The metaverse was one of the major themes at CES2023, as evidenced by a wide range of sessions and tech solutions. The keynote from the Consumer Technology Association identified metaverse as one of the top themes, with the tagline of “Closer Than You Think.” I believe there are arguments both for and against the near-term emergence and impact of the metaverse. But first, it is important to define what is even meant by the term – and there is no universal agreement on the metaverse concept. We will explore the concept in this blog, as well as the implications for the P&C insurance industry.
My definition of the metaverse is as follows, although others may have different views. The best way to think of the metaverse is as a set of collective virtual worlds. By collective, I mean that multiple people can join and collaborate in the same virtual space. This differentiates the metaverse from virtual reality applications used by a single individual via a VR headset. Some think of the world painted by the novel Ready Player One as the ultimate metaverse. In some ways, that is appropriate, but the reality is likely to be very different. The Ready Player One world is gaming-centric. Games will certainly be a leading component of the future metaverse. However, the metaverse will have the most impact and value when it includes shopping, traveling, learning, telehealth, virtual meetings, social interaction and other aspects of life – all within virtual worlds. In essence, the metaverse will become the next generation of the internet.
What is necessary for this to become a reality is the acceleration of immersion technologies that were on full display at CES2023. Technologies addressing every human sense – touch, smell, taste, hearing and sight – were prominent at the event. A second critical success factor is the maturity and broad availability of content creation platforms. There were many solutions featured at CES, and the sophistication (and content libraries) are rapidly increasing. Ultimately, there need to be realistic virtual worlds for people to inhabit and actively participate in the wide variety of activities envisioned.
Despite technological progress, the idea of millions of people immersed in virtual worlds seems like decades away. Remember that Ready Player One was set in the 2040s. However, consider these statistics:
- The U.S. has 164 million gamers today, with about 60% being more serious gamers. As immersive experiences improve and virtual worlds become even more realistic, these gamers will be the first true inhabitants (if I can call them that) of the metaverse. (Source: The Consumer Technology Association, 2022).
- A recent McKinsey study finds that the average person expects to spend almost four hours a day in the metaverse in five years. Gen Z expectations are closer to five hours, while Baby Boomers are a bit less than two hours a day. Whether this comes to pass or not, it is still remarkable that the expectations are this high. (Source: McKinsey Metaverse Consumer Survey, February 2022).
So, what will it be? Metaverse adoption and implications in the next decade, or is the true metaverse a couple of decades away? My view is that it probably trends toward the latter. Much like the evolution toward an autonomous vehicle future or the emergence of a true general artificial intelligence, the metaverse is likely to evolve slowly over the next couple of decades. The tech is evolving rapidly, but the content and user adoption may take a while before it becomes pervasive. There will certainly be implications in the next decade for gaming and other specific areas, but it seems unlikely that the average person will be logging into virtual worlds and spending hours every day in that timeframe.
See also: The Metaverse and Financial Services
How should insurers think about the metaverse? Despite the press and the hype around this topic, I do not think it is something that should be high on the priority list for insurers. To be sure, the industry should track developments and consider future implications. But for now, the focus should be more on virtual and augmented reality for use cases such as training and healthcare. It is fun to think about, and the metaverse may dramatically alter human existence in the future, but that future is a ways off.