Metaverse, is it worth investing? Blackrock’s analysis of risks and opportunities
Nigel Bolton: “It’s not a question of if, but of when and how”. Technology considered disruptive like the Internet “phenomenon” of the 1990s and the advent of smartphones at the turn of the second millennium. “Significant implications but we need to take action now”
28 Jan 2022
Domenico Aliperto
If from the point of view of technologies and user experiences the metaverse still represents a future perspective, in terms of investment opportunities the time to choose and act is now. Nigel Bolton, Co-Chief Investment Officer of BlackRock Fundamental Equities, is convinced of this, and with an analysis of the potential of this dimension outlines the possible developments for companies and investors.
Index of topics
• The new frontier of the digital world
• Investing in the technologies of the future
• Reward brands that understand consumers
The new frontier of the digital world
“It is not a question of if, but of when and how,” Bolton writes. “The world’s largest technology companies have made it clear that the metaverse is the next frontier of the digital world. The metaverse is very similar to the internet of the early 90s or the smartphone of the early 2000s. We know it will have a great impact and will change people’s daily lives “.
According to Bolton, especially for the younger generation, who already spend a lot of their time in virtual worlds, the screen is the limiting factor. “Virtual reality (VR) headsets and augmented reality (AR) glasses, along with powerful 5G mobile networks, will take this world to the next level. Tech companies – as well as consumer brands and marketing firms – are focused on one key goal: engagement. Technology and consumer companies believe the amount of time people spend on social media could multiply many times over in the metaverse, with huge revenue implications for companies selling advertising and consumer goods, ”Bolton adds.
Investing in the technologies of the future
The transition to the metaverse therefore has significant implications for investors and – although according to BlackRock it will not become the main stream until the end of this decade – investment opportunities are here and now, both in terms of technology and hardware, and between. consumer brands.
“The internet companies want to provide both the platform and the hardware, avoiding what happened when manufacturers were allowed to control the hardware and operating software for smartphones,” says Bolton. “Large hardware companies are also moving quickly to deliver next-generation technology. We believe a key breakthrough will come in the form of Ar glasses – objects that are light and smart enough to be worn every day – perhaps as early as the end of 2022. Producing Ar glasses that are wearable, stylish and fit to take us to the metaverse will require a new generation of chips, batteries and lenses “.
BlackRock thus wants to invest in companies that can provide large internet companies, companies that produce software and smartphones with the ingredients they need to develop eyewear and headphones. With respect to hardware, the company sees opportunities in the services that can be accessed by these new devices, and in the software that will shape the metaverse. “We are also interested in companies that will play a key role in ‘building’ the metaverse, designing and creating virtual worlds,” Bolton points out.
Reward brands that understand consumers
“We believe the metaverse is something that all brands will have to embrace to grow. Brands that have resisted other major technological shifts have done so by understanding the consumer and providing relevant emotional experiences. People flock to brands that understand their world – both the normal analog world and the emerging and engaging digital worlds “, notes the manager, according to which fashion brands are already selling virtual clothes and shoes in virtual worlds, so that consumers can dress up their characters online (aka avatar).
“We are looking for companies that lead the transformation of income streams, ready to be bigger and more meaningful in the years to come, and those that are investing to be where future consumers will be. Brands that invested heavily in e-commerce when their peers hadn’t yet are now expanding their market leadership, ”Bolton notes. “We will look for similar investments in the metaverse.”