Billion-dollar market or graveyard? What the metaverse can really do

What is at stake

A two-storey villa with pool, beach and lighthouse – for 450,000 dollars. Not a stone laid, not a plank of wood cut. The villa exists only in a virtual world. Mark Zuckerberg has renamed his company Meta, Microsoft is investing, and platforms like The Sandbox and Decentraland are selling land for hundreds of millions of dollars. In 2021, virtual plots changed hands for more than 500 million dollars. But behind the hype, sober questions arise: what will the metaverse actually become – and who will make money from it?

The hype and the reality

Neal Stephenson, the science fiction author who coined the term metaverse thirty years ago, apparently has little interest in buying a villa there. The reason: many of today’s metaverse projects are more speculative assets than usable spaces. The technology is still not mature, user experiences are crude, and VR headsets are too unwieldy. Those investing in the metaverse today are betting on a future that will only materialise over several years – maybe.

Where money can actually be made

More concrete than virtual real estate are the use cases that already work: industrial digital twins (Siemens builds factories virtually first), training (surgery on virtual patients), architecture (walk-through building models before construction begins), entertainment (concerts in virtual arenas). These areas will grow. The metaverse as a personal retreat, however, will arrive more slowly than many expect.

What investors need to know

The metaverse will be big. But on the way there it will become a hype that disappoints expectations – just as most major Silicon Valley innovations have done. The internet needed the dotcom bubble before it became economic reality. The metaverse will go through a similar cycle. Those entering now must expect setbacks – but also a sector that will look very different in ten years’ time.

I wrote this piece together with Thomas Jahn and Larissa Holzki for Handelsblatt.