Metaverse Beyond The Fantasy 

Metaverse Beyond The Fantasy

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Metaverse Beyond The Fantasy

For many, the term “Metaverse” first entered their consciousness when
Facebook changed its name to Meta in later 2021. At the time, many
people assumed it was merely a passing trend, focused on gamers and
younger audiences, with little or no relevance to them or their businesses. However, key players and consultancies have since been falling
over themselves to declare its huge potential, outdoing each other with
the scale of their market forecasts. In this report we have sought to provide a realistic picture for businesses, focusing in particular on the technologies that are necessary to realize the Metaverse.

It is important to recognize that the Metaverse is not a new concept. The reason it is high on the agenda today is that we are seeing
a rapid acceleration of development activity and usage adoption.
This acceleration is driven by the convergence of three industries:
gaming; collaboration and productivity tools; and social media and
networks. The acceleration is also fueled by the confluence of key
trends in user behaviors, software, and hardware development.
Businesses should not underestimate the importance and potential
of the Metaverse. Put simply, it promises to be the future version
of the Internet, powered with new properties that will open up new
usages and business models — in a similar way to how the smartphone transformed the Web.

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nologies are included, such as artificial intelligence (AI), Internet
of Things (IoT), and blockchain, as well as the required digital infrastructure development, then the market could easily reach several
trillion euros by 2030. However, we advise caution, as some of this
market represents substitution rather than genuinely new market
space. Our more conservative view suggests an incremental market,

Blue Shift / R E P O R T 0 0 2

Forecasting the size of the market is difficult. If key enabling tech-

excluding infrastructure, of perhaps €500 billion by 2030, with a
30%-40% growth. In any case, however you define it, the Metaverse
market is enormous and very dynamic.
To help understand the Metaverse and its current development
status, we developed a six-layer architectural framework. Using this
analysis, we concluded that, in contrast to what many observers are

Instead of a single,
unified Metaverse,
businesses face
today a world
of unconnected
proto-metaverses.

saying, the underlying technology to enable the Metaverse as the
complete “future version of the Internet” won’t be fully available
for around a decade. This is something that businesses need to be
aware of.
Instead of a single, unified Metaverse, businesses face today a world
of unconnected proto-metaverses. That said, there are still huge
opportunities. Despite the remaining technological challenges,
businesses need to take steps now to understand the current market
and position themselves for the future.
In summary, we believe that among all the trends and factors currently shaping the Metaverse, three of them are especially critical
because they combine high potential impact and high uncertainty.
These three critical factors are:
1. Immersivity. The development of new augmented reality/
mixed reality (AR/MR) technologies that effectively overcome
current technical obstacles would be a strong accelerator of
new usages in the coming years. In the same way that smartphones made the digital economy shift from computers to
mobiles, we believe that user-acceptable AR/MR glasses
would drive a similar shift from screen to Metaverse.
2. Interoperability. Interoperability is essential to provide a
true seamless experience to users and to allow them to share
resources, irrespective of their access platform. However,
due to diverging interests between vendors, users, and other
players in the value chain, there is no guarantee that this will
be achieved.
3. Abundance. In the physical world, scarcity drives the value of
assets in a market economy. In the traditional digital economy,
since a digital file can be duplicated at no cost, scarcity was
reintroduced artificially through systems such as digital
rights management. In a virtual world with blockchain and
non-fungible tokens (NFTs), a new economic paradigm of
“abundance” may appear, implying a more fundamental value
shift from physical assets to experience and, perhaps, status.
The extent to which this will happen, and its implications for
business, are uncertain.

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Blue Shift / R E P O R T 0 0 2

Preface
by Primavera
De Filippi

Having discovered the Internet at a very young age, I spent most of my
childhood exploring the new opportunities of this virtual environment
— socializing with people all over the world, traveling through the blue
trails of hyperlinks, and making software to do things not previously possible. Similarly, today I am fascinated by the potential of the Metaverse.
This new virtual environment in which anything is possible — a place
where you can be anyone you want to be, do anything you want to do,
and go anywhere you want to go.

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table component of our everyday reality — whether that is through
virtual reality (VR), augmented reality AR, or extended reality (XR) —
and that it will change the way we live, work, and play in ways that
we cannot even imagine. As an artist, I am excited about all the new
opportunities of artistic production and creative expression that this
new medium will engender. In a world where there is no sky, imagina-

Blue Shift / R E P O R T 0 0 2

I am confident that the Metaverse will eventually become an ineluc-

tion is the only limit that can hold us back.
But what is the Metaverse, exactly? Very few people can give a
precise answer to this question, and those who do might possibly
change their minds after reading this Report. Indeed, as this Report
shows, the Metaverse as we envision it does not exist (yet). All we
have are walled gardens — siloed virtual worlds competing with one
another in order to become “the” Metaverse. But if the Internet has
taught us anything, it’s that interoperability is crucial and that open
permissionless innovation is key to any flourishing digital ecosystem.
All the commercial opportunities of the Metaverse have attracted
the attention of many new businesses, eager to establish themselves in this new virtual landscape. Yet, the Metaverse can only
be what we make of it. And as the short history of the Internet has
shown, there will always be a battle between those who see the
Metaverse as a new opportunity to build an open and participative society, and those who see it as a means to promote their own
vested interests and economic profits.
As a legal scholar and digital activist, I am today committed to
ensuring that the Metaverse — whatever direction it takes — will
become a powerful tool for good that can help us build a better
world, one where new communities can emerge and collaboration
can strive. I hope this Report will inspire you to push toward the
same direction.

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Blue Shift / R E P O R T 0 0 2

Preamble

Over 20 years ago, without knowing it, I was contributing modestly
to some of the technological bricks that underlie the Metaverse. I
was finishing my studies as a telecom engineer and, in 2001, beginning my internship at the Australian National University (ANU),
where I would explore the frontiers of VR, which already fascinated
me at the time. A year later, I started my PhD in computational
physics, still at the ANU. During a screening of the film The Matrix, I
had the chance to meet the Australian philosopher David Chalmers,
a specialist in the nature of reality and consciousness, who was
giving a lecture entitled “The Matrix as Metaphysics.” Exciting!
Since that time, digital and synthetic worlds have never ceased
to fascinate me. They fascinate me as technologies, and also as
sources of disruption in terms of uses and business models. They
fascinate me also as vectors of societal and anthropological transformation. And finally, they fascinate me as sources of dizzying ethical and philosophical questions.
In fact, some, like the philosopher Nick Bostrom2 or the entrepreneur
Elon Musk,3 think that the world we live in — what we call reality —
is in fact a simulation. In a nutshell, the argument goes like this: (1) if
humans don’t become extinct and (2) if humans don’t decide against
running so-called “ancestor simulations” (i.e., simulations aiming at
simulating the apparition and evolution of life), then (3) there is a
point in time when humanity will reach enough technological
maturity to be able to run such simulations. In which case, there will
be a lot more simulated worlds than there are real worlds. It follows
that the probability that we are not in a simulation today is actually
very small.
But back to our “real world.” During the first COVID-19 lockdown in
March 2020, when my twin daughters were playing hide-and-seek
with their friends on Roblox — which I thought was just a teen video
game — I realized that the vast majority of young people stuck at
home because of the pandemic were reproducing uses of the
physical world in synthetic worlds, and that this shift from real to
synthetic would be anchored for life.

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2 Bostrom, Nick. “Are You Living in a Computer Simulation?” Philosophical Quarterly, Vol. 53, No. 211, 2003.
3 “Are We in a Simulation? — Elon Musk.” YouTube, 17 February 2018.

article for Harvard Business Review France in early 2021:4 I felt that
the Metaverse was going to become “the place to be.” In response to
the article, we received many requests from our ecosystem to give
conferences or consulting on the topic. So, we decided to investigate
the matter even further to help you navigate through the technological fog and make the right strategic decisions today. This study

Blue Shift / R E P O R T 0 0 2

This awareness, supported by an initial analysis, led me to write an

aims to answer three questions:
1. What is the Metaverse?
2. How mature is the Metaverse?
3. What are the business opportunities of the Metaverse?
Before immersing ourselves in the Metaverse, however, I would
like to share an anagram I discovered for “Metaverse Flippant”
(Creepy Metaverse):

platement
pervasif/
flatly
pervasive
This may sound a little scary or pessimistic but, as always,
anagrams move in mysterious ways. What do you think?

– Dr. Albert Meige
4 Meige, Albert. “Metaverse: A Virtual Universe for a New Real Economy.” Harvard Business Review France, 5 October 2021.

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CHAPTER

1

12

I. THE
METAVERSE:
THE FUTURE
VERSION OF
THE INTERNET

Blue Shift / R E P O R T 0 0 2

#1

The Metaverse:
The future version
of the Internet

Despite what some would have you believe, the Metaverse is nothing
new. The concept of synthetic or virtual worlds in which people connect
has been around for at least 40 years in science fiction and 20 years in
real life (see Figure 1). However, what is important is that there has been
a strong acceleration of development activity around the concept over
the last two or three years. This acceleration is due to two main reasons:
convergence between three industries fighting for the same market, and
a confluence of trends in users, software, and hardware coming together
for the first time. Rather than a new concept, the Metaverse can be best
considered as the future version of the Web, powered with new properties that will open up new usages and business models — in a similar way
to how the smartphone transformed the Web.

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Blue Shift / R E P O R T 0 0 2

The concept of Metaverse has
been around for 40 years
The Metaverse is not a new concept — it actually predates the Web
itself. The idea of synthetic5 or virtual worlds that people visit in
order to interact with others dates back over 40 years in science
fiction, becoming more mainstream thanks to films such as Tron
and Total Recall in the 1980s and 1990s. The term itself was coined
in Neal Stephenson’s 1992 novel Snow Crash, defining a virtual space
where users could go to escape a dreary, totalitarian reality. 

Fig 1 — The concept of Metaverse has been around for 40 years, both in science fiction …

1980s

1990s

2000s

1998

1990

1998

1980

Predating the World
Wide Web by a decade,
Web of Angels
envisaged an
instantaneous
communications
network that allows
some users to travel
between different
human worlds.

1982

In the movie Tron, a
computer programmer and
video game developer is
transported inside the
software world of a
mainframe computer.

1992

Total Recall explores
the blurring of memory
and reality in a fictional
future world.
The term Metaverse
was first used in the
1992 novel Snow Crash.
It was a virtual place
where characters could
go to escape a dreary
totalitarian reality.

