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PwC India’s recent survey of top executives in India indicates that business leaders have begun taking steps to harness the potential of the metaverse. A deep dive into its benefits and challenges
Almost 70% of respondents say that they plan to integrate it into their organisational activities, while 63% of companies that are actively engaged with it emphasise that they will fully embed the metaverse in their organisational activities within a year.
The COVID-19 pandemic, and the subsequent lockdowns in many parts of the world, introduced wide-ranging changes in business operations. Business leaders met, brainstormed, took decisions, hired, bought, sold and conducted many other aspects of their operations on digital platforms. This intense increase in virtual activities cast the spotlight on a relatively new player in the digital world – the metaverse – and its potential to take businesses to new heights.
Businesses are embracing the metaverse, both in India as well as across the globe. PwC India’s survey conducted early this year covered sectors such as technology, media and telecom (TMT), financial services (FS), pharma and healthcare, retail and consumer, industrial products, government, automotive and EdTech.
Though the term metaverse spans a wide spectrum of definitions, it mainly denotes a digital environment with a virtual world that mimics reality through the use of emerging technologies such as artificial intelligence (AI), low/no-code platforms, blockchain, cybernetics, 5G, edge computing, digital identity models, community and power platforms, augmented reality (AR), and virtual reality (VR).
More than 60% of the business leaders surveyed by PwC India affirmed that they have a detailed or good understanding of the metaverse - 48% have a good understanding of the metaverse, while 13% who have a detailed understanding have already begun harnessing its advantages.
Some sectors, because of the nature of work, are more aware about the metaverse. The TMT sector is the leader in this regard, followed by the FS segment.
Of the 28 companies surveyed from the TMT sector, 79% indicate that they either have a detailed or a good understanding of the domain (see the graph below). Driving most of the metaverse growth in this sector is advancement in AR-VR and blockchain technologies. Furthermore, technology and media companies are taking a leadership position by building solutions for business functions such as training and onboarding with the goal of leveraging their knowledge on the subject for their customers.
When it comes to timelines, 25% of India respondents say that their metaverse plans will be fully embedded in their activities within a year, while 47% say that this will take place in 2–3 years.
In the US, where a similar – but larger – survey was conducted in 20221, 38% say that they will embed metaverse in their business activities within a year. This is mainly due to the large online gaming market combined with a more developed technological infrastructure and early adoption of the technology, which has helped build momentum and enthusiasm among businesses around the possibilities of the metaverse in the US.
Globally, businesses have started exploring partnerships with some of the leading technology players in the metaverse to explore the possibilities and business opportunities and pilot projects. However, the metaverse ecosystem in India is still at a nascent stage where businesses are warming up to its opportunities and technology companies are still in the process of building their solution stack. It is estimated that it will be another year or two before companies start rolling out large-scale projects in India and 4% of the respondents from the US, and 7% of India respondents say that they will take more than five years to adopt the company’s metaverse plans.
As technology matures, businesses in India have been looking at the metaverse as another door to opportunity. Leaders across sectors have realised that they can carry out their business functions with ease on the metaverse, for instance, they can visit offices or factories, talk to employees remotely, and even test out new products and conduct trainings. With the growth in the online gaming industry, users are becoming more receptive to an avatar-driven virtual world and businesses have started leveraging this change to build innovative metaverse experiences for their customers.
Many leading fashion brands have launched limited edition virtual apparel for the users to explore. This is complemented by virtual try-on features provided by e-commerce websites where customers can visualise how an item of merchandise would look on them before making a purchase.
The metaverse also helps companies in the tourism space to offer immersive virtual travel experiences to their customers, enabling them to virtually visit popular or remote destinations from the comfort of their homes. Companies are also offering virtual tours of hotel rooms to prospective customers. FS companies are exploring new customer engagement channels through virtual bank branches and by creating digital lobbies.
Car manufacturers have embraced the metaverse by curating highly contextualised test-driving capabilities for their premium brands in a virtual world. They also provide virtual showrooms, entertainment zones as well as game areas in the metaverse.
These are just a few of the many possibilities the metaverse holds — in the same way that opportunities once opened up on social media sites.
Respondents in the US are more upbeat. 22% business leaders in the US say that the metaverse is the next internet, and 36% hold that it will radically change businesses.
Companies are already exploring metaverse avenues that boost business.
About 10% of the respondents to the India survey say that they have no plans of exploring the metaverse compared to the 13% in the US who are not planning to explore the metaverse yet.
An overwhelming 90% of the large and mid-cap companies surveyed indicate that they are either actively engaged in the metaverse or are looking into it.
For companies, the metaverse promises enriched consumer experiences, the possibility of marketing physical and digital products and services, introduction of virtual products — and a lot more. Much of this entails the use of specific technology. Companies are looking at — or have already introduced — virtual environment tools, enterprise blockchain, augmented reality (AR) and virtual reality (VR).
A sign of a company’s interest in a field is often seen in the assigning of designated roles within the organisation. When asked whether the respondents have any designated roles for areas such as the use of the metaverse, cryptocurrency or non-fungible tokens (NFT) in their company, 25% say that they do, while 40% say that they plan to create such roles.
Virtual environment tools (61% respondents), VR (48%), simulation modelling (44%), AR (40%) and enterprise blockchain (39%) are some of the technologies that companies plan to embed in the near future.
