Contact Career
Menu

Embracing Disruption

The metaverse: is it real?

We think standard definitions of the metaverse underplay its disruptive and transformative potential. By seamlessly integrating “real” life and digital worlds, it creates a new level of interconnectivity – and major new opportunities for investors.

Key takeaways
  • Our take on “disruption” is that changes facilitated by new technologies will reverberate far beyond the tech sector into every corner of our lives – and the metaverse is a prime example of this trend
  • As we increasingly embrace digital worlds – from online gaming to video calls – the metaverse represents a new frontier of seamless interconnectivity between digital and physical spheres
  • With people growing increasingly comfortable with “real life” going digital, the total aggregate revenues of companies in the metaverse could reach USD 25-30 trillion by 2040
  • As the metaverse offers increasing interoperability of “real life” and digital worlds, it will also encompass traditionally non-digital industries, creating multiple opportunities for investors
We don’t think of disruption in the traditional way – as a phenomenon limited to the tech sector. Granted, it may have begun with innovations in ride-hailing and rentals, but the true disruptors today reach into every aspect of our lives, from healthcare to smart homes. Disruptive trends will transform the competitive landscape – redefining the “winners” and “losers” – and the emergence of the metaverse underscores the shift that is taking place. We don’t think of the “metaverse” as something limited to virtual reality. Rather, we believe the metaverse is the culmination of the last 30 years of digital acceleration in nearly every facet of daily life. That brings exciting implications for investors.

The metaverse is the product of decades of digitalisation

“Metaverse” is such a new term that there’s no agreed-upon definition. Mostly it is used to describe digital worlds or virtual spaces enabled by virtual or augmented reality. But we believe this definition is too limited. Rather, the metaverse should be thought of as a seamless integration of the physical and digital worlds. It’s an existence in which our digital identity is as valuable as our physical identity, rather than simply some separate digital place that we visit in virtual reality or augmented reality – as in the Steven Spielberg movie Ready Player One. In our definition, the metaverse and Web 3.0 – a version of the internet based on blockchain that supports a new level of interconnectivity – are two sides of the same coin. Accordingly, we think that the metaverse is a megatrend that will drive profound changes in the evolution of society.

Digital natives are a growing demographic cohort

The data show that internet adoption globally continues to grow, and each age cohort is larger in size than the previous generation. This is creating more “digital natives” – people for whom working and living in the digital space is second nature. As the number of digital natives grows, the world is spending more time on the internet per day. Accordingly, we believe that the total aggregate revenues of companies in the metaverse could reach USD 25-30 trillion by 2040 – a quadrupling in size compared to the equivalent revenues of today’s internet.

Future drivers of sustainable fixed income solutions for investors to consider 

Prior to the digital evolution, our attention was solely focused on the physical world, but with the advent of television, followed by computers and mobile phones, we divert more and more attention to digital worlds, and we expect this trend to continue. With this shift in attention to digital worlds, we have seen many physical-world concepts manifesting themselves in digital worlds. To give a few examples: 

  • Remote work was embraced during the Covid-19 pandemic. One video conferencing service now hosts 3.3 trillion minutes of video calls on an annual basis.
  • In-real-life (IRL) friends became online communities on established and new social networks, some of which enjoyed exponential growth in the preceding decade.
  • The cameraderie once found in five-a-side soccer or little league baseball is now found in online multiplayer games, with platforms that host tens of millions of users daily.
  • Augmented reality (AR) filters are the new makeup. Is it important to conform to conventional definitions of “beautiful” in real life when you can use a new filter on social media?
  • Money and property have migrated to the digital worlds via cryptocurrencies and non-fungible tokens (NFTs)

Move over, Web 2.0 – the metaverse and Web 3.0 are next

Just as Web 2.0 represented a giant leap forward for the internet with the advent of social networking and cloud computing, Web 3.0 looks to offer a new level of interconnectivity based on blockchain technology – and it is one of the foundation stones of the metaverse. The combination of Web 3.0 and the metaverse is expected to deliver on several key themes:

  • Interoperability between digital and physical worlds as a common public ledger in the blockchain enables physical-world interaction with digital assets like non-fungible tokens (NFTs) and cryptocurrencies, and digital interaction with physical assets like real estate
  • Massive user scale capable of thousands of users interacting simultaneously
  • A sense of presence as opposed to the limited means of interaction today
  • New business models in which the creators/users are the owners rather than the product

The precursors to many of these changes are already underway, with significant investments committed by well-known tech behemoths into construction of a metaverse, cryptocurrencies and NFTs seeing rapid growth in use, videoconferencing becoming an everyday part of life, and AR filters making us all look better online. These represent just the beginning of the investment opportunities arising from this next wave of digital transformation.

What it means for investors: prepare for the metaverse “IRL”

How should investors capitalise on this theme? Initially we see potential opportunities to invest in companies creating Web 3.0 infrastructure, the application ecosystem built to utilise this infrastructure, and the digital worlds that emerge through these interoperable applications.

Taking a longer-term view, we believe that the metaverse will grow to encompass many non-digital industries. For example, it could help enable more efficient and trans¬parent maintenance of property records in real estate, streamline complex financial transactions via blockchain, and optimise supply chains in manufacturing and agriculture. That is why investors should draw on multiple, cross-industry perspectives to identify the winners in this environment.

