Metaverse Profits Await, But Most Businesses Not Ready to Invest
A KPMG survey shows that despite the potential of the metaverse to drive up business profits, companies are still hesitant to invest significant amounts of money into it. Most companies invest less than 5% of their technology budgets in 2023 into the metaverse, and 27% have not allocated any funds to it. The biggest barriers to investing in and embracing the metaverse are the lack of technology to support experiences, the high cost of development, and a dearth of appropriate employee skills.
The concept of a metaverse refers to a digital world where people can interact with each other through virtual reality platforms. Although it has a great potential to drive up business profits, there is still a lack of proven success for companies to invest big money into it, according to a survey by KPMG. In this article, we will explore the findings of the KPMG survey, which highlights the TMT executives’ views on the metaverse’s potential, its current state, and the obstacles that hinder its development.
Potential of the Metaverse to Drive Business Profits
According to the KPMG survey, 60% of TMT executives believe that the metaverse can drive revenue and profits and lower operating expenses as transactions shift from physical to virtual. They also believe that it can improve customer satisfaction through interactive experiences. However, despite the metaverse’s potential, a similar proportion of executives acknowledge that it still needs further refinement and development. The majority of TMT executives taking part in the survey feel that the metaverse is several years from becoming a thriving commercial ecosystem.
Investment in the Metaverse
Most of the global companies polled invest less than 5% of their technology budgets in 2023 into the metaverse, and 27% have not allocated any funds to the metaverse. Many in the tech, media, and telecom sector want to see evidence of greater metaverse usage before making significant investments. According to 40% of respondents surveyed, there is a lack of successful use cases to show a return on investment for the metaverse.
TMT executives surveyed remained skeptical about the viability of the metaverse, with 27% saying it is “an unattainable pipe dream” and 20% describing it as “a fad that will never live up to its hype.” Close to 50% of the respondents revealed their companies are either “watching and waiting” or assessing long-term business value before making major investments.
Companies’ Readiness for the Metaverse
Many of KPMG’s survey respondents say their companies are underprepared for the metaverse. The biggest barriers to investing in and embracing the metaverse are the lack of technology to support experiences, the high cost of development, and a dearth of appropriate employee skills. About half of the respondents said there is a lack of proper technology to support the metaverse, while 50% said the high cost to develop the metaverse is preventing their companies from fully investing in and embracing a strategy. Less than half, or 49%, noted that their companies lack employee skills to run the metaverse.
Current State of Companies Investing in the Metaverse
Tech companies from Meta to Disney have invested billions into the metaverse, but have yet to see solid success. Meta’s metaverse unit posted an operating loss of $13.72 billion in 2022. The stock declined 60% in 2021 when CEO Mark Zuckerberg declared that metaverse will be the company’s future and renamed Facebook to call it Meta. The company still relies heavily on advertising for its revenue.
Meanwhile, Disney reportedly cut its metaverse division as part of layoffs announced last week. The company had never explicitly outlined its metaverse plans. “Suffice it to say our efforts to date are merely a prologue to a time when we’ll be able to connect the physical and digital worlds even more closely, allowing for storytelling without boundaries in our own Disney metaverse,” Disney’s former CEO Bob Chapek said during its 2021 earnings call.
In conclusion, the KPMG survey shows that although there is a great potential for the metaverse to drive up business profits, companies are still hesitant to invest significant amounts of money into it. The lack of proven success, the high cost of development, and the lack