1994

The novel
Permutation City asks
whether there is a
difference between a
computer simulation
of a person and a
“real” person,
exploring some of the
consequences of
simulated realities.

1999

Dark City, Thirteenth
Floor, and The Matrix
all explore aspects
of dystopic futures
where reality for
humans is simulated.

2011

In Ready Player One,
to escape from the
realities of a declining
future world, people
turn to a virtual reality
simulator accessible by
players using visors
and haptic technology
such as gloves.

Source: Arthur D. Little

5 Since “virtual world” is often associated with VR, which is too narrow when it comes to Metaverse, we refer to the “synthetic
world” rather than “virtual world,” with a slightly broader concept.

15

Fig Figure
2 — … andX.
in real
life — the pace is accelerating
XXXX
Blue Shift / R E P O R T 0 0 2

1990s

2000s

1995

Set up in 1995,
Active Worlds
allows users
to explore 3D
virtual worlds and
environments
that others have
built and is still
active today.

2003

Second Life
allows
people to
create their
own avatar
who has its
own life in an
online virtual
world.
Peaked at 1
million users
in 2013.

2010s

2006

Roblox is a
game
platform
and game
creation
system that
allows users
to program
games and
play games
created by
other users.
First
released
in 2006.

2008

Google Lively
was a
short-lived
Web-based
virtual
environment.
Discontinued
at the end of
2008.

2014

Facebook
acquires
Oculus.

2020s

2017

Epic Games
releases
the online
game
Fortnite.

2020

Epic Games
announces
US $1 billion
funding, to
support
future
growth and
pursue its
long-term
vision for the
Metaverse.

2021

Microsoft announces
Microsoft Mesh, a
collaboration and
communications
platform aimed at
unifying holographic
virtual collaboration
across multiple
devices.

2021

Facebook announces
Horizon Workrooms, a VR
workplace.
Facebook partners with
Ray-Ban for connector
glasses.
Facebook announces
10,000 new jobs in Europe
to create the Metaverse.
Facebook changes its
name to Meta.

Source: Arthur D. Little

In real life, a Metaverse is not a new concept, either. As illustrated
in the timeline in Figure 2, Active Worlds was created in 1995 and
still exists today, allowing users to own worlds and universes, and
develop custom three-dimensional (3D) content. Second Life followed in 2003, allowing players to create an avatar who lives another
life using voice and text in a virtual world. The game generated substantial hype and high expectations, but usage peaked at less than
one million in 2013, and declined gradually until the 2020 pandemic,
when there was a large spike in new registrations. More generally,
there has been a very strong acceleration of activity over the last
two to three years. This acceleration is visible from various points
of view, such as the frequency of announcements, investments by
venture capitalists, startup creations, and number of users.

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Blue Shift / R E P O R T 0 0 2

Today, the Metaverse is best
considered as the future of the Internet
at the convergence of three industries
So, what is different about the Metaverse today and what does it
mean for businesses? Why are the major players such as Meta (formerly Facebook), Microsoft and NVIDIA, Roblox, Epic Games (the
creator of Fortnite), and Niantic (Pokémon Go) all heavily pushing the
concept? What we observe today is better viewed as the result of
various usage and technological trends that the key players want to
accelerate. The term “Metaverse” is a useful wrapper around these
trends to facilitate the understanding of what will soon be enabled.
The Metaverse is generally described as a virtual world where people
can interact, but as the words of various CEOs in the industry reveal
(see Figure 3), leading players have their own slants and definitions
of what it means. And while these definitions and visions converge
to a large extent, there are a number of differences reflecting the
players’ backgrounds and objectives.

Figure
X. XXXX
Fig
3 — Leading
players all have their own slant on what the Metaverse means

“A virtual universe that is persistent and
shared, where platforms connect people
from different realms of life and enable
them to communicate in a new way
through gaming and the entertainment
industry.”

“An expansive, communal, and virtual
world where people can interact with
brands, intellectual properties, and one
another with experiences spanning
across all categories, beyond gaming.”

“A 3D extension of the Internet
today, with an economy much larger
than the real-world economy.”

David Baszucki, CEO, Roblox

Tim Sweeney, CEO, Epic Games

Jensen Huang, CEO, NVIDIA

“With the Metaverse, the entire
world becomes your app canvas.”

“Technology that
connects the real world
with the digital one.”

“A successor to the mobile Internet
that will elevate physical world
experiences and be co-created and
built responsibly.”

Satya Nadella, CEO, Microsoft

John Hanke, CEO, Niantic Labs

Mark Zuckerberg, CEO, Meta

Source: Arthur D. Little

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Blue Shift / R E P O R T 0 0 2

It is therefore important to define precisely what we mean by the
term before diving into our analysis. Taking a more holistic approach,
we adopt the following definition (see Figure 4):

Figure X. XXXX

Fig 4 — Definition of the Metaverse as a future version of the Internet

Immersive spaces

Creator economy

The future version of the
Internet will be spatialized,
increasingly immersive, and

The future version of the
Internet will increasingly
leverage the creator

will take advantage of 3D
environments from gaming,
as well as simulations &

economy to design and sell
physical and digital assets.

digital models from industry
(digital twins, etc.).

Metaverse

Collaboration platforms

Social experiences

The future version of the
Internet will increasingly

The future version of the
Internet will enable more

facilitate remote
collaborative work.

The Metaverse is
the future version
of the Internet,
blending the
frontiers between
reality and
virtuality, at the
convergence of
immersive spaces,
collaboration
platforms, social
experiences, and
leveraging the
creator economy.

and more social experiences.

Source: Arthur D. Little

– “Future version of the Internet.” The Metaverse
is not a collection of private platforms — it is a

new evolution of the Internet, similar to what we

saw with the advent of the smartphone.
“Blending the frontiers between reality and

virtuality.” What we call reality is, and increasingly will be, augmented by one or several layers

individuals and companies to collaborate,
communicate, or work remotely.

– Social networks & media — generating

the technologies and applications that
allow people to connect, socialize, and

world becomes the screen on top of which digital

share experiences.

reality” to get a sense of what we mean.
“At the convergence of immersive spaces,

collaboration platforms, social experiences.”
Three industries are converging and are fighting
for the same market:

– The gaming industry — ignored for decades

by the rest of the world, it is now taking center
stage due to the amazing technologies it
has developed.

18

the technologies and applications that allow

of data, information, or representations. The real
layers are superimposed — think “augmented

– Collaboration platforms & tools — producing

– “Leveraging the creator economy.” We have

seen over the last two decades the explosion of
the digital creator economy (platforms allowing
creators to create and users to consume). The
creator economy will take on another dimension in
the Metaverse as the same principles will apply to
both virtual and physical products.

Now let’s look in more detail at the convergence that is
enabling the Metaverse:

Over its relatively short life, the gaming industry has undergone a
series of transformations (see Figure 5). It has moved from its initial
“pay to play” model (with famous games such as Pac-Man) to encompass “free to play” models (i.e., freemium/ad-supported games such

Blue Shift / R E P O R T 0 0 2

Gaming industry: More and more nongaming experiences are moving toward the social network &
media and collaboration spaces

as Candy Crush), and “play to earn” models to enable players to
actually earn money through e-sports competition. The most recent
transformation of the gaming industry, as it becomes increasingly
immersive, finds a growing portion of its revenues coming from nongaming experiences. These experiences include social events, music

“Most industries
have ignored the
game culture
and industry.
This is changing.
It’s an industry
that’s becoming
mainstream and
relevant to all the
others.”

concerts, and e-commerce.

Morgan Bouchet, VP/Global
Head of XR, spatial computing
& Metaverses, ORANGE

Figure X. XXXX

Fig 5 — Transformation of the gaming industry toward increasingly nongaming experiences
Pay to play
• Pay to play
• Pay to continue

Free to play
• Pay to progress faster
(in-game purchases)
• Watch advertising

Play to earn
• Earn money to play e-sport
• Earn money to compete

Game as a platform
• Generate revenues through
creator economy
• Generate revenues through
non-gaming experiences
(socializing, concerts, etc.)

Source: Arthur D. Little

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Blue Shift / R E P O R T 0 0 2

Games are becoming social platforms that players use

From the outset, Roblox has been a platform where

to interact with their friends and share experiences. For

developers and users can build and publish their own

example, 29% of gamers surveyed by Nielsen in April

games or other virtual assets. Demonstrating the

2020 said they used games to stay in touch with friends

increasing interest in virtual assets, in May 2021 Gucci

and family, and 26% to socialize with strangers (Figure

released a limited edition of in-game virtual bags that

6).6 Showing the growing convergence between gaming

sold for US $4,115 on the platform (more than the phys-

and social platforms, 250 million people are registered

ical equivalent!), as part of a wider partnership.7

players on Fortnite — around the same size as
Snapchat’s user base. Each of these steps has brought
in new audiences and revenues.

Other games and video creation platforms have also
opened up their technology. Epic Games’ Unreal Engine,
which powers Fortnite, can be used to create 3D envi-

Gaming platforms are also increasingly becoming col-

ronments, while Unity’s real-time content development

laborative platforms. Some companies are allowing

engine enables the development and creation of films,

third parties to develop their own games and virtual

as well as games and high-quality, immersive architec-

assets using their engines.

tural and automotive renders.

Figure X. XXXX

Keeping in touch with
family/friends

Combat boredom/
fill time

Socialize with strangers

36%
29%

36%

Stay in touch with
friends/family

26%

Watching or
following sports

24%

Watching live streams

Substitute for unavailable
entertainment

22%

Meeting new contacts

Escape the real world

24%

Filling spare time

45%

Top reasons to use video
games during COVID-192

48%

Most popular reasons for Internet
users to use social media1

56%

Fig 6 — Comparison of reasons why Internet users use social media versus video games

Source: Statista, Nielsen, BBC News, Arthur D. Little analysis
Source:
Arthur D. Little, Statista, Nielsen, BBC News

Notes: Answers do not sum up 100% because respondents could choose different options; (1) Worldwide as of Q3 of 2021. 7 other options between

Note:
Answers
notcollected
sum up 100%
because
could
choose
different
options;
(1) Worldwide
asvideo
of Q3games;
of 2021.
other options
22% and
35%; (2)do
Data
from April
2020 respondents
of US residents
18 and
older, only
residents
who played
or watched
(3) 7December
2019 between 22% and 35%; (2) Data
collected from April 2020 of US residents 18 and older, only residents who played or watched video games; (3) December 2019

20

6 “The Future of Video Gaming Is Bright — Even as Real Experiences Return.” Nielsen Entertainment, 6 January 2021.
7 Dey, Asmita. “Brands Go the Metaverse Way.” Fortune India, 8 July 2022.

