Once deemed the next big thing, the metaverse has had a mixed evolution. How can retail, leisure and hospitality businesses make the right moves on their metaverse play?
Our WTW Retail Futures report last year, looked at the metaverse's potential to provide immersive customer experiences and additional revenue stream for brands. Today, the outlook for the metaverse is more mixed.
In this brief insight, we'll consider the pros and cons as they stand, and offer some considerations for retail, leisure and hospitality organizations when whether they're evaluating their next metaverse move, or choosing to watch and wait.
The metaverse: Previous and current outlook
Back in 2022, investment in the metaverse was estimated at $120 billion, with predictions of growth to $5 trillion by 2030. In 2024, earlier hype has waned, partly due to the rise of AI in capturing the public imagination.
While funding for the metaverse has seen a significant drop as total amount invested to be around $1.97 billion in 2023, according to crunchbase, customer-facing industries are continuing to experiment with the underlying technologies. One example is Disney. After scrapping its metaverse division in 2023, Disney, for example, recently announced it will invest $1.5 billion in Epic Games to create a new universe to coexist alongside Epic Games' popular game, Fortnite. This multiyear project will let people play, watch, shop and engage with content and characters from Disney intellectual property such as Star Wars and Marvel Comics.
Meanwhile, metaverse-related technologies like AR, VR and Web3 are still developing.
Apple's launch of the Vision Pro AR/VR headset, priced at $3,499, emphasizes spatial computing and signals a move away from the 'metaverse' terminology. The high price may also restrict its initial market penetration. Meta also launched its Quest 3 VR headset at a much lower price, integrated with the company's Llama-powered Meta AI update, which lets users carry out activities such as looking at virtual screens within the headset while also getting responses about objects in their offline view.
So, while the initial hype and investment rush may have died down, the metaverse still holds potential for transforming retail, leisure and hospitality experiences. We'd encourage customer-facing industries to continue to test and learn, with an emphasis on complementing your existing online and offline channels and evaluating the opportunities with caution.
Pros and cons of the metaverse for retail, leisure and hospitality
Now may be time to weigh-up the core pros and cons on the metaverse in the context of your existing strategy.
In terms of the potential advantages of the metaverse, these include:
- Enhanced customer engagement: The metaverse enables you to create immersive and interactive experiences that can significantly boost customer loyalty and satisfaction
- New revenue streams: Opportunities for monetizing virtual goods, such as digital apparel and accessories, along with unique marketing campaigns involving NFTs and virtual influencers, can open new avenues for revenue
- Rich data insights: The metaverse offers deep insights into consumer behavior, enabling personalized shopping experiences and more effective marketing strategies.
The core drawbacks of the metaverse include:
- Technological limitations and high costs: The reach of metaverse experiences is currently limited by the availability of advanced technology and the high costs associated with creating immersive environments
- Talent shortages: There's a scarcity of skilled professionals capable of developing and managing sophisticated virtual environments
- Data security and privacy concerns: New types of data collected in the metaverse pose significant privacy risks and security breaches can have real-world consequences.
Questions you should ask before investing in the metaverse
We suggest a range of critical questions when considering your next metaverse move, including:
- What are your objectives and who is your target audience when it comes to the metaverse?
- What are the full technological and financial requirements for developing any sustainable presence in the metaverse?
- How can you ensure data security and privacy to protect consumer data and prevent breaches?
- Are you ready to develop a talent strategy to establish your metaverse presence and maintain a competitive edge?
- Do you have comprehensive KPIs and risk management strategies to evaluate the success of metaverse initiatives while mitigating the potential risks?
For a smarter way to evaluate the risks and opportunities of the latest technologies for your retail, leisure and hospitality business, get in touch with our industry experts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.