In Ernest Cline’s 2011 science fiction novel, Ready Player One, people turn to a virtual, utopian world called OASIS to escape poverty, war, and climate change.
Using a visor and haptic gloves, they engage with other players, play games, shop, and much more.
The book is set in a dystopian world… in 2045.
But that imagined world is already a reality today. It’s called the metaverse.
In December, I showed you why the metaverse is the future of the internet. The metaverse is a virtual environment, where – using an avatar – you can “live,” work, and have fun. It’s open to everyone.
And some metaverse platforms already have developed economies. So you can buy and sell things.
Most people first heard about the metaverse in October 2021. That’s when Facebook became a “metaverse” company and changed its name to Meta.
The metaverse is still in the early stages. But Bloomberg Intelligence says it can reach revenues of $800 billion by 2024.
This lofty projection is luring investors… including some of the biggest names in entertainment, tech, and finance.
So, whatever your feelings about the merging of our physical and digital lives in general, the metaverse is here to stay.
And it’s one of the key themes on my radar for the coming years. I believe the Meta-Reality trend will affect everything we do. That includes retail, tourism, healthcare, art, sports, and entertainment.
And that spells opportunity for investors…
Storytelling Without Boundaries
Earlier this month, Disney (DIS) appointed Mike White to head up its strategy for the metaverse. This is a big deal for Disney. But it’s also a big deal for the entertainment sector as a whole. Here’s why.
Disney is an entertainment giant. No other company in the industry matches its size and scope. It has a market cap of $268 billion. It’s bigger than Netflix, Nintendo, and Spotify combined.
From film and animation studios to parks and resorts, TV networks, cruise lines, consumer merchandise, comic studios, and music… Disney has everything covered in entertainment.
It has also been gearing up for a streaming war with Netflix. Across its Disney+, Hulu, and ESPN services, Disney has 179 million subscribers worldwide. Netflix has 222 million. But Disney plans to double the number of countries where Disney+ is available by 2023.
The company’s streaming service will play a key role in the development of its metaverse platform.
Disney will use the metaverse to connect the physical and digital worlds. This will help it establish storytelling without boundaries.
But Disney isn’t the only household name staking its place in the metaverse…
Game On for the Metaverse
Microsoft (MSFT) recently joined the race. It plans to buy Activision Blizzard (ATVI) for $75 billion. It is Microsoft’s largest ever deal.
Activision Blizzard makes popular games like Call of Duty and World of Warcraft.
Microsoft described the purchase as a pathway to the metaverse. That’s because the early adoption of the metaverse will likely hinge to a large extent on gamers. The world of gaming is already far along in the metaverse journey.
With Activision, Microsoft will acquire several online games with metaverse attributes. For instance, 5.65 million people play and socialize in Activision’s World of Warcraft every month. They interact as avatars in a virtual fantasy universe.
And here’s the critical part. The gaming phenomenon has already transitioned from pay-to-play to free-to-play.
Now, it’s moving to play-to-earn.
Gamers can now get paid for the time they spend playing… They might get paid in a digital currency or digital assets that they can then sell outside the game.
British investing firm Three Body Capital Management estimates that gamers could earn the equivalent of around $100 per week. This is sure to entice even more players.
Microsoft already has a strong presence in the gaming market. It owns the Xbox gaming console. On this, you can play more than 100 different games, including Activision’s Call of Duty.
And then there’s the wildly popular Minecraft. Microsoft bought that game in 2014 for $2.5 billion. It has more than 100 million players every month. They can dream up entire universes, where they can play with people from around the world. That’s another example of the metaverse in the making.
Here’s the bottom line. Microsoft’s empire goes far beyond Windows and Excel. Its acquisition of Activision is its latest move in the steady expansion of its empire.
This move will make Microsoft the third-largest gaming company in the world.
Microsoft’s move to acquire Activision is its on-ramp to the metaverse.
Banking on the Metaverse
Finally, you have investment bank JPMorgan. It recently became the first major financial institution in the metaverse. It opened a virtual space – Onyx Lounge – in Decentraland.
Decentraland is an online world. It combines virtual reality and blockchain technology. Blockchain is the technology cryptocurrencies such as Bitcoin and Ether are built on. In Decentraland, users can exchange cryptocurrencies for land and buildings.
You may remember I wrote to you in December about a $2.43 million deal for a plot of virtual land. That was in Decentraland.
Onyx Lounge is named after JPMorgan’s in-house blockchain payments system.
It aims to eventually operate like a bank in the metaverse, just like JPMorgan does in the real world.
The virtual worlds in the metaverse tend to have their own currencies. For example, in Decentraland, the currency is the MANA token.
In February 2021, JPMorgan announced that it was developing its own digital coin for payments – JPM Coin.
This is a complete 180 on virtual assets from JPMorgan. Not so long ago, CEO Jamie Dimon called cryptocurrencies a fraud.
But now, JPMorgan has developed its own digital coin and established a presence in the metaverse. So it will be able to help people in these virtual worlds with cross-border payments, the creation of financial assets, etc. The opportunities are virtually limitless.
JPMorgan labeled the metaverse a $1 trillion opportunity. So, it seems it is now putting its money where its mouth is.
How to Get in On This Revolutionary Trend
These are just a few examples of leading companies currently jumping on the metaverse bandwagon. And things are moving quickly!
Here’s the bottom line: The metaverse is the next chapter for the internet. It will revolutionize multiple industries. And it will create trillions of dollars in the process.
So how do you position yourself to profit?
If you want to get some exposure to this developing trend, you can buy a piece of The Roundhill Ball Metaverse ETF (METV). It’s listed on the Nasdaq.
METV invests in companies with exposure to the growing metaverse space. That includes Microsoft, video game developer Roblox, chipmaker Nvidia, and software company Unity. It has about $785 million of assets under management.
Happy investing, and I’ll be in touch again soon.
Editor, Inside Wall Street with Nomi Prins
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