The pandemic turbocharged the adoption of collaboration platforms
such as Microsoft Teams or Mural (see 2019-2020 bump in Figure 7).
Helped by the shift to hybrid working, these tools are now standard
for most organizations. Returning to voice-only telephone conference calls feels as if it would be a step back in time.

Blue Shift / R E P O R T 0 0 2

Social network & media industry: From social
experience to collaboration platforms

Collaboration platform features such as real-time chat and multiperson video calls enable social interactions. Social media platforms
are aggressively moving into the collaboration space themselves to
combat this potential threat to their usage (and revenues).
In August 2021, Meta (Facebook) released the open beta of Horizon
Workrooms, a collaboration app targeted at teams managing remote
work environments, designed to improve their ability to collaborate
and connect remotely. The app offers virtual meeting rooms, whiteboards, and video call integration for up to 50 people. It works across
both virtual reality and the Web, with users able to bring their desks,
computers, and keyboards into VR. Avatars and spatial audio aim to
deliver an immersive experience, with gesture-based control rather
than a need for controllers or keyboards.
Horizon Workrooms aims to compete directly with players such
as Microsoft. Coming from the collaboration platform space,
Microsoft has already developed the Mesh collaboration toolset,
which aims to provide more immersive virtual meetings by enabling
presence and shared experiences from anywhere — on any device —

Figure X. XXXX

through MR applications.

Fig 7 — The growth of collaboration software

The growth of collaboration software has
accelerated rapidly during COVID-19 pandemic1
Global collaboration software market size ($bn)
+29%
16.0

16.4

2020

2021E

16.7

17.1

12.4
11.0
8.5

2023E

2022E

2019

2018

2017

Source: Arthur D. Little, Statista
Note: (1) Collaboration software enables the sharing, processing, and management of files, documents, and other data types among

Source:
Statista,
Arthur
D. Little
analysis
several users
or systems.
Popular
examples
include Slack and Microsoft Teams

Notes: (1) Collaboration software enables the sharing, processing, and management of files, documents, and
other data types among several users or systems. Popular examples include Slack and Microsoft Teams

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Blue Shift / R E P O R T 0 0 2

Three main properties
of the Metaverse distinguish
it from today’s Internet
The Metaverse has three main properties that distinguish it from
today’s Internet: immersion, interaction, and persistence:
1. Immersion. The Internet is becoming spatialized and
immersive — the real world is becoming the screen. Users
can become totally engrossed and involved in the experience,
effectively living in another universe or in an augmented
universe, where one or several layers of data, information, or
representations are superimposed on the real world. Today’s
Internet is cognitive, meaning it gives access to knowledge,
whereas the Metaverse also provides perspective, and will
increasingly involve all our five senses.
2. Interaction. Real-time interaction between users (or between
users and machines) is becoming increasingly natural. For
example, today, a video conference with more than three or
four people provides a very degraded experience compared
to a real-life meeting. In particular, the timing of how people
speak does not occur exactly as it would naturally, which leads
to significant cognitive fatigue. Close to real-life, real-time
interactions will be at the heart of the Metaverse.
3. Persistence. The synthetic world, objects, and people will
continue to exist and develop internally even when users don’t
interact with them. It may even extend to the real world, much
like in today’s pervasive games.

22

As we have shown, the concept of the Metaverse has been around
for many years. Previous attempts at creating virtual worlds, such
as Second Life, have faltered. So, what has changed? Essentially,

Blue Shift / R E P O R T 0 0 2

The confluence of recent trends in users,
software, and hardware is making the
revolution possible for the first time

three ingredients are now coming together to provide the building
blocks of the future Metaverse: software, hardware, and users.
Just like with other digital technology domains in the past, this
confluence provides a good indication that we could possibly be
at the inflection point in an exponential growth curve.

Users: A very rapid growth of the
user base and corresponding revenues

Fig 8 — Revenue generated by Roblox

worldwide
daily active users
Figure
X.and
XXXX

The user base for synthetic worlds is growing dramatically, and
although it is no longer limited to younger people, more than

Daily active users (million)

Quarterly revenue ($m)

54

COVID-19
Lockdown

50
47
42

36

43

a quarter (26%) of teens say they own a virtual reality headset,
according to research from Piper Sandler.8
Taking the example of Roblox, which was established in 2006 as a

37

video game mainly for teenagers and pre-teenagers, Roblox gen-

33

erated revenues of $2 billion in 2021 by selling virtual assets in the
game. These numbers are significant, even if small compared to

24

10

60

11

73

13

14

16

17

18

19

387

85

93

111

119

131

148

162

200

252

454

509

569

537

the $300 billion generated by the whole gaming industry. Roblox’s
growth is even more impressive: the number of daily users has

310

increased from 10 million to more than 55 million in the past four
years. This growth was accelerated by the COVID lockdown, as can
Q4 ‘21

Q2 ‘21

Q4 ‘20

Q2 ‘20

Q4 ‘19

Q2 ‘19

Q4 ‘18

Q2 ‘18

Source: Arthur D. Little

be seen in Figure 8.
Another company that has seen significant growth is Epic Games.
Epic released the online game Fortnite in 2017, which became
something of a cultural phenomenon. The game generated over
$5 billion in revenues in 2020, including proceeds from a live
performance by Travis Scott that drew an audience of 12 million
people.9 Young people, the consumers of tomorrow, already spend
considerable sums of money to dress up their Fortnite avatar in a
fashionable skin. In April 2020, Epic Games announced that it had
completed a $1 billion round of funding, which will allow the company to support future growth and pursue its long-term vision for
the Metaverse. Epic announced another $1 billion round of funding
in 2022, half of which comprises investments from Sony Group
Corporation and KIRKBI, the holding and investment company
behind The LEGO Group. Another live Fortnite performance in 2021
— the Rift Tour, headlined by Ariana Grande — attracted an audience of nearly 78 million.10
Familiarity with virtual worlds undoubtedly accelerated with the
pandemic, as locked-down consumers of all ages were forced to
switch from physical to virtual interactions and companies found
ways to enable their homeworking employees to communicate
and collaborate online. Even Second Life saw a spike in new registrations in 2020 after years of decline.

8 “Taking Stock with Teens.” Piper Sandler, Spring 2022.
9 “Fortnite’s Travis Scott Virtual Concert Watched by Millions.” BBC News, 24 April 2020.
10 Oyinloye, Tunboson. “Pop Culture Moments That Predicted the Metaverse.” Dailycoin, 10 July 2022.

23

Blue Shift / R E P O R T 0 0 2

Software: Major platforms are allowing third
parties to form new value chains
Previously, we described Roblox as a video game for teenagers,
although in reality, Roblox is a platform, not a video game. On one
side of the platform, users (mostly preteens and teens) can access
various experiences: play, meet, socialize, listen to music together
(through a recent partnership with Deezer), and go to concerts,
among other things. On the other side of the platform, third parties,
individuals, or companies create and sell experiences such as virtual
worlds or games, as well as various digital assets such as skins to
customize avatars. Roblox is thus a platform similar to Apple’s App
Store, in that it allows developers to develop applications and users
to purchase these applications. It is also like a YouTube of video
games, bringing creators and consumers together.
With the infrastructure and the ecosystem that it has built, Roblox
has become a major player in developing the Metaverse. It has also
managed to attract the attention of many brands, including luxury
players. For example, Gucci opened its Gucci Garden virtual space on
Roblox for two weeks at the end of May 2021, and, as previously mentioned, released a limited edition of in-game virtual bags that sold
for $4,115 each. Cosmetic brands have also started to offer their own
virtual beauty products. At the end of April 2020, for example, L’Oréal
allowed Snapchat users to virtually try the products of several of its
brands, such as Garnier and Lancôme.
Epic Games is also a platform in the sense that its Unreal Engine
technology is used by third parties to develop synthetic worlds,
experiences, and games. For example, Epic has worked with NASA
on VR simulation for Mars exploration and with LEGO to create a
child-friendly Metaverse space. (Further details on these collaborations and use cases can be found in Appendix 1: Experience continuum use cases.)
The bottom line is that despite the fact that Roblox and Epic are
known for their games, they are in fact infrastructure platforms. By
making the development environment and data available, anyone
can develop things on these platforms, such as worlds, games, virtual assets, or social experiences in fields as diverse as e-commerce,
entertainment, social interaction, and enterprise services.

24

Up until now, the required hardware to power and access the
Metaverse was not sufficient to enable the three main properties of
immersion, interaction, and persistence that we described above.
However, there are signs that accelerating advances in hardware, at

Blue Shift / R E P O R T 0 0 2

Hardware: The hardware required to power and
access the Metaverse is developing rapidly

both an infrastructure and man-machine interface level, will reduce
some of the barriers to wider adoption in the years to come. Major
players are entering the market. Meta bought VR headset developer
Oculus in 2014 and is now selling its Quest 2 headset from new,
dedicated, physical stores.11 Apple has filed multiple patents over the
last 10 years related directly to VR headsets, as well as increasing
hiring and acquisitions in this area. On the infrastructure side, faster
fiber networks and 5G rollouts will reduce the impact of latency and
increase available bandwidth.
Technologies that enable more convenient and effective highquality AR and immersivity, such as lightweight glasses and
headsets that provide easy transition between VR, AR, and the
physical world without bulky equipment, will be transformative
in terms of adoption.
Looking further into the future, rapid advances are being made in
brain-computer interfaces (BCIs). Elon Musk’s startup, Neuralink, has
already successfully implanted AI microchips in the brains of a pig
and monkey, and released a video of the monkey playing the classic
video game Pong solely using its brain.12 Another startup, NextMind,
is already offering a noninvasive BCI device that can read brain
waves from the visual cortex of the brain to enable direct control
of functions in games.

11 Jockims, Trevor Laurence. “Meta Is Opening Its First Store as VR Headsets Inch Closer to Mainstream Reality.” CNBC, 8 May 2022.
12 “Monkey MindPong.” YouTube, 8 April 2021.

