| INTEGRATIVE INSIGHTS ON EMERGING OPPORTUNITIES |
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dgearhart@firstanalysis.com
npetrusich@firstanalysis.com
- The metaverse is poorly understood and has failed to gain traction as a concept, in large part because many offerings to date have focused on niche or novelty uses that have little or no relevance to most people.
- But we think key technologies underpinning the metaverse - virtual reality, augmented reality, and extended reality - have significant potential when applied to e-commerce to enhance the everyday experience of the billions of people who shop online.
- We expect brands and retailers to increasingly demand technologies that help them compete and increase sales by delivering more engaging, immersive online experiences, particularly those that help consumers better understand and appreciate product qualities via online interactions that replicate experiences of holding, examining and evaluating products in stores.
- We discuss how these technologies work, key application areas, why sellers and consumers find them compelling, and which immersive technology provider strategies seem most likely to succeed. We also profile several interesting immersive technology providers.
TABLE OF CONTENTS
Includes discussion of 10 private companies
Focus on immersive environments, relatable use cases to replace overhyped metaverse
Many types of immersive e-commerce environments
The potential audience and user base for immersive e-commerce is substantial
Compelling reasons to adopt immersive capabilities
Multi-year tailwind for thoughtfully positioned solutions
Representative vendors
Compelling opportunity in tech for immersive e-commerce experiences
First Analysis E-commerce Optimization Index rangebound near one-year low
E-commerce optimization M&A pace slows
E-commerce optimization private placement pace slowed in Q3
Focus on immersive environments, relatable use cases to replace overhyped metaverse
Most people have encountered the term metaverse, particularly since Facebook adopted the name Meta to reflect its metaverse ambitions. However, despite the broad awareness, most people do not understand what the metaverse means. Without a widely accepted and understandable definition, metaverse proponents have stumbled in their efforts to educate the market. Their reliance on general descriptions - for example, the metaverse represents a merging of the real and digital worlds - provides insufficient insight and often creates confusion.
In addition, the most visibly promoted metaverse offerings, which are largely focused on niche or novelty uses that have little or no relevance to most people, have done little to advance mass-market understanding. Examples include buying and selling digital real estate, purchasing digital representations of things in the form of non-fungible tokens (NFTs), buying and changing clothes on digital representations of people (called avatars), and spending the majority of one's time in virtual environments viewed in headsets that display three-dimensional spaces. Buying things in metaverse applications often requires paying with cryptocurrencies, which most people do not have nor know how to get, making the metaverse even less accessible. As a result, most people, even institutional investors, have a negative perception of the metaverse, considering it aspirational technology at best or pure hype at worst.