The Potential Global Economic Impact of the Metaverse

ExecutiveSummary1 I.Introduction5 A.Whatisthemetaverse?5 B.Usesofmetaversetechnologiesaroundtheworld8 C.Challengesofmeasuringtheeconomicimpactofthemetaverse11 II.EconomicsofInnovation12 A.Theoriesofinnovation12 B.Economicimpactofinnovation17 C.Examplesofbreakthroughtechnologies19 III.MobileTechnology22 A.Focusonmobiletechnology22 B.Literatureontheeconomicimpactsofmobiletechnology24 IV.EmpiricalAnalysisoftheEconomicImpactofMobileTechnology27 A.Model28 B.Data29 C.Summarystatistics31 D.Regressionresults34 E.Robustness36 V.AnalysisofthePotentialEconomicImpactoftheMetaverse37 A.QuantificationofthepotentialimpactofthemetaverseonGDP38 B.Challengesandopportunitiesformetaverseadoption41 VI.Conclusion44 AbouttheAuthors45 ExecutiveSummary Thisstudyinvestigatesthepotentialcontributionofthemetaversetoglobaleconomicactivity.Themetaverseasconceivedtodayisconsideredbymanya“successor”oftheInternetandissometimesreferredtoasan“embodiedInternet.”Onewaytothinkaboutthemetaverseisasasetofinterconnecteddigitalspaces,includingimmersiveXRexperiencesthatcombinethedigitalandphysicalwords,inwhichindividualscaneasilymovebetweendifferentspacesandexperiencesaswellasinteractandcollaboratewithotherpeoplewhoarenotinthesamephysicalspace.Someoftheearlycomponentsofthemetaverseandtheexperiencesandactivitiesitisenvisionedtosupportorenablearealreadyinexhibit,suchasaugmentedreality,virtualreality,mixedreality,blockchain,andnon-fungibletokens.Thesetechnologies,whichareexpectedtobethebackboneofthemetaverseanditsofferings,arealreadybeingusedaroundtheworldbybusinessesandcreators.Asuserscontinuetoadoptthesetechnologies,theirpotentialtotransformsocietyinunpredictablewayswillonlyaccelerate. Estimatingtheeconomicimpactofthemetaversepresentssubstantialchallenges.Economictheoriesprovidesomeinsightsintohownewinnovationscanbeexpectedtoevolveandimpacteconomies,butaswithallinnovations,itisimpossibletopredictalloftheareasinwhichmetaversetechnologieswillbeused,theextentandtimingoftheiradoption,theinnovationsthatwillbedevelopedthatbuilduponthemetaverse,andalloftheirassociatedeconomicimpacts.Putsimply,thereisno“metaverse”tomeasureasoftoday.Yet,ratherthanwaitforsomepointinthefuture,wecanapplyexistingtoolsanddatafromrelatedsectors,technologies,andconsumerbehaviorstocreateapotentialanalogueforthemetaverse.Inidentifyingsuchananalogue,ourgoalisnottocomparethemetaversetoanothertechnology—afterall,ifthemetaverseweresimilartoanexistingtechnologythenitwouldnotbeaninnovation—butrather,ourgoalistolearnfromtheadoptionprocessandeconomicimpactofanexistingtechnologytodrawinferencesaboutthepotentialadoptionprocessandeconomicimpactofthemetaverse. Wedrawfromthedeploymentandinnovationimpactofmobiletechnologytoestimatethepotentialimpactofthemetaverse.Wecouldintheoryuseanybreakthroughtechnologicalinnovationasananalogueforthemetaverse,butweviewmobiletechnology—whichwedefinetoincludemobiledevicesenabledwiththeInternetandtheirassociatedinfrastructureandecosystem1—asparticularlywellsuitedforanumberofreasons.Thewaymobiletechnologycombinedexistingtechnologiessuchasphones,theInternet,cameras,andmp3playersandevolvedtochangehowweusetheInternetisreminiscentofthepaththemetaverseappearspoisedtofollow.Combiningexistingtechnologiessuchasphones,theInternet,cameras,andmp3playersintoasinglemobiledevicefundamentallyalteredhowweconnectwiththeInternetbyovercominglimitationsofgeography.Existingconceptionsofthemetaversehaveasimilarflavorofcombiningexistingtechnologies,suchasAR/VR,videoconferencing,multi-playergaming,anddigitalcurrency,andturningthemintosomethingnew.Whilemobile 1Wemeasuremobiletechnologyadoptionasthenumberofactivemobilebroadbandsubscriptionsper100people,sourcedfromtheInternationalTelecommunicationUnion(ITU).ITU’sdefinitionofactivemobilebroadbandsubscriptionsisasfollows:“Activemobile‐broadbandsubscriptionsreferstothesumofactivehandset‐basedandcomputer‐based(USB/dongles)mobile‐broadbandsubscriptionstothepublicInternet.Itcoversactualsubscribers,notpotentialsubscribers,eventhoughthelattermayhavebroadband‐enabledhandsets.Subscriptionsmustincludearecurringsubscriptionfeeorpassausagerequirement–usersmusthaveaccessedtheInternetinthelastthreemonths.Itincludessubscriptionstomobile‐broadbandnetworksthatprovidedownloadspeedsofatleast256kbit/s(e.g.WCDMA[(3G)],HSPA[(3G)],CDMA20001xEV‐DO[(3G)],WiMAXIEEE802.16e[(4G-level)]andLTE[(4G)]),andexcludessubscriptionsthatonlyhaveaccesstoGPRS,EDGEandCDMA1xRTT.”SeeITU,“WTIIndicatorswithDefinitions,”p.12,availableathttps://www.itu.int/en/ITU-D/Regional-Presence/AsiaPacific/Documents/Events/2017/Aug-aspstat2017/WTI_Indicators_with_Definitions_14Aug2017_final.pdf devicesuntetheredtheInternetfromdesktopcomputers,themetaverseisexpectedtofurtherbreakdownlocationbarriersandtransformawiderangeofindustriesbyenablingmoreseamlessandimmersiveexperiencesaswellascreatingasenseofpresencewithouttheneedtobephysicallypresentinalocation.Similartomobiletechnology,therangeofexpectedapplicationsforthemetaverseisfar-reaching,includingthecommunications,entertainment,education,healthcare,man