25

INTERLUDE#1
DEFINING THE
METAVERSE

26

Although the
Metaverse is still
strongly associated
with science fiction,
it already raises
new questions and
solutions.

Even if it is difficult to visualize what it will be, we know
that the Metaverse is about to play a decisive role for businesses, society, and humans. The mesh of the movie Tron
inspired me for this illustration, which aims to define the
Metaverse. In this isometric view, some people design an
airplane (left), and individuals collaborate with avatars
from this virtual universe (middle) to produce this airplane
in reality (right).

– Samuel Babinet,
artist

CHAPTER

2

30

II.THE
METAVERSE:
NOT FOR
ANOTHER
DECADE

Blue Shift / R E P O R T 0 0 2

While some analysts claim that the underlying technology for the
Metaverse “already exists,”13 a more detailed analysis of the technology
shows that this is not true. The Metaverse, as envisioned by the main
players and as we defined it in the previous chapter, does not yet exist —
and we forecast that it won’t be fully available for another decade. There
are two main reasons for this: first, the various platforms that exist today
are not interoperable, which means that it is not yet possible to share
experiences, data, information, or other resources across these platforms; and second, even though both hardware and software are getting
closer to maturity, closer analysis of the full architecture tells us we are
not there yet. We are currently in an era of proto-metaverses.

#2

32

The Metaverse:
Not for another
decade

13 “Value Creation in the Metaverse.” McKinsey & Company, June 2022.

Try to remember the Internet in the mid-1990s (see timeline in
Figure 9). Many readers may remember the mythical sound of the 56k
modem. Or AOL and its famous “You’ve got mail.” Once connected
to the Internet via AOL, it was possible to access all sorts of strange

Blue Shift / R E P O R T 0 0 2

There is no Metaverse until there
is interoperability

things. Unfortunately, this door to the Internet was in fact only a
door to a proto-Internet surrounded by impassable walls. It was a
walled garden without any walkways to other gardens; an Internet
bubble not connected to other bubbles. Users were unable to share
resources or communicate with other walled gardens such as
CompuServe, Prodigy, and so forth.
Toward the end of the 1990s, it became clear that the Web browser
had to allow communication and exchange of information with any

“People frequently
conflate one
domain of
interoperability
with another,
and that adds
confusion to
how people
think about the
challenges and
opportunities.”
Jon Radoff, CEO, Beamable

other user, regardless of their Internet service provider. Users and
usage defeated the walled garden model and the Internet became
interoperable — at least to some extent.
The Metaverse is in the same state as the Internet in the mid1990s. Today, there is not a Metaverse, but a whole set of protometaverses — walled-garden Metaverses. The majority of companies
aspiring to develop the Metaverse — such as Roblox, Epic Games,
NVIDIA, Microsoft, Decentraland, or Meta — are actually developing
noninteroperable proprietary platforms. This means that currently
it is impossible to exchange virtual assets or even to communicate
between one platform and another. Until there is interoperability,
there will be no Metaverse.
Interoperability is one of the factors that may have a strong impact
on the development of the Metaverse. At the same time, there is a
tension between vendors and users. On one hand, vendors invest
massively in the development of the Metaverse and want a return on
investment. They will therefore tend to push for a noninteroperable
Metaverse to keep users within their own environment. On the other
hand, users and brands will maximize value by having an interoperable Metaverse. At this point, as no one knows yet whether or not
interoperability will occur; interoperability is a key uncertainty.

Fig Figure
9 — Development
of Internet operability
X. XXXX

The Internet
1970s
Internet was available only
at major universities and
research centers.

1990s
Walled-garden
“proto-Internets” were
available to individuals
through online services
AOL, CompuServe, Prodigy
(IBM), Bulletin Board
Systems (BBS), etc.

2000s
Internet became
interoperable, and users
could then share
information and
communicate
irrespective of the
Internet service provider.

Source: Arthur D. Little

33

Blue Shift / R E P O R T 0 0 2

A detailed analysis of the full Metaverse
architecture shows the path to maturity
Some of the technologies behind the Metaverse, as defined in the
previous section, are not particularly new. However, since the
Facebook (Meta) announcement in September 2021, many people
have had an uneasy feeling: either the Metaverse is indeed something completely new, or else it’s simply a repackaging of a set of
technologies that have been under development for several decades.
What is the situation, exactly? What are the building bricks that
make up the Metaverse? What are the technologies in each of these
building bricks? How mature are they and when will they become
mature? When can we hope (or fear) to see the “real” advent of the
Metaverse?
To begin answering these questions, we developed a framework,
which aims to represent the architecture of the Metaverse in six
layers (see Figure 10). These layers effectively cover the value chain
of the Metaverse, in which the top level corresponds to new user
experiences and business models, and the lowest level corresponds
to the required hardware and software infrastructure.
This is, of course, a simplified view of reality (if we can talk about
“reality” when we talk about the Metaverse!). This simplified view,
however, helps us to analyze the complexity that underlies the
Metaverse. Below, we dive into each of the layers to understand
its nature and the maturity of each of the technological elements
that compose it. This helps us to answer the questions: Should I be
interested in the Metaverse as part of my business? And what are
the opportunities today and in the future? As we will see in the final
section of this report, even in this embryonic state, many business
opportunities can be seized in all the layers.

Figure X. XXXX

Fig 10 — The six architectural layers of the Metaverse to help assess maturity and business opportunities

1

Experience continuum

Allows users to create new blended usages
and business models across virtuality and
reality, both for consumers and businesses

2

Human-machine interfaces

Allow humans to experience and
interact with extended reality

3

Extended reality

The immersive representation replacing
or augmenting physical reality

6

Key enablers

4

World engine

The software layer comprising graphics, logic,
physics, and presence engines aimed at creating
accurate digital simulations and models

5

Infrastructure

The physical layer (network, computing, storage)
ensuring immersion, interaction, and persistence

Source: Arthur D. Little

34

The key technologies
required by the other
layers of the architecture

Layer 1, which we call “experience continuum,” is the layer that brings
together all the new use cases, experiences, and business models,
existing and future. These new use cases and business models blur

“The Metaverse
is the tool to
search, find, and
capture value in
complexity by
immersing (space)
oneself in it and
projecting (time)
oneself into it.”

the boundaries between reality and virtuality. Like the Internet

Blue Shift / R E P O R T 0 0 2

Layer 1: Experience continuum — Use cases
and business models

today, use cases can be segmented into three categories: consumer (socializing, entertaining, playing, etc.), enterprise (meeting,
exchanging, collaborating, etc.), and industrial (modeling a production line or distribution network, collaborating around a digital twin,
etc.). We will describe Layer 1 in more detail in the next chapter when
we consider the opportunities and use cases that exist today.

Michel Morvan, President and
cofounder, Cosmo Tech

35

Blue Shift / R E P O R T 0 0 2

Layer 2: Human-machine interfaces —
The gateway

Fig 11 — Rapid growth in AV/VR headsets

Figure
X. XXXX
and other
HMI technologies
AR/VR headset market size

Haptic technology1 market size

Layer 2, which we call “human-machine interfaces (HMIs)” is, as
the name suggests, the layer that allows humans to perceive and

$12.6bn

interact with Layer 3’s “extended reality” (described below). HMIs
+36%

are the gateway to the Metaverse. They include a mix of hardware

$9.0bn

and software that allows users to send inputs to the machine and

$7.1bn

the machine to send outputs to users, thus forming a consistent
$5.5bn

interaction loop.

$4.0bn
$2.7bn
$1.8bn

$12.6bn

+12%

$5.5bn

$2.5bn

$2.0bn

$2.8bn

$3.5bn

$3.1bn

$3.9bn

$4.4bn

$4.9bn

The HMI market is forecast to see rapid expansion over the coming
2028E

2027E

2026E

2025E

2024E

2023E

2022E

2021E

2020

2025E

2024E

2023E

2022E

2021E

2020

2019

2018

years, with over 35% yearly growth in the AR/VR headset sector up
to 2025 and a 12% increase in sales of haptic technologies up to
2028 (see Figure 11).

Haptic technology1 market size

Some of the underlying technologies, such as the keyboard and
$12.6bn

mouse on the input side, or the screens on the output side, are very

Source: Blue Shift Institute research

Notes: (1) Haptic technology refers to any technology that can create an experience of touch by applying forces, vibrations, or motions to the user

mature. In contrast, other technologies, such as brain-computer
interfaces, are much less mature. Between the two, there is a

$9.0bn

$2.5bn

$5.5bn

$3.5bn

$3.1bn

$2.8bn

whole range of more or less mature HMIs, such as VR and/or AR

$12.6bn

+12%
$4.4bn

$3.9bn

visors, holography, and haptic interfaces on both the input and

$4.9bn

output sides (see Figure 12, which shows HMI technologies
mapped by technology readiness level [TRL] — see Appendix I
2028E

2027E

2026E

2025E

2024E

2023E

2022E

2021E

2020

2025E

2024E

for further description).
Overall, we can conclude that the way users will immerse themselves in the Metaverse is a critical uncertainty that will have a

Source: Arthur D. Little, Credit Suisse, IDC,
Researchandmarkets.com

major impact on the rate of adoption. The more these technologies
advance, the more immersion and interaction with the Metaverse

eate an experience of touch by applying forces, vibrations, or motions to the user

will involve all our five senses. We predict that AR glasses, despite
their current immaturity compared to VR headsets, is the interface
likely to revolutionize usage and adoption in the coming five years.
The real world is becoming the screen.

Figure X. XXXX

Fig 12 — Types of human-machine interface and their technology maturity
Non-hands-free
interfaces

Input

Keyboard, mouse,
touch screen

TRL1

1

5

9

1

Computer vision

Digital textiles

Real-time
gesture/eye
movement
recognition that
allows hands-free
interaction

Alternative for
hands-free
interaction using
smart textiles

5

9

1

5

9

1

On-body
interaction

Brain computer
interfaces

Human body as an
interactive surface

To allow user to
send inputs to the
machine by the
power of thought

5

9

Basic

1

Source: Arthur D. Little

36

5

9

Advanced

VR/AR headsets
Enable an
immersive
experience of
the virtual world
through sight
and hearing

Output
TRL

1

5

9

1

Holography

Haptic interfaces

A 3D image of a
subject seen in
the real world
without the aid
of special glasses

Allow to
complement the
experience with
haptic feedback

5

9

1

5

Brain computer
interfaces
Provide sensory
outputs to all
five senses

9

1

5

9

Brain-computer interfaces (input type)

On-body interaction technology uses the human body

BCIs enable users to send inputs to the machine

as an interactive surface, eliminating the need for a

through the power of thought. A BCI system consists of

touchscreen or other hardware device. Users can either

four components: signal acquisition, feature extraction,

tap or swipe specific parts of their body to access spe-

feature translation, and device output. Two types of BCI

cific applications or perform location-independent

exist: invasive and noninvasive.

actions anywhere on their body.

