Metaverse market set for rapid growth through 2028, despite setbacks

The news: The metaverse is still happening, and it’s going to be big. Really.

The global market is set to expand rapidly to $54.50 billion by 2028 from $17.5 billion in 2023, with a compound annual growth rate (CAGR) of 25.5%, per S&P Global.

Still a believer: That size helps explain why Meta hasn’t given up on its ambitions for the space​​.

• The company is hiring an executive to lead AI-metaverse integration; it plans to spend up to $40 billion on AI this year to enhance metaverse content and features, per Coingeek.
• In a related move, Meta will allow children ages 10 to 12 to join virtual reality chats and calls under parental supervision, allowing preteens to interact with approved contacts and join multiplayer experiences.
• This comes shortly after Meta announced its Horizon OS will be available to third-party AR/VR hardware manufacturers in an effort to expand its presence in the mixed reality space and emulate Google's Android strategy to dominate the market.

Virtual goods, concrete value: Meanwhile, metaverse pioneer Infinite Reality (iR) has raised $350 million and acquired Landvault, a game developer that has worked with Red Bull, Hershey, Heineken, and Mastercard, for $450 million. The acquisition boosts iR’s valuation to $5.1 billion.

• That’s far from the only recent move in this space; in February, Disney invested $1.5 billion into Epic Games to create a persistent, live-service video game involving its media properties, signaling a significant move into the gaming and metaverse arena.
• In January, Walmart partnered with Unity to integrate commerce APIs into games and apps, allowing users to purchase physical goods within the virtual world.

Zoom out: The metaverse’s growth will be fueled by a combination of social gaming, digital twin services, remote collaboration applications, and advancements in augmented and virtual reality hardware​​.

• That said, gaming hubs like Roblox and Fortnite are playing pivotal roles in metaverse growth. These hubs are expected to improve their virtual commerce and advertising capabilities over the next few years​​.
• While the market for AR and VR headsets has been sluggish, it is anticipated to rebound with new product launches like the Apple Vision Pro and Meta Quest 3​​.

Yes, but: Much of the metaverse’s potential (for now) may not be tied to marketing applications. Businesses are leading the charge by investing heavily in digital twins and remote collaboration tools​​ more than consumers.

And given the recent concerns tied to social media’s impact on the mental health of younger consumers, Meta’s push to put younger people in its metaverse may be ill-timed.

Our take: The convergence of AI and the metaverse holds immense potential, but it also demands careful consideration of ethical and safety implications, especially for younger users.

Balancing innovation with responsibility will be crucial as these technologies continue to evolve.

Go further: Read our new report on how AR and VR Are Reshaping the Future of Consumer Engagement.