The Once Booming 'Metaverse' Investment Slows Down... "Profit Guarantee Difficult"

Survey of 767 Global Executives
50% Respondents "Cautiously Monitoring, Waiting to Invest"

Companies are increasingly struggling over the 3D virtual world metaverse, which once sparked a global craze like generative artificial intelligence (AI). While they still believe there is growth potential, the fact that they must invest for years to build a metaverse ecosystem without guaranteed profits is causing hesitation.

[Image source=Reuters Yonhap News]

According to CNBC and others on the 2nd (local time), a global accounting firm KPMG conducted a survey of 767 executives from technology, media, and telecommunications (TMT) companies with annual revenues exceeding $250 million (about 330 billion KRW) at the end of last year. The results showed that 60% of respondents believed the metaverse could generate revenue and profits while reducing operating costs. This indicates a high expectation for the economic growth potential of the metaverse.

However, when looking at the metaverse investment amounts of the companies participating in the survey, 70% of respondents said their metaverse budget accounts for less than 5% of their technology-related budget this year. Additionally, 27% said they allocated no budget to the metaverse at all. When asked whether they would increase their metaverse-related budget in the future, only 20% said they would increase it by more than 10%, while most said they did not expect to significantly expand their investments.

Why are companies so reluctant to invest heavily despite predicting that the metaverse will generate profits?

Four out of ten respondents said they have not seen clear cases of success even when investing. At the same time, 59% of respondents said in another question that additional development is needed for the metaverse’s potential to shine. This means they must pour money in for years without guaranteed returns.

KPMG explained, "The majority of TMT executives participating in the survey believe that the metaverse still requires several more years to establish itself as a commercial ecosystem." Mark Gibson, KPMG’s U.S. TMT leader, said, "This situation places companies in a typical investment dilemma."

Global executives participating in the survey also answered that the lack of necessary technology to support the metaverse, high development costs, and the scarcity of skilled developers make investing in the metaverse more difficult.

As a result, about 50% of global company executives said they would watch the situation carefully and wait before making investments. If even one successful case emerges in the metaverse, large-scale investments could follow.

Recently, Disney, Microsoft (MS), and Meta Platforms, the parent company of Facebook, have successively exited the metaverse business. According to The Wall Street Journal (WSJ), Disney dismantled its metaverse strategy department, MS discontinued its virtual reality workspace project AltspaceVR, and even Meta, which showed enthusiasm for the metaverse and changed its company name in 2021, recently included most of its metaverse engineers in layoffs.

This content was produced with the assistance of AI translation services.