When survey respondents were asked about which metaverse-related areas their companies are likely to explore
Reimaging experiences with user-centric design principles will add value for companies exploring the metaverse, as it will help them to expand their brand identity in ways that may not be feasible in the physical world.
Despite the growing interest among consumers about metaverse, businesses could consider less risky internal activities such as training, collaboration and onboarding for quick successes while not losing focus on the customer-centric use cases.
When asked about how companies planned to introduce steps in the next 12 months to support their metaverse plans,
The government and industrial products sectors are investing in technology related to the metaverse, while simultaneously either acquiring or partnering with external players. With the excitement around the metaverse predominantly driven by B2C segments, companies in the B2B segment are looking at the metaverse to gain maturity in the medium term. Such companies can look to leverage their resources for internal use cases such as training and onboarding, and product simulations and collaborations, which can help drive business outcomes.
The advent of any new technology or concept often requires the development of new strategies for businesses to deal with the novel concerns. When asked what businesses consider to be a challenge in working with the metaverse:
In the US, cybersecurity tops the list, followed by privacy risks, which is the third-most important risk area for India respondents. Regulatory uncertainty and intellectual property concerns occupy the fourth and fifth positions respectively, both in India and in the US.
But these concerns can be addressed. Business leaders in India see solutions for such concerns in transparency around commerce and operations (27%), cyber protection and protocols (25%) and protection for business data and IP (18%). US business leaders cite cyber protection and protocols as their number one priority for establishing trust in the metaverse.
The varied and evolving technologies of the metaverse provide businesses with vast opportunities that range from the ability to engage customers with the help of immersive experiences to improving processes via a digital twin and bolstering employee skills through simulations. Another important reason for embracing the metaverse is to target the young and technology-savvy future generations of consumers.
As the PwC India survey underlines, business leaders are largely aware of the opportunities offered by the metaverse. Several companies that have already invested in and built solutions on the metaverse need to keep abreast of the wide range of possible and growing applications of the metaverse across sectors.
Developments in various foundational technologies such as edge computing, digital twin, 5G and AR/VR are fuelling the current customer-centric metaverse experiences, but the full spectrum of the metaverse, as envisaged by tech visionaries, is clearly years away. Advancement and subsequent adoption of the digital twin technology and generative AI will help create immersive 3D spaces which are able to capture and mimic real-world devices.
This metaverse is produced through shared and persistent simulations used by millions of users in synchronised real time. Computing power, headsets, software protocols and networking capacity also have a long way to go before they can support such an immersive, shared metaverse. The large-scale deployment of 5G and advancement in edge computing technologies will help users run large experiences on mobile devices, which could enhance the adoption of the metaverse.
As in the early days of the adoption of the internet, there will be pockets of speculation, overvaluation and unwise investment as the metaverse develops and is adopted by businesses. Therefore, businesses must prepare themselves and devise strategies to navigate these issues.
Given that metaverse is still an avenue for exploration for many businesses, it is imperative to tread cautiously and factor in a few of the following measures.
Mid-cap and large-cap companies need to take a long-term view of opportunities that lie in the metaverse. They should build capabilities organically by investing in metaverse-relevant technologies and drive awareness among internal stakeholders and decision-makers.
These enterprises need to stay aligned with technology advancements relating to the metaverse and be able to leverage them as and when available. Considering the rate of maturity of various foundational technologies comprising the metaverse, companies should invest flexibly in technologies so that the investments materialise outside of the metaverse as well — for instance, in augmented reality or blockchain. They should also look at defining metaverse-focused roles at all levels of the organisation headed by a leader who is able to strategise a viable roadmap to tap into the full potential of the metaverse.
PwC has embedded the Technology Tinkering Lab methodology in teams and projects across territories to deliver quantifiable benefits and help organisations to develop new ways of solving problems, create unique experiences for customers, and boost business performances. This methodology can help clients identify the right strategies while embracing the metaverse by factoring in the investment versus outcome matrix.
The metaverse provides businesses with immense opportunities to engage more deeply and creatively with their customers and to unleash potential revenue streams.
The global metaverse market is projected to grow at an average compound annual growth rate (CAGR) of 40% from 2022 to 2030, based on various industry forecasts and PwC analyses4, and become a USD 800 billion market at the end of the period. Nearly 35–40% of the revenue would be driven by hardware aspects such as VR headsets, sensors and computing systems, with another 40–45% of the revenue being contributed by software like asset-creation tools and programming engines. Services consisting of advisory, support, creative design would contribute to the remaining 15–20%.
Businesses evidently cannot afford to ignore the potential of the metaverse — neither in the short term, nor in the long run. While it may be judicious to start planning its leverage, embracing the metaverse unquestioningly would depend largely on an organisation’s ability to mitigate the inherent risks.
About the survey
Twenty-two per cent represent TMT, 19% financial services, 16% pharma and healthcare, 15% retail and consumer, 12% industrial products, 9% government and 7% automotive and edtech.
4 PwC Global analysis based on market intelligence from Bloomberg, Credit Suisse, Goldman Sachs
Sudipta Ghosh, Ashootosh Chand, Vishnupriya Sengupta and Yasha Pandit