Blue Shift / R E P O R T 0 0 2

On-body interaction technology

Prototype input invasive BCIs have already been suc-

It offers the advantage of always-available control, an

cessfully developed. At Stanford University in May 2021,

expanded input space, and additional proprioceptive

for example, a microchip implanted in his brain allowed

and tactile cues that support nonvisual use. Companies

a paralyzed man to communicate by text at speeds that

in this space include Makeability Lab, which has been

approach the typical smartphone user.14 Companies and

exploring a suite of sensors mounted on the finger, Soli,

startups developing invasive BCIs include Elon Musk’s

and Ultraleap.

venture Neuralink.

Current challenges include being able to demonstrate

BCIs may eventually be used routinely to replace or

the accuracy of interactions and overcoming potential

restore useful functions for people severely disabled by

embarrassment at performing on-body interactions in

neuromuscular disorders or to improve rehabilitation

public, which could hold back adoption.

for those with strokes or head trauma. They could also
augment natural motor outputs for pilots, surgeons, and
other highly skilled professionals.
And although it may sound like science fiction, some
noninvasive BCIs are already available commercially,
with companies such as NextMind, Emotiv, and Kernel
involved in the space.
The future of BCIs depends on progress in three critical
areas: development of comfortable, convenient, and
stable signal-acquisition hardware; BCI validation and
dissemination; and proven BCI reliability and value for
many different user populations.

14 Goldman, Bruce. “Software Turns ‘Mental Handwriting’ into On-Screen Words, Sentences.” Stanford Medicine News, 12 May 2021.

37

Blue Shift / R E P O R T 0 0 2

VR/AR headsets

Holography

The most well-established HMIs, VR/AR headsets are

The holography process creates a 3D image of a subject

already widely used with video games as well as in

seen in the real world without the aid of special glasses

other applications, including simulators and trainers.

or other intermediate optics. The image can be viewed

They comprise a stereoscopic head-mounted display

from any angle, so as the user walks around the display

(providing separate images for each eye), stereo sound,

the object will appear to move and shift realistically.

and head-motion-tracking sensors, which may include

Holographic images can be static, such as a picture of a

devices such as gyroscopes, accelerometers, magneto-

product, or be an animated sequence.

meters, or structured light systems. Some headsets also
have eye-tracking sensors and gaming controllers.

While best known as a method of generating 3D images,
holography also has a wide range of other applica-

Since they were first launched, VR/AR headsets have

tions. For example, it is already used in data storage (by

improved both technically (in terms of resolution and

storing information at high density inside crystals or

lightness) and cost. However, they are still not yet widely

photopolymers) for applications including art, security,

available to the general public due to key challenges

and logistics. And while increasing computing power

related to comfort and affordability. Other challenges

may enable the creation of digital human models that

include resolution, field of view, movement tracking, and

will render faster and more realistically, this potentially

immersivity capabilities. Players in this space include

leads to issues around voice cloning and fraudulent

Apple, HP, Oculus (owned by Meta), Valve Index, and HTC

impersonation. Leading players include HYPERVSN,

Vive.

MDH Hologram, SeeReal Technologies, and VividQ.

The three main performance factors that are considered

The future of holography lies at the intersection of AI,

when evaluating VR headsets are resolution (pixels per

digital human technology, and voice cloning. Increasing

degree), field of view (FOV), and refresh rate. Resolution

computing power should enable creation of digital

has improved year-on-year to ~30 pixels per degree and

human models that will render faster and more realisti-

is getting closer to the eye-limiting resolution of about

cally. The evolution of holographic technologies is hoped

~60, or normal sight. These performance factors are key

to lead to their increasing availability and portability.

for future mass adoption. Even if AR headsets/glasses
are currently at a lower maturity level, it is likely that AR
glasses will be the main interface in the coming three to
five years.
Manufacturers have reduced the cost of developing
devices, although it seems there is room for improvement. In addition to the three performance factors
above, the main challenges are related to comfort
and affordability. Wired headsets usually have better
graphical power, while wireless glasses currently have
lower quality. The final challenge, to provide a “sense
of embodiment,” is a key research area that focuses on
methods to allow the user to see themselves within the
virtual scenario without the use of avatars.15

Haptic devices
Haptic devices allow users to touch, feel, and manipulate 3D objects in virtual environments. They are
employed for tasks that are usually performed using
hands in the real world, such as manual exploration and
manipulation of objects. Computer keyboards, mice, and
trackballs constitute relatively simple haptic interfaces.
Other examples are gloves and exoskeletons that track
hand postures and joysticks that can reflect forces
back to the user. Companies involved in the area include
CyberGlove Systems, Force Dimension, HaptX, and
Ultrahaptics.
Key challenges for greater adoption are being able to
scale up from laboratory to market readiness, along
with overcoming technical challenges such as
following or allowing the motion of the user with
minimum resistance.

38

15 Kilteni, Konstantina, Raphaela Groten, and Mel Slater. “The Sense of Embodiment in
Virtual Reality.” Presence: Teleoperators and Virtual Environments, Vol. 21, No. 4, 2012.

Layer 3, which we’ve named “extended reality” (XR), is the immersive
representation that augments or replaces reality. It comprises a
spectrum ranging from 100% real to 100% virtual. Extended reality
combines the world and real objects with one or more layers of
computer-generated virtual data, information, or presentation.

Blue Shift / R E P O R T 0 0 2

Layer 3: Extended reality — The visible face

Thus, XR may be thought of as the visible face of the Metaverse.
XR includes AR, MR, augmented virtuality (AV), and VR, reflecting
different mixes of real and virtual information along the spectrum
(see Figure 13).
The technologies that comprise XR are at varying degrees of maturity. For example, VR today is much more mature than AR. As these
technologies develop, the more they will converge and the more the
Metaverse will be synonymous with continuity between the real and
the virtual.

Augmented reality
Augmented reality enhances the real-world experience by superimposing on it computer-generated contextual data, information, and
virtual experiences. AR software works in conjunction with devices
such as tablets, phones, headsets, and more. These integrating
devices contain sensors, digital projectors, and the appropriate
software that enables these computer-generated objects to be projected into the real world. Once a model has been superimposed in
the real world, users can interact with and manipulate it.
AR is commonly used for entertainment purposes (such as Niantic’s
Pokémon Go mobile game), but also increasingly in enterprise and
industrial applications such as training, maintenance, construction, healthcare, and retail, where users can access contextual data
superimposed on real-world objects. Although relatively mature, the
technology faces challenges related to costs, accessibility, and education as well as potential privacy concerns since it depends on the
ability of the device to record and analyze the environment in real
time. Major players active in the AR space include Help Lightning,
Niantic, Plattar, SightCall, and Streem.

Figure X. XXXX
Fig 13 — The spectrum of real and virtual mixes that constitutes XR
Real world

Augmented
reality (AR)

Perceived reality
through our 5 senses.

Mixed reality (MR)

Virtual information
on objects overlaid
on the real world.
Superimpose layers
on top of reality
without taking into
account the context.

TRL

1

5

Reality

9

1

5

Augmented
virtuality (AV)

Real and virtual
worlds are merged
so physical and
digital objects
interact.

Real objects or
information are
placed in the virtual
world.

1

5

9

1

5

“Brain in a vat”

Users are fully
immersed in a
simulated
environment.

The user perceives
and interacts with
the virtual world
directly through
brain-computer
interfaces and the
five senses.

The virtual world is
perceived through
sight and hearing
(and other senses).

Superimpose layers
on top of reality by
taking into account
the context.

9

Virtual reality (VR)

9

1

5

9

1

5

9

Virtuality

Source: Arthur D. Little

39

Blue Shift / R E P O R T 0 0 2

Mixed reality

Virtual reality

Mixed reality refers to the intertwining of real and vir-

Virtual reality refers to an entirely simulated experience

tual worlds. In contrast to AR, in MR, digital objects are

that can be similar to, or completely different from,

not just overlayed on but are anchored to the physical

the real world. It uses VR headsets or multi-projected

world, meaning they can be interacted with. Green

environments to generate realistic images, sounds, and

screen and video chat backgrounds are nonimmersive

other sensations that simulate a user’s physical pres-

2D examples of MR. However, some definitions of MR

ence in a virtual environment, allowing for movement

include both AR and AV.

and interaction.

Organizations across many industries have already
begun developing MR applications to make certain
processes safer, more efficient, or more collaborative.
It is already used in sectors such as manufacturing,
healthcare, and architecture for training and development, remote collaboration, and turning concepts into
pre-production models. MR headsets like the Microsoft
HoloLens allow for efficient sharing of information

VR headsets commonly comprise a head-mounted display with a small screen in front of the eyes, but can
also be created through specially designed rooms with
multiple large screens. While seeing increasing adoption, there are health and safety concerns around VR’s
prolonged use, especially by children. Leading companies active in the market include Autodesk, France
Immersive Learning, Google, SteamVR, and Threekit.

between doctors. Other players include the US Air Force

Overall, it is important to realize that the Metaverse is

Research Laboratory and Skywell Software.

not all about interactions in a completely virtual world,
which is typically the type of experience that many

Augmented virtuality
Augmented virtuality refers to predominantly virtual
spaces into which physical elements (such as objects
or people) are dynamically integrated. The objects or
people can then interact with the virtual world in real
time with the use of techniques such as streaming video
from physical spaces (such as webcams) or the 3D digitalization of physical objects.
The use of real-world sensor information, such as gyroscopes, to control a virtual environment is an additional
form of AV, in which external inputs provide context for
the virtual view. Current use cases include gaming and
design applications. For example, using a touchscreen,
people can design their own kitchen or bathroom by
selecting and moving virtual appliances and fixtures
around a digitally created room. Blacksburg Tactical
Research Center is a leading player in the AV space.