Is the metaverse real? Yes, we think it is. As the divide between our “real” and digital lives diminishes, the metaverse is not some distant, faraway land. It is quite literally closer than you think – and so are the investment opportunities it offers.

  • Disclaimer

    *On 25 July 2022, AllianzGI completed the transfer of investment teams (including 87 Investment Professionals) and USD 101bn of assets they manage to Voya Investment Management as part of a strategic partnership. Two thirds of the assets continue to be managed on behalf of AllianzGI clients outside of the US. Drawing on a 50-year investing legacy and the expertise of 300+ investment professionals, Voya IM strategies span public and private fixed income, equities, multi-asset solutions and alternatives.

    Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors might not get back the full amount invested. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable at the time of publication. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail. The Management Company may decide to terminate the arrangements made for the marketing of its collective investment undertakings in accordance with applicable de-notification regulation. The duplication, publication, or transmission of the contents, irrespective of the form, is not permitted; except for the case of explicit permission by Allianz Global Investors GmbH.

    For investors in Europe (excluding Switzerland)
    This is a marketing communication issued by Allianz Global Investors GmbH, www.allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). The Summary of Investor Rights is available in English, French, German, Italian and Spanish at https://regulatory.allianzgi.com/en/investors-rights. Allianz Global Investors GmbH has established branches in the United Kingdom, France, Italy, Spain, Luxembourg, Sweden, Belgium and the Netherlands. Contact details and information on the local regulation are available here (www.allianzgi.com/Info).

    For investors in Switzerland
    This is a marketing communication issued by Allianz Global Investors (Schweiz) AG, a 100% subsidiary of Allianz Global Investors GmbH.

    2178191

Explore Insights

Navigating Rates

Donald Trump poised for White House return

With all signs pointing to a Donald Trump win, we expect many of his populist policies to cause ripples, even though markets were largely priced for this outcome. How might investors navigate the election result?

DISCOVER MORE
by Gregor Hirt , Michael Krautzberger , Virginie Maisonneuve | 06/11/2024

Navigating Rates

Bond market view: smooth landing in sight?

The US Federal Reserve’s policy pivot has ushered in a new investment regime that should help provide a near-term floor for risk sentiment

Read More
by Julian Le Beron , Luke Copley | 24/10/2024

Navigating Rates

CIO roundtable: what can investors learn from a super-election year?

Going into the year, 2024 was always set to be an intense election period, with polls in more than 60 countries. It turned out to be even more action-packed than anticipated, with snap elections in France and Japan giving investors even more to focus on, in addition to the US election. What are the implications of one of the busiest years in election history? We asked our global CIOs how investors could position themselves in a shifting political terrain.

Read More
by Gregor Hirt , Virginie Maisonneuve , Michael Krautzberger , Eric Stein | 14/10/2024

Allianz Global Investors

You are now leaving the Allianz Global Investors’ website and being redirected to

Important Information for Clients

Select Role
  • Individual Investor
  • Professional Investor
  • Please read the following page carefully before proceeding as it contains important information concerning your use of the website and explains certain legal and regulatory restrictions applicable to any investment in Allianz Global Investors investment products. By pressing ‘Confirm’ you agree that you have read and understood the following information.

    The information contained herein is provided solely for use by professional / qualified clients and their advisers in Switzerland and should not be relied upon by retail clients. Any person unable to accept these terms should not proceed any further.
    This website contains information about Allianz Global Investors’ (AllianzGI’s) investment products and services available to qualified clients according to Swiss law.

    The information provided in this site is directed at clients from Switzerland only. It does not constitute an offer to sell or solicit an offer to purchase any investments by anyone in any jurisdiction in which such offer or solicitation is not authorized.

    AllianzGI makes no representation or warranty as to the accuracy or completeness of the information from other parts of the AllianzGI which is provided for information purposes only and is not intended as promotional material. AllianzGI has taken reasonable care to ensure the accuracy of information available through the site. However, the information may be amended at any time by AllianzGI without notice. As far as it is permitted under the Swiss Federal Act of 23 June 2006 on Collective Investment Schemes, AllianzGI does not accept liability for any loss, direct or indirect, owing to reliance on any information contained herein.

    Regulation and Status Disclosure
    Allianz Global Investors represents products and services of Allianz Global Investors (Schweiz) AG, www.allianzglobalinvestors.ch. Allianz Global Investors (Schweiz) AG, www.allianzgi.com, an investment company with limited liability, incorporated in Switzerland, with its registered office at Gottfried-Keller-Strasse 5, 8001 Zürich, registered with the local court Zurich CHE-142.648.785, authorised by the Swiss Financial Market Supervisory Authority (www.finma.ch). Details about the extent of our regulation by the Swiss Financial Market Supervisory Authority are available from us on request.

    Throughout the website Allianz Global Investors (Schweiz) AG may sometimes be referred to as Allianz Global Investors or AllianzGI.

    Copyright
    Copyright in this website is owned by Allianz Global Investors (Schweiz) AG. The copyrights of third parties are reserved. You may download or print a hard copy of individual pages and/or sections of the website, provided that you do not remove any copyright or other proprietary notices. Any downloading or other copying from the website will not transfer title to any software or material to you.

    You may not reproduce (in whole or part), transmit (by electronic means or otherwise), modify, link or use for any public or commercial purpose the website without the prior permission of Allianz Global Investors.

Please check the checkbox to accept the terms and conditions.