Is the Metaverse a trillion-dollar industry？A summary of the JPMorgan Metaverse Report

[TL;DR]

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Investment bank JPMorgan released a report in February 2022 detailing why it believes Metaverse projects will become a massive industry, reeling in $1 trillion dollars in yearly revenue. Here are some of the report’s highlights in summary.

Metaverse projects already have a lot of money involved
As of 2021, $54 billion dollars was spent on fully-virtual goods, while $41 billion dollars is the current market cap of all NFT assets available for purchase in open marketplaces.

Converging technologies
Several different technologies are developing simultaneously and becoming ever more relevant to our routines. First came cryptocurrencies, which gave birth to intangible virtual assets such as NFTs and give users the power to take financial control without a centralized entity. Then Virtual Reality and Augmented Reality tools came along, which are becoming increasingly more accessible and interactive for the everyday user.

Metaverse already had nearly two decades of evolution
Second Life, for instance, without a doubt the first metaverse-like project ever created, is 19 years old and moves over $80 million dollars in revenue per year for its creators - while the company itself is worth $650 million. Out came other metaverse landmarks in history such as Microsoft acquiring Minecraft, the Decentraland release and the stratospheric rise of Roblox - a minecraft-like digital game based on user-generated content.

The ownership economy
In merely six months last year, the average price of a virtual piece of land in metaverse projects doubled from $6 thousand to $12 thousand dollars. Real-world corporate giants like Nike, Samsung are investing in these lands to create new forms of entertainment and influence over the users. As a result, real estate near those virtual areas end up appreciating.

Metaverses are creating a new workforce
If Sandbox is expanding, for instance, it needs actual people to build new tools, accessories, stores, plazas and ways to advertise them. While a portion of the workforce will be dedicated to marketing and content creation, others will work on the backend and frontend software structures of the world itself. Of course, you also have the service workers such as sales staff, entertainers and more.


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It’s of no surprise that the word “metaverse” has been in the minds and discussions of several investors, venture capitalists and technology enthusiasts over the past year or so. While many crypto projects building decentralized virtual worlds were already flourishing as early as 2017, it was only when Facebook announced its name change to “Meta” in hopes to focus on metaverse ventures that the novel term really caught the eyes of the mainstream world.

Much like any new technology, there are always predictions surrounding their value to society and validity as financial assets. Many of these predictions come in the form of reports created by financial firms to their investors and readers. Out of the many that have come out over the past year, a recent report by multinational investment bank JPMorgan has caught a lot of attention: the bank believes that the Metaverse will soon become a trillion-dollar industry.

In this article, we summarize the JPMorgan Metaverse Report of February 2022 with the main arguments for Metaverse becoming a trillion-dollar industry.

There is already a lot of money involved

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According to JPMorgan’s report, the trends surrounding virtual worlds are already very present in our daily lives. As of 2021, $54 billion dollars was spent on fully-virtual goods, while $41 billion dollars is the current market cap of all NFT assets available for purchase in open marketplaces. Not only so, but crypto metaverse projects like The Sandbox have been consistently forming partnerships with mainstream companies; Sandbox (SAND) has totalled more than 200 so far.

JPMorgan also mentions the community engagement aspect of it. Roblox, a closed-source gaming platform built by users, has users sending over 60 billion messages per day to each other - which is absolutely massive.

Convergence of technologies

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The report also points out that, as a technological society, we are currently at an inflection point where several different technologies are developing simultaneously and becoming ever more relevant to our routines. First came cryptocurrencies, which gave birth to intangible virtual assets such as NFTs and of course the currencies themselves, that bring users the power to take control of their financial holdings without the need of a centralized entity. Then Virtual Reality and Augmented Reality tools came along, which are becoming increasingly accessible and interactive for the everyday user.

Another major milestone for the advancement of the metaverse revolves around decentralized governance: cryptocurrencies also allow users in most of these projects to vote for the updates and changes that they’d like to see in the metaverses, turning these organizations into technological organisms based entirely on their community’s best interests.
Nearly two decades of evolution


Although the mainstream interest around metaverse technologies is fairly new, JPMorgan argues that the applications themselves aren’t. Second Life, for instance, without a doubt the first metaverse-like project ever created, is 19 years old and moves over $80 million dollars in revenue per year for its creators - while the company itself is worth $650 million. Out came other metaverse landmarks in history such as Microsoft acquiring Minecraft, the Decentraland release and the stratospheric rise of Roblox - a minecraft-like digital game based on user-generated content. The document ends the timeline with the most recent news that shook the techworld: Microsoft acquiring Activision Blizzard for $68.7 billion, the biggest aquisition in tech history.

The ownership economy

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In a nutshell, as these projects gain more users and visitors, their decentralized economies also flourish. Parcels of land which used to be worth some tens of dollars up to a couple of years ago are now up to the hundreds of thousands. In merely six months last year, the average price of a virtual piece of land in metaverse projects doubled from $6 thousand to $12 thousand dollars. What attests to the livable nature of this real estate growth is its similarity to the real world - prices are spiking in metaverses like Decentraland and Sandbox because real-world corporate giants like Nike, Samsung (and JPMorgan itself) are investing in these lands to create new forms of entertainment and influence over the users. As a result, real estate near those virtual areas end up appreciating.

A new workforce

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With the creation of new worlds with new forms of entertainment and social interactions, comes new economies. Since metaverse projects base themselves around decentralizations, asset ownership and cryptocurrencies, it allows for fully-digital economies to surface - each with their own internal frameworks and banking structures.

JPMorgan also notes that the game can’t simply grow by itself without active influence of new up and coming professionals. If Sandbox is expanding, for instance, it needs actual people to build new tools, accessories, stores, plazas and ways to advertise them. While a portion of the workforce will be dedicated to those areas, others will work on the backend and frontend software structures of the world itself. Of course, you also have the service workers such as the one depicted in the image above - that’s your guards, sales staff, entertainers, post officers (yes there are those) and more.

According to JPMorgan’s estimates, metaverse advertising will become a $18.64 billion dollar economy by 2027. As for the entire ecosystem itself? As mentioned previously, the investment bank firmly believes that the Metaverse will receive over one trillion dollars in yearly revenue. Yes, $1 trilllion per year. Will their estimates come true? It is very hard to tell at this point, but one thing is very clear: the metaverse is here to stay.



Author: Gate.io Researcher: Victor Bastos
* This article represents only the views of the researcher and does not constitute any investment suggestions.
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