40

observers focus on and is often the source of skepticism
about its likely level of adoption. As XR technologies
mature, the Metaverse will offer seamless continuity
between the real and virtual worlds.

Layer 4, which we call “world engine,” corresponds to all the software allowing the development of virtual worlds, virtual objects,
and their processes (digital twins) and virtual people (avatars or
digital humans). The world engine (see Figure 14) will likely evolve
from today’s game engines, such as Unity or Unreal, combined with

Blue Shift / R E P O R T 0 0 2

Layer 4: World engine — The engine

physics engines such as that of Dassault Systèmes. They will thus
have similar core architectures. The world engine is composed of
four essential building blocks: graphics engine, presence engine,
logic engine, and physics engine.
World engine technology development is still at a relatively early
stage. It will take several years before the different engines within it
combine to enable more complete realism. While there are already
solutions for these components, there is still much development
necessary and more convergence is expected between gaming and
digital twin engines. Players include Dassault Systèmes, Epic Games,
Nuke, NVIDIA, and Unity.

Figure X. XXXX

Fig 14 — The main building blocks of the world engine

TRL

1

Graphics engines

Presence engines

Logic engines

Physics engines

Software module
responsible for creating
and rendering the visual
layer of the digital world.

Software module responsible
for providing accurate
simulation of presence in the
digital world, taking into
account physical laws.

Software module responsible
for logic encompassing both
simulation of non-player
characters and process
interactions.

Software module responsible
for providing realistic
physical simulations.

5

9

1

5

9

1

5

9

1

Virtual worlds

Digital twins

Avatars

World engine is responsible for
creating the environments
(“scenes”) of the Metaverse,
where user activities and
interactions occur.

Digital twins are accurate digital
models and simulations of objects
and/or of their processes. True
digital twins model both the
object’s physical properties and
receive full data feeds from IoT
sensors on the real device.

Avatars (also called
“digital humans”) are the
equivalent of digital twins
for people. They are virtual
representations of users.

5

9

Source: Arthur D. Little

Graphics engine
The graphics engine is responsible for creating and rendering the
visual layer of the virtual world. The key component of the Metaverse
— the integrated world combining the physical and virtual world —
will be based on graphical techniques, including the 3D construction
of world scenes, digital items, non-player characters (NPCs), and
player characters (avatars). Computer graphics engines are likely one
of the most advanced and mature components currently available
for Metaverse projects, as near-photorealistic 3D computer graphics
can be generated in real time for games, albeit using state-ofthe-art hardware that is not easily accessible to the average user
and at a relatively high energy consumption (powerful desktop
graphics processing units [GPUs] can consume over 500 watts
of energy at peak load), limiting their mobility. Leaders in this
space include Unity, Unreal Engine, CRYENGINE, 3ds Max, and
Amazon Lumberyard.

41

Blue Shift / R E P O R T 0 0 2

Presence engine
The presence engine enables users to feel present in
any location as though they were there physically. For
example, a first state of presence technology can now
be found in 4DX cinemas, which incorporate on-screen
visuals with synchronized motion seats and environmental effects such as water, wind, fog, scent, snow,
and more to enhance the on-screen action. Presence
engines are currently in the early prototype phase,
though significant work is happening in the field, especially in the areas of haptic feedback propelled by both
gaming and training simulators.

Logic engine
The logic engine is responsible for managing interactions between various virtual entities. It encompasses
both simulation of NPCs and process interactions. Logic
engines currently are driven mainly by game development, as the most successful Metaverse-like environments currently in existence are computer games. In
most cases, logic engines allow the attachment of additional “components” or “behaviors” to a 2D or 3D model.
At this time, logic engine components are relatively
simplistic and focus on highly specific behaviors such as
the ability for a digital model to emit light, move, or play
sounds. Today’s logic engines are highly deterministic
and control the bits and pieces that attempt to give the
digital model verisimilitude. In future, logic engines will

engines, on the other hand, tend to have simplified
algorithms and reduced accuracy but allow for real-time
computation. Real-time engines are a key requirement
to maintain verisimilitude as, for example, too slow
computation of collision detection will result in objects
passing through each other and potentially being
repelled with abnormal correction force when the
computation catches up.
Players in the scientific space are developing numerous
physics engines for a wide variety of purposes, with
each tending to focus on a particular high-precision
physics challenge. From a Metaverse perspective, where
at least the initial versions will likely be collaborative
spaces where physics will be an approximation of reality
sufficient to maintain realism, the usual game creation
engines are key players in the space, including Unity,
Unreal, CRYENGINE, Amazon Lumberyard, 3ds Max, and
Dassault Systèmes.

Virtual worlds
Looking now at the output side of the world engine, the
user in a virtual world accesses a computer-simulated
world that presents perceptual stimuli to them, allowing
users to manipulate elements of the modeled world and
thus experience a degree of presence. Communication
between users can range from text, graphical icons,
visual gesture, sound, and, rarely, forms using touch,

likely have more advanced and free-form components

voice command, and balance senses.

based on AI and machine learning (ML). For example,

While virtual worlds have made impressive steps forward

AI components will synthesize speech and responses
rather than relying on pre-recorded text. Leaders are
much the same as those in the graphics engine space,
and include Unity, Unreal Engine, CRYENGINE, 3ds Max,
and Amazon Lumberyard.

Physics engine
The physics engine allows the creation of realistic
multi-physics modeling and simulations (e.g., concerning fluid dynamics or gravity). It describes the physical behavior of the materials supporting actions like
heat, bending, or chemical reactions. The physics engine
is responsible for providing an approximate simulation
of physical systems to enable the verisimilitude of the
virtual world to help with immersion, and will handle
tasks such as collision detection and body dynamics.
Physics engines tend to be broadly categorized in
high-precision and real time, although the distinction
is already becoming somewhat blurred due to better
algorithms and the increase of computational power.
High-precision engines are typically used to calculate

42

very precise physics, such as fluid dynamics. Real-time

in terms of immersivity, they currently require robust
hardware and fast connectivity to operate effectively.
Notable players in the space include IMVU, Kaneva, and
Second Life.

Digital twins create a virtual copy of a physical object, such as a
machine. Sensors produce data about different aspects of the
physical object’s performance, such as energy output, temperature,
weather conditions, and more. This data is then relayed to a
processing system and applied to the digital copy.

Blue Shift / R E P O R T 0 0 2

Digital twins

This virtual model can be used to run simulations, study performance issues, and generate possible improvements — all with the
goal of generating valuable insights that can then be applied back to
the original physical object.
While digital twins are increasingly being adopted, there is still significant development needed to fully model all properties of a complex object in the digital domain. Companies involved in the market

“Virtual objects
are more
expensive than
real ones because
they give access
to knowledge.”

include Ansys, Cosmo Tech, Dassault Systèmes, IBM, and Siemens.

Pascal Daloz, COO, Dassault Systèmes

Figure X. XXXX

Fig 15 — Technological maturity of key digital twin developments, from basic to advanced
Graphical
representation
Objects currently
appear solely as
graphics with no other
properties — such as
collision detection or
gravity.

1

5

Basic

9

1

3D object representation

Interactive objects

Data twin

Digital twin

Improved rendering
technology can make 3D
objects more real and
interactive. For example,
both interiors and
exteriors are accurately
represented, allowing for
virtual tours.

Scanned objects can
be assigned physical
attributes that mimic
real-world behavior,
allowing for improved
simulation. A key
development in gaming
in recent years has been
destructible environments.

Digital twin modeling only
sensor data, allowing for
enhanced monitoring.

True digital twin
representation modeling
both the object’s physical
properties and receiving
full data feeds from IoT
sensors on the device.

5

9

1

5

9

1

5

9

1

5

9

Advanced

Source: Arthur D. Little

43

Blue Shift / R E P O R T 0 0 2

Avatars
Avatars are developing toward becoming photorealistic 3D
renditions of human beings in the virtual world that are nearly indistinguishable from the real thing. They rely on a complex combination
of technologies for their functionality. These include AI to process
input and provide feedback, natural language processing to
understand voice commands, advanced 3D modeling to replicate
expressions of human emotion with precision, and natural language
generation so that the digital human can respond via voice.
While they already have business applications, such as acting as
the face of customer experience chatbots, the introduction of truly
realistic physical and mental simulations is still a long way in the
future. Current challenges include, for example, achieving real-time
response without latency and enabling avatar autonomy. There are
also ethical issues associated with an avatar, which both is and isn’t
the same thing as the real person it is representing. Companies
active in the market include Banuba, Emova, Imverse, Soul Machines,
Uneeq, and Unity.
Avatars can be projected into the Metaverse in one of two ways —
either through real-time 3D video (which is bandwidth intensive) or
through photorealistic models that only transfer changes (such as
body movements) to the Metaverse, reducing the network capacity
required. For example, Emova is working to deliver photorealistic 3D
models that capture movement and also control lighting effects to
enhance realism. The first target market is online fashion, enabling
consumer avatars to digitally try on clothes or jewelry to get a realistic impression of how an item will look when worn. The aim is to
reduce return rates (a third of clothes purchased online currently
are returned), thus increasing efficiency and lowering environmental
impacts.
While certain areas, such as photorealism and movement capture
are now mature, techniques such as emotion capture and avatar
autonomy are not. This limits the usefulness of avatars for applications such as online meetings in the Metaverse, which are also currently held back by a lack of sufficient bandwidth.

44

This means there are huge opportunities for players at

Layer 5, which we have named “infrastructure,” corre-

suggest that the market will be worth more than $700

sponds, as its name suggests, to the physical infrastruc-

billion for telecom operators by 2030. Some relevant

ture — network, computing power, and storage — that

telcos and local infrastructure players have already

enables the real-time collection and processing of data,

entered the Metaverse by themselves or through

communications, representations, and reactions (see

different partnerships, including e&, MTN Group,

Figure 16).

SK Telecom, Telefónica, T-Mobile, Turkcell, Verizon,

Infrastructure is in a sense the “piping” that enables

and Vodafone.

achievement of the three essential properties of the

Areas where infrastructure will need to be expanded

Metaverse described earlier: immersion, interaction, and

include:

the infrastructure level. For example, some estimates

Blue Shift / R E P O R T 0 0 2

Layer 5: Infrastructure — The piping

– Local computing power. Significant local com-

persistence.
Infrastructure is probably the least interesting layer for

puting power is needed to achieve an immersive

the nonexpert, so it is not often discussed in the media.

