Jefferies analyst Simon Powell believes that the metaverse will be disruptive to society once it gains its true form over the next decade. There are a number of companies that could benefit greatly from the new digital ecosystem.
A single metaverse could be more than a decade away, but as it evolves it has the potential to disrupt almost everything in life that has not yet been disrupted, said Powell in a long research note on Monday, The Digitization of Everything. The adoption of various technologies was accelerated by the pandemic. From socializing to working, many people were forced to spend more of their lives online, from education to entertainment. The shift to an online world will continue. The metaverse is an online world that includes 3 D avatars, virtual reality and augmented reality. How things are done can change dramatically as this world takes form. Powell said that the digital world we can all move in and out of will be created by the digitization of everything. The metaverse is viewed as a new platform for the digital age. We see it as a wrapper that will roll up other digital platforms. It will not replace the internet, but rather build on top of it and allow us to step into, and perhaps live in it, when combined with other technologies and interfaces. This virtual environment is expected to change how people interact with the physical world, but also how we work with other people.
Drew Houston is a founder and CEO of Dropbox, and it's really excited about the vision, according to Drew Houston, founder and CEO of Yahoo Finance Live. If you're working in that kind of environment or in the metaverse, you need stuff. It is very early. It is a long journey but it is exciting. Jefferies' Powell acknowledges that it's still early for investors to pick definitive metaverse winners. It's possible for investors to draw up a plan of attack.
Focus on the hardware needed to lift the internet to become the metaverse. Then look at the software that will design and host it, and ultimately the businesses that create use cases on it, says Powell.
The analyst outlines a number of potential winners from the metaverse, mostly relegated to social media and gaming sectors.
Facebook Meta SNAP are both working on hardware to access the metaverse while having social platforms with significant reach. Roblox RBLX is the closest to being an early stage metaverse. TakeTwo TTWO is currently running three games that could be early stage metaverses. Electronic Arts EA has several IPs that would be ripe to be turned into walled garden metaverses: Skate, Sims, SimCity, and even its sports franchises. Activision Blizzard ATVI has one of the innovators in the early metaverse with World of Warcraft in its library. Call of Duty could use many tools in building a metaverse to better monetize and engage users cross platform, cross universe, single currency economy Music will likely play a role along the way from here to there, according to Powell. Music WMG already sees this as it has invested in several start ups that are building tools platforms in the metaverse.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter and LinkedIn.