanes are interesting toys but of no military value.”

1911: Planes

—Joseph M. Schenck, President of
United Artists

“I don’t think people will want talking pictures long…. Talking doesn’t belong in pictures.”

1928: Sound in films

If all the corporate and consumer experimentation in the metaverse isn’t enough to convince you to take it seriously, then consider this: insurance executives are already making business cases to account for metaverse risks.

Everywhere business has gone—international waters, the internet, and even outer space—insurance has followed. The metaverse is no different. Beyond its practical business applications, the metaverse’s increasing popularity is creating an array of new risks that have real-world implications. Very few of these risks, which include the following, are currently covered.

Accidental loss: problems with metaverse event programming, technology capacity and constraint, and network and service outages that can cause financial loss to users, platforms, brands, companies, and event promoters

Financial fraud: illegal fundraising, and other illicit activities with cryptocurrency leading to financial loss

Hacking: unauthorized or illegal access to steal or vandalize VR equipment, personal/avatar data, and other virtual assets

Mental and emotional harm: online harassment, trolling, and toxic behavior

Violation of privacy: data breaches leading to financial and emotional turmoil

Dive deeper:
The metaverse and insurance

The fact is, the technologies and attributes that make the metaverse compelling to users also present a series of opportunities for businesses of all types: the ability to deepen customer loyalty, engage with new communities, reimagine operations, grow revenues, and gain a new perspective on what is going on within the walls of your company. That may be why 82% of US business executives surveyed in 2022 said they expect the metaverse to be “business as usual” either within the next year or within the next two to three years.

Users skew young—and aren’t where you might think

Many consumers who are accustomed to spending time in gaming environments see the metaverse as a natural evolution of their digital lives. In PwC’s February 2023 Global Consumer Insights Survey, which surveyed 9,180 consumers across 25 territories, 26% of respondents said they had participated in metaverse activities in the preceding six months. Not surprisingly, the younger the person, the more likely they are to engage with the metaverse. But here’s what is surprising: the variation across geographies. Income and region, it turns out, are less of a factor than you might expect. The US, at 24% metaverse participation, notched double the rate of its neighbor Canada. India and Vietnam have considerably higher adoption rates than either of those countries. It’s likely that the relevant factors have to do with the age of the population; widespread availability of cheap, high-quality connectivity; and a strong gaming culture.

—Albert Einstein

“There is not the slightest indication that [nuclear energy] will ever be obtainable.”

1932: Nuclear power

—Darryl F. Zanuck, Head of 20th Century Fox

“Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.”

Television (1946):

—T.A.M. Craven, US Federal Communications Commission

“There is practically no chance communications space satellites will be used to provide better telephone, telegraph, television, or radio service inside the United States.”

1961: Satellite communications

Who’s working in the metaverse?
Three use cases that might surprise you.

Extending a consumer experience: The Venice Carnival
PwC Italy’s 3D design and creative teams overcame the interoperability challenge by collaborating with metaverse platforms Ready Player Me and Roblox. Together, they developed platform-agnostic avatar costumes, and then expanded the Carnival experience further via VR exhibitions and AR Instagram filters. The result? These extended-reality (XR) experiences spread the Venice Carnival from a single city to 19 countries, tripling the average number of attendees.

Gamifying a solution: PwC’s Metaverse Climate Challenge
Launched on Earth Day 2023, PwC’s Metaverse Climate Challenge uses the enticement of gamification to highlight
key issues in the race to limit the negative effects of climate change. The climate challenge’s games and quests, such as building a sustainability-focused investment portfolio to measuring emissions, contribute to an immersive educational experience that can help increase engagement and information retention, making the tool a key use case for
the future of business XR.

(Hyper)realizing a vision: NEOM digital twin
To help investors, businesses, and future residents visualize NEOM, a vast region under construction on the Red Sea coast that will house several smart cities, Saudi Arabia is creating a digital twin of the futuristic metropolis in the metaverse. More than any 2D blueprint ever could, the digital twin will allow architects, engineers, and designers to collaborate more effectively. When the first assets are operational and the first residents arrive in the coming years, the digital twin will collect real-time data and use it monitor, manage, simulate, and predict the evolving community.

Dive in and explore

As the metaverse progresses beyond the “dip your toes in” phase, you’ll need to shift from skunkworks experimentation to accountability and real resource allocation. Most companies—even many technology companies—lack institutional familiarity with the metaverse’s concepts. Many may also lack the skills and processes to truly understand and trust their digital transactions and investments. Assign at least one person or team to understand key ideas such as cryptocurrencies and decentralized autonomous organizations.

Once you’ve identified the long-term opportunities presented by the metaverse and the gaps your organization faces in taking advantage of them, work on foundational measures. Many companies, for example, will likely benefit from recruiting digital-native employees who are already at home with the metaverse’s key concepts.

Lay the foundation

Select a few opportunities available within the metaverse’s underlying trends today. Lower-risk plays include selling digital versions of physical goods or, say, offering tours of virtual products or facilities. Leasing or buying digital real estate for advertising, sales, or customer support constitutes a higher-risk gamble.

Make your play

Manage risk. Rather than first building an application and then identifying and mitigating risks, build security into your approach to metaverse data, transactions, and experiences from the start. This approach should help drive long-term cost efficiencies and reduce risks.

Stay true to your purpose and brand. As in the physical world, your purpose and brand can define you in the metaverse. Assess your metaverse activities for a consistent brand message, and remember that customers may trust your metaverse presence more if it’s guided by a corporate purpose that matches their values. This entails ensuring a consistent brand experience across both the physical and digital worlds.

—Ken Olsen, Founder of Digital Equipment Corporation (DEC)

“There is no reason anyone would want a computer in their home.”

1977: Home computers

New York Times

“For the most part, the portable computer is a dream machine for the few.… The real future of the laptop computer will remain in the specialized niche markets.”

1985: Laptop computers

—Paul Krugman, Winner of the 2008 Nobel Memorial Prize in Economic Sciences

“By 2005 or so, it will become clear that the internet’s impact on the economy has been no greater than the fax machine’s.”

1998: The internet

Beyond the hype

Understanding the metaverse and its possibilities

Metaverse and web3

Demystifying the metaverse

—David Pogue, Technology Editor of the

“Everyone’s always asking me when Apple will come out with a cell phone. My answer is, ‘Probably never.’”

2006: The iPhone

Take me there

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Scroll for a brief history of getting it wrong

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—The

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In brief

In brief | What is it? | Why care? | What to do? | Getting it wrong

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Prematurely dismissing new technologies is an age-old practice. View the timeline below to see some of the most memorable examples.

In conclusion

In brief | What is it? | Why care? | What to do? | Getting it wrong

The metaverse is clearly already here—but it is also very much still in a state of becoming. And that’s to be expected when it comes to technology. No sooner is a big, new operating system rolled out than work on version 2.0 commences. Leaders shouldn’t wait until the ground solidifies (or calcifies) before starting to experiment, experience, and build. Of course, as an immersive, always-on environment, the metaverse poses unique risks and challenges, even if you’re just experimenting with it. Companies shouldn’t rush heedlessly into this new terrain. Leaders must make sure they have a clear understanding of how to manage the risks associated with data, identity, and security in this new realm. Then, they can get on with it, stepping gingerly at first, gaining knowledge and capabilities, before striding forward with increased confidence.

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