VR/AR experience and will require an immense

However, infrastructure is critically important to the

improvement in performance to achieve levels

development of the Metaverse. The infrastructure we

required by the Metaverse.

– Communications. New, low-latency, near-

have defined does not yet exist, and probably won’t be
realized for around a decade due to the technical chal-

instantaneous communications methods will

lenges involved.

need to be developed to achieve the interaction

A localized high-bandwidth, low-latency infrastructure

levels needed for truly immersive Metaverses to

is needed, requiring development in gigabit speeds,

exist. Networks, including Internet backbones, will

millisecond latency, and local and cloud compute. To

require perhaps an order of magnitude in through-

achieve anything close to what Metaverse advocates

put increase to handle the new data streams.

– Cloud computing. Current massively multiplayer

promise, most experts believe nearly every kind of chip
will have to be more powerful by an order of magnitude

games have limited populations or offer very lim-

than it is today.

ited simulation of specific aspects of life. Cloud
computing farms will need an order of magnitude
performance increase to accommodate the
needs of the Metaverse and to ensure the world
is always “on.”

Figure X. XXXX

Fig 16 — The infrastructure needed to support the Metaverse
Immersion

Interaction

Persistence

The Metaverse will need to
allow users to become totally
engrossed and involved in
the experience — effectively
living in another universe.

The Metaverse will require
complete, near instantaneous,
two-way flow of information
between computer and user.

The Metaverse will need to
continue to exist and develop
internally even when no people are
interacting with it. It may even
extend in the real world — much
like the pervasive games of today.

Local computing power

Communications

Cloud computing

Significant local computing power
is needed to achieve an immersive
VR/AR experience. Local computing
will require an order of magnitude
improvement in performance to
achieve Metaverse-required levels.

New, low-latency, near instantaneous
communications methods will need to be
developed to achieve interaction levels
needed for truly immersive Metaverses
to exist. Networks, including Internet
backbones, will require perhaps an order
of magnitude in throughput increase to
handle the new data streams.

Cloud computing server farms will be needed
to ensure the world is always “on.” Current
massively multiplayer games have limited
populations or offer very limited simulation
of specific aspects of life. Cloud computing
farms will need an order of magnitude
performance increase to accommodate the
needs of the Metaverse.

1

5

9

1

5

9

1

5

9

Source: Arthur D. Little

45

Blue Shift / R E P O R T 0 0 2

Layer 6: Key enablers — Oiling the wheels
Layer 6, which we call “key enablers,” brings together a set of
technologies, mostly software, that is essential to the proper
functioning of the other layers. This sixth and final layer may be
thought of as the oil that lubricates the wheels. It brings together
IoT, blockchain, cybersecurity, and AI (see Figure 17). The latter,
for example, is necessary for the automatic generation of digital
twins or for the creation of realistic avatars with realistic attitudes. The technologies below are already mature in many existing
applications but will require further development to enable new
Metaverse applications. The TRL for each type of technology
shown in Figure 17 is therefore a simplification.

Figure X. XXXX

Fig 17 — Key enabling technologies for a functioning Metaverse

TRL

Internet of Things

Artificial Intelligence

Blockchain

Cybersecurity

Physical objects that are
embedded with sensors,
processing ability, and control
software to enable them to
exchange data over a network
or the Internet.

Technologies allowing
machines to learn from past
experience and achieve
complex goals.

Digital ledger that contains a
growing list of records (or
blocks) interconnected using
cryptography.

Protection of computer
systems and networks from
information disclosure, theft,
damage, disruption, or
misdirection.

1

5

1

5

9

1

5

IoT enables, for example:

AI enables, for example:

Blockchain enables, for example:

• Digital twins used in asset
management

• Modeling and simulations
of complex systems

• Asset ownership

• Simulations of real systems
• AR/AV linkage of real and
virtual objects

Source: Arthur D. Little

46

9

• Realistic avatars and
non-human characters

• Transactions (e.g., via NFTs)
• Identity & authentication

9

1

5

Cybersecurity enables,
for example:
• Security for
Metaverse users

• Safe interconnectedness

9

Blockchain

IoT refers to physical things that are embedded with

Blockchain is a digital ledger that contains a growing

sensors, processing ability, and control software to

list of records (or blocks) interconnected using cryptog-

enable them to exchange data over a network or the

raphy. Blockchain enables, for example:

Internet.
IoT enables, for example:

– Digital twins. Allows complete end-to-end asset
management of interconnected devices.

– Simulation. Enables customers to create and

simulate hundreds of virtual connected devices,
without having to configure and manage physical
devices.

– AR/AV. Allows real data to link virtual and real

objects in different applications along the MR

– Asset ownership. Its immutability allows for a
record of NFTs within Metaverse economies as

Blue Shift / R E P O R T 0 0 2

Internet of Things

proof of digital asset ownership, allowing quick,
efficient, and cost-effective transactions.

– Identity and authentication. The technology can
effectively keep track of digital identities, bringing trust to identity challenges.
The global blockchain market size has been estimated
at $4.7 billion in 2021 and an estimated $165 billion in
2029, with a CAGR of 55%.

spectrum.
The global market size has been estimated at $750
billion in 2020 and $4,500 billion in 2030, with a CAGR
of 20%.

Cybersecurity
Cybersecurity refers to the protection of computer
systems and networks from information disclosure and
theft of or damage to hardware, software, or electronic

Artifical intelligence
AI refers to technologies allowing machines to learn
from past experience and achieve complex goals and
enables, for example:

– Simulation of digital twins. Allows better mod-

eling and simulation of complex systems such as
industrial equipment or living entities, leveraging
larger amounts of heterogenous data that could
not be processed manually.

data, as well as from the disruption or misdirection of
the services they provide. Cybersecurity enables, for
example:

– Security. Must be guaranteed before any platform
can attract users.

– Interconnectedness. Essential to allow the

Metaverse to offer new, secure paths for the connections between humans that may be required to
enable new applications and capabilities.

– Realistic avatars. Together with generative

adversarial networks (GAN), improving the realism
of avatars (in both representation and behavior).

– Computer agents. Mimicking the behavior of
nonhuman characters.

The global AI market size has been estimated at $94
billion in 2021, and $1,000 billion in 2028 with a CAGR
of 40%.

47

INTERLUDE#2
BUILDING THE
METAVERSE

48

With this work, I sought to
represent the complexity of the
Metaverse with various intricacies:
the intricacy of both the physical
and the real, the intricacy of both
the hardware and the software,
and finally the intricacy of the six
layers of the architectural model
of the Metaverse developed by
Arthur D. Little.

– by artist
Samuel Babinet

CHAPTER

3

52

III. PROTO-METAVERSE: VIRTUAL WORLDS FOR
REAL ECONOMY, TODAY

Blue Shift / R E P O R T 0 0 2

#3

Proto-metaverses:
Virtual worlds for
real economy, today

Dimensioning and forecasting the Metaverse market is challenging
because it depends on what is included in the calculations. Some
analysts project a market as large as $5 trillion by 2030, based on
assumptions around the proportion of the global digital economy that
will shift toward the Metaverse. These headline-grabbing numbers are
very speculative. Instead, we propose a more conservative approach
that suggests new markets, excluding enabling technologies such as
IoT, AI, and blockchain, in the hundreds of billions of dollars by 2030
with a 30%-40% annual growth rate. Even though the Metaverse, as
envisioned and defined previously, is not yet a reality, a large number
of business opportunities already exist and can be seized in today’s
proto-metaverses. Just like the Internet, in considering the opportunities it is useful to segment the Metaverse market into three types:
consumer, enterprise, and industrial.

54

Blue Shift / R E P O R T 0 0 2

Market:
Very significant, but consider multitrillion-dollar forecasts with caution
Several analysts have already come up with numbers to quantify
the Metaverse’s market size and dynamics. Some, such as Citibank,
estimate the market size in a top-down manner, producing very large
figures.16 For their predictions, they considered the overall global
GDP, the percentage of this attributable to the digital economy,
and the percentage of the digital economy attributable to the
Metaverse. Working on the assumption that the digital economy
makes up between 25%-30% of global GDP and that 10%-50% of this
is attributable to the Metaverse puts forecasts in a range of market
sizes between $2-$20 trillion. However, this does include supporting
digital infrastructure and enabling technologies, which as we
explained above, will not be driven or used solely by the Metaverse.
Others, such as McKinsey, get to a $5 trillion market in 2030 with
a more bottom-up approach.17 Their approach is based on assumptions about future use cases. In practice, a large proportion of these
use cases represent a shift in the already rapidly growing digital
economy from the classical Web to the Metaverse, rather than being
genuinely new market space — much in the same way that a very
significant part of the digital economy shifted from computers to
smartphones.
The point is not to claim that one approach is better than the
other, but to stress the fact that forecasting the future size of the
Metaverse market accurately is difficult for three main reasons:

– Scope. Delivering the Metaverse will require extensive and

expensive digital infrastructure (such as high-speed, highcapacity networks) to be in place. However, these enabling
technologies will not be driven by the Metaverse alone. In
other words, sizing the market depends on what we decide to
include in its scope, which is somewhat arbitrary.

– Lack of maturity. As with any immature market, predicting

when (or if) growth will occur is hard. When will the inflection
point be reached when consumer demand grows
exponentially, for example?

– Substitution. Some market activity in the Metaverse will be

a substitute for activity that would have taken place anyway
in the conventional digital economy, and is thus substitution
rather than new growth.

16 “Metaverse and Money: Decrypting the Future.” Citi GPS, 30 March 2022.
17 “Value Creation in the Metaverse.” McKinsey & Company, June 2022.

55

Blue Shift / R E P O R T 0 0 2

A conservative
forecast suggests
that it will
increase to around
$110-$125 billion
by 2025 (see Figure
18), and we expect
it could reach
around $500 billion
by 2030, assuming
linear growth.

Given these factors, our analysis provides a cautious, low-end forecast, which estimates that the current Metaverse market, excluding
infrastructure and enabling technologies, is estimated to be worth
$50 billion.
These numbers are from ADL analysis based on recent credible
forecasts for AR, VR, and MR software and hardware markets across
multiple consumer, enterprise, and industrial segments. Taking into
account the current technological challenges that still need to be
overcome, we have conservatively assumed 10%-30% new market
space created by further progress in Metaverse adoption up to 2025,
over and above recent forecasts. Importantly, these figures exclude
revenues from the new digital infrastructure and enabling technologies such as blockchain, AI, and IoT required for Metaverse growth.

