The metaverse is going to be really, really big, which is about the only definitive thing you can say about it.

That’s the general takeaway from a long report on the evolution of the metaverse by Bernstein internet analyst Mark Shmulik

He warns that we’ve hit “peak metaverse hype,” thanks in no small measure to Mark Zuckerberg’s decision to re-christen Facebook as Meta Platforms (ticker: FB). Shmulik reports substantial investor confusion and debate about what we all mean by the term. Virtual reality is part of it, but not all of it. The analyst adds that the “a future depicted in films like Ready Player One where we retreat into virtual worlds through immersive headsets and wearables may appeal to some…[but] the repulsion felt by others may well support a broader, less immersive metaverse definition.” 

The analyst notes that parts of the metaverse already exist—he points to hardware like the Facebook Quest and Microsoft  HoloLens headsets, and the Apple Watch, software platforms like Fortnite and Roblox, augmented reality experiences like Pokémon Go, and virtual collaboration experiences like Microsoft’s Mesh for Teams. But what’s less clear is both the size of the opportunity, and how it will unfold for the mass market. Shmulik estimates the combined run rate of related markets at more than $2 trillion and growing. Just when that unfolds is an open question. “The timing is still unknown, as we’re early on the adoption curve and current metaverse technology doesn’t offer the necessary value proposition for many users,” he writes.

His view is that “despite the hype,” the metaverse isn’t just a fad. “It’s an important concept for investors to understand when thinking about the longer-term growth prospects for many tech companies,” he writes. “We offer the metaverse as the next stage of the way we use the Internet, connectivity, and computing.”

Shmulik contends the metaverse is less a big leap than it is a natural progression from current technologies. “While a fully functional, seamless persistent metaverse isn’t happening any time soon, metaverse-like features and advancements in how we connect with technology and the Internet are already underway and driving modest, incremental improvements,” he writes.


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