Read our topical report for the full findings of our survey of middle market business leaders with analysis and commentary from our digital experts.
Typically, digital investment is the first area to receive a hair cut in a recession. However, in The Real Economy’s latest topical survey on digital transformation, 49% of respondents signalled an intention to continue as planned with their digital investments in the face of recession. The stated intention from almost half of respondents to carry on as planned emphasises the escalating importance of digital strategy to middle market businesses.
For many, the Metaverse represents the culmination of, or at least the next step in, our digital realities. We outlined earlier in the year why Boards should be considering the Metaverse today. The Metaverse represents a market that analysts are projecting to be worth between $10tn and $15tn by 2030.
Is now the time to invest in the Metaverse as part of your business’s digital transformation strategy?
With 69% of respondents expecting these investments to be a higher strategic priority in the next three years we explore what areas of digital investment might be crucial today, and which areas of technology are likely to move so significantly that investments today are likely to be superseded by rapid advancements by 2025 and beyond.
Starting with the top priorities from our panel of middle market business leaders - the key areas for digital investment were digital marketing (51%), CRM and customer analytics (49%) and data analytics and business intelligence. A key priority therefore is business development, marketing, and brand.
Digital investments can be a crucial area where high quality understanding of customer data and patterns can unlock new markets, attract new business, and retain key customers. But is the Metaverse a key area to consider now?
For many, the Metaverse will not be strategically important in the immediate future. Consumer related spend in the near future is expected to be grounded in gaming, tokens, and VR/AR hardware (see below). There are markets for other sectors - fashion retailers and brands have begun to explore the Metaverse, including consumer heavyweights Gucci and Nike.
These initiatives can, at times, feel like experiments. Many brand advisors believe experimentation today and developing a deep understanding of this new market will unlock rewards ahead of competitors in the future, arguing late adopters will be left behind. This may be true.
According to projections from Bloomberg it is beyond 2025 that spend on advertising is expected to rapidly grow, indicating that by this point the Metaverse will be gaining momentum as a market. Digital investments today, for example CRM systems, may not capture fields, data and records that are linked to the Metaverse as it is too soon. If the Metaverse begins to arrive in 2025, this may be the timeframe to consider ensuring that digital strategies in marketing, CRM and customer analytics capture and assess the Metaverse market. By 2030 it will be crucial to capture this information.
For some boards, there may be good reason to take very early steps today – especially in digital industries such as gaming. For most it will be a decision on whether to be an early or late adopter at the end of the 2020s in integrating metaverse capabilities into their digital marketing, intelligence, and CRM systems.
The hardware is the resource that performs the digital work. Most of us are aware that rapid advancements in computing shrinks the size, energy and output of devices. A PlayStation console released in 1994 was broadly the size of a cereal box and the weight of several bags of sugar. The equivalent device today would fit into your pocket and cost a fraction of the original price. A modern console or computer the size of a Weetabix box is dramatically more powerful than its ancestor from the early 90s. We all carry very powerful computers in our pockets - our mobile handsets.
The Metaverse takes place in digital, real-time environments. These virtual worlds require enormous computing power that isn’t in common use today. Gaming engine environments you can see today are misleading, as these environments are relatively basic even though they might appear photo realistic.
These current digital worlds are pre-built and pre-rendered. Video game environments look realistic but are constructed (digitally) within very narrow (virtual) walls. For example, your digital avatar in FIFA can reflect you playing football, but it cannot step outside of the stadium and handle a range of activities that would be needed in a deep and varied metaverse. FIFA does not facilitate you attending a music concert with friends after the game or training as a concert pianist in the event. Game worlds today often look fantastic, but huge amounts of computing power will be required at a point where true, deep and varied meta worlds exist.
For boards investing today, it is likely no computer at any cost will be future proof to the extent it will be anything but a museum piece by the time the Metaverse arrives.
We will experience the Metaverse through either augmented reality or virtual reality. The consumer market eagerly awaits the long-anticipated virtual reality headsets from Apple (expected in the first half 2023). Apple’s iPhone revolutionised the handset industry and many anticipate their headset to do the same. This is no given – another product may appear from left field and become the market leader. In October 2022, Meta (formerly Facebook) announced a $1,499 VR headset incorporating significant advancements. At this price point we are still a long way from widespread adoption across both consumers and businesses.
Greater variety will be needed across headsets as different users will have different needs – especially across business and enterprise application. For example, an automobile manufacturer might value robustness if their headsets are attached to terminals with multiple users or in busy spaces. These headsets can be used by remote engineers to troubleshoot issues in the production line or consider efficiencies in the manufacturing process.
Architects, in comparison, may have very different priorities. They may value portability, comfort or features such as surround sound music as they seek to create a premium digital space as part of the client experience. A slick, ‘Apple’ style headset may be crucial in this environment.
At present, metaverse environments are early stage and the hardware used to enter them is similar. However, by 2025 the technologies will almost certainly have advanced. There will almost certainly be a broader selection of options to choose from which will have greater levels of performance than those available today.
In relevant industries, now may be the time to make digital investments in Metaverse technologies. For many, now will be the time to try experimenting or at least monitoring the development of these technologies. Keep an eye out for Apple’s headset in 2023 and consider how your own product lines, services and workforces might apply in a world with greater international, digital connectivity than ever before.
With 2030 often cited by analysts as a point in time when the Metaverse will represent a multi-trillion market, 2025 is a key point to consider as the market will begin to compound and develop three years from today. 69% of respondents highlighting digital investments as strategically important in the next three years – it is almost certain that this number will be much higher in our 2025 survey.
For more information on Metaverse and digital transformation, contact Ben Bilsland.
As investing in digital strategies becomes more of a priority for the middle market, our experts have put together some practical points to help you make the most of your digital investments.