Figure
X. XXXX
Fig 18 — Conservative forecast of Metaverse market growth to 2025
Sizing the Metaverse
AR, VR, MR

New market space
$500-600bn

$92bn

$459bn

+35%

$110-125bn

$40bn

$7bn

$60-70bn
$12bn

2022F

2023F

$79bn

$105bn

2030F

$59bn

2025F

$45bn

$21bn

$16bn

2024F

$34bn

2021E

$3bn

$45-50bn

$80-95bn

Source: Arthur D. Little, Markets and Markets, Fortune Business Insights, Grand View
Research,
Insight and
Partners,
Emergen
Research,
AdroitInsights,
Market Research
Source:The
Markets
Markets,
Fortune
Business
Grand View Research, The Insight

Partners,
Emergen
Research,
Adroit Market
Research,
Little Institute of Technology
Note:
Estimates
for the different
applications
exclude
what it isArthur
already D.
considered
under
other
categoriesfor the different applications exclude what it is already considered under
Notes:
Estimates
other categories

56

In this section we focus on the experience continuum — the layer
that contains new usages and business models across virtuality and
reality. As we mentioned before, these applications can broadly be
split into three areas (see Figure 19):

– Consumer Metaverse. Referring to all applications and expe-

Blue Shift / R E P O R T 0 0 2

Three types of Metaverse:
Consumer, enterprise, & industrial

riences designed for and accessed by accessed by individual
consumers.

– Enterprise Metaverse. Referring to non-industry-specific

applications used across businesses for interaction. These are
driven mainly by the need for corporate collaboration among
employees.

– Industrial Metaverse. (including concepts such as digital

twins). Focused on technical collaboration among employees
and machines. These applications are often industry- or
business-specific.

Many real applications for the Metaverse already exist in most sectors for consumers, enterprises, and industry. However, these are
currently implemented as proto-metaverses — the walled gardens
we referred to earlier. Additionally, there are current infrastructure
opportunities. We have shared a range of current use case examples
in Appendix 1. Here, we share a topline summary with some illustrative examples from across different industries.

Figure
X. applications
XXXX of the Metaverse
Fig 19 — Three
Consumer Metaverse

Enterprise Metaverse

Industrial Metaverse

• Gaming

• Training and education

• Design and development

• Meetings

• Simulation and optimization

• Collaborative working

• Operational improvement

• Entertainment
• Events
• Social interaction
• Experience
• Buying and selling goods and services

Source: Arthur D. Little

57

Blue Shift / R E P O R T 0 0 2

Current opportunities:
Proto-metaverses across all industries
Consumer Metaverse
The consumer Metaverse provides many of the opportunities that
first come to mind, given the Metaverse’s partial origins in the
gaming industry. There are opportunities across virtually every
consumer sector, for example:
Retail and consumer goods:

– Digital assets — including branded, virtual only, replicas of
physical assets, or add-ons.

– Virtual try-ons/shops/auctions/retail experiences — aimed at

enhancing consumer experience, engagement, loyalty, touchpoints, and brand awareness.

– New payment models.
– Enhanced product customization and comparison through
digital modeling.

– Improved customer tracking.
Entertainment:

– Virtual events/experiences/simulators — a vast range of applications that could be further enabled by new HMI technol-

ogies, which would allow for additional merging of gaming/
entertainment and social/collaborative applications.

– Digital assets — building on the existing global digital entertainment market.

– Virtual worlds/virtual tourism — development of what are

currently “gaming-only” opportunities into what could be an
almost endless array of virtual experiences.

– E-sports/music — New opportunities for sports and music
content creation, and new ways for consumers to virtually
attend and participate in sports and music events.
Travel:

– In-journey entertainment — new immersive entertainment
opportunities (see above).

– Customer interface enhancement — virtual interactions and
facilities to revolutionize the customer experience along all
stages of the journey from pre-travel to post-arrival.
Financial services

– Virtual support for clients — enhancing customer engage-

ment, personalization, and quality of interaction along the
customer journey.

Healthcare

– Virtual healthcare provision — enhanced “telecare” offerings

for patient consultation, diagnosis, and treatment from a distance and from virtual hospitals.

58

This category includes nonspecialist virtual training
courses, virtual meeting and event tools, and remote
collaboration and workshop tools. The category is of
course already well established in the 2D environment,
although technical shortcomings still prevent more
widespread application in truly immersive environments.
Improvements in the quality of the immersive experience could lead to a step change in the adoption of
enterprise tools.

Healthcare:

– Remote monitoring of patient health conditions.
– Digital human simulations to test therapies —
reducing cost and improving safety.

– Digital twins of manufacturing facilities — as with
manufacturing, above.

Blue Shift / R E P O R T 0 0 2

Enterprise Metaverse

– Better diagnostics and solutions — leveraging “in

silico” approaches for drug discovery and development in a digital environment.

Energy and utilities:

Industrial Metaverse
The industrial category has one of the longest histories
and is already extensive in scale. Examples of typical
applications include the following:
Manufacturing:

– Digital twins of factories, plants, and other oper-

ational facilities — used to enhance and optimize
design, operations, and maintenance.

– Human behavior simulation — integrating realistic
human behavior models into digitalized manufac-

turing process models.
Simulations of complex supply chains — the
ability to model entire supply chain networks,
from suppliers to end customers, continually
balancing supply and demand in real-time, virtual
environments to collaborate between supply and
demand.

– Asset management and maintenance — tools to
enhance and optimize asset management and

maintenance, enabled by Industry 4.0 technologies such as IoT, AI, ML, and AR.
Travel and transport:

– Digital twins of assets and infrastructures — as

per asset management and maintenance, above.

– Asset design, manufacture, operation, and maintenance — tools to enable enhanced design of
assets such as complex travel infrastructure,
integrated mobility systems, etc.

– Design, inspection, testing, and validation of

equipment — using digital twins and models,
using AR to provide real-time data on asset
conditions, etc.

– Modeling and visualization of operating data —

using virtual 3D simulations to enhance the ability
to optimize and make decisions based on complex
and changing data.

– Operator/engineer training — virtual training
environments.

Aerospace and defense:

– Digital twins to optimize operations and maintenance — as above.

– Future combat air systems — combining manned
and unmanned systems.

Financial services:

– Decentralized finance approaches.
– New financial products — new financial and

payment models to suit the emerging Metaverse
economy.

– New security approaches — suitable for the virtual
world.

Education:

– Campus digital twins — extending the concept of
virtual training environments.

– More realistic simulations — to enhance learning.
– New forms of collaboration — among students
and teachers.

59

Blue Shift / R E P O R T 0 0 2

Key players in the Metaverse
There are perhaps 100 companies that are prominent today in
shaping the future of the Metaverse, although the total number of
companies involved is much greater. Figure 20 shows a selection
across the top five layers of the Metaverse framework.
The large gaming companies such as Roblox, Epic Games, and
Niantic have been leading the way in shaping the Metaverse,
together with the tech giants such as Meta and Microsoft. At each
layer of the Metaverse architecture, multiple large and well-funded
players are active, as well as hundreds of smaller players. Companies investing in Metaverse activities are to be found in nearly every
sector, from fast food to football.
By way of illustration, selected key players include the following:

Figure X. XXXX
Fig 20 — Selected key players in the Metaverse, organized by layer
Experience
continuum

Human-machine
interfaces

Source: Arthur D. Little, Meta Annual Report, Blue Shift Institute

60

Extended
reality

World
engine

Infrastructure

Figure
X. XXXX
Fig 21 — Meta
Meta’s business model
1

Meta annual revenue, 2013-2021

Ad sales on Meta’s family of apps

$39.37bn

Blue Shift / R E P O R T 0 0 2

Meta

• Primary source of Meta’s revenue is from ad sales.
• Meta sells ads on social media websites and mobile apps.
• The family of apps segment posted $32.4 billion in revenue in Q4
FY 2021, comprising over 97% of the company’s total revenue.

$29.15bn

$22.11bn

2

Reality Labs

$18.49bn
$15.93bn

• Comprised of Meta’s AR/VR-related hardware, software, and
content, including the Oculus VR headset.

$10.22bn

• This segment is key to the company’s plan of building out the
Metaverse.
• This segment reported revenue of $877 million in Q4 FY 2021,
accounting for 3% of the company’s revenue.

$1.50bn

$2.94bn

$3.69bn

2021

2020

2019

2018

2017

2016

2015

2014

2013

• Oculus was acquired by Facebook for $2.3 billion in 2014.
• Since 2014, Meta has made numerous VR acquisitions (e.g., VR
workout app Supernatural in October 2021).

Source: Arthur D. Little

• Quest 2 was unveiled in September 2020.

For many, the term Metaverse first came to prominence

is Metaverse-like, there are still many technical

when Facebook changed its name to Meta in 2021. The

limitations, including the number of people in the

company is investing heavily in the Metaverse, focused

space, the ability to dynamically alter the environ-

on three current initiatives (see Figure 21):

ment, and the cost and complexity of hardware

– VR hardware. Since acquiring Oculus in 2014 for

$2 billion, Meta has focused on creating best-inclass hardware and complementary software &
services to support VR experiences. Currently this
allows users to play games, try fitness classes,
play sports, and watch concerts in virtual environments. One of the biggest differentiators for
Oculus is its large array of nongaming experiences
designed for the headset. For instance, users can
explore extreme terrain in National Geographic
Explore VR, join virtual fitness classes, or simulate

being a chef.
AR lenses. Meta has built AR lenses within the

Partnerships include:

– Verizon (infrastructure layer) — developing 5G
ultrawideband networks with lower latency and
higher upload and download speeds to deliver a
high-quality Metaverse experience.

– VNTANA (world engine) — allowing brands to

upload 3D models of their products to Facebook
and Instagram and easily convert them into ads.

– Microsoft (experience continuum) —

integrating between Meta’s Workplace enterprise
social network software and Microsoft Teams,

Instagram chat and Messenger platforms. There

allowing Meta customers to access Workplace

is clearly interest in Meta’s AR platform, with the

content inside the Teams app, and vice versa.

company stating that there are currently 600,000
AR creators in 190 countries working with the
technology, who have so far produced 2 million

required to access it.

AR filters.
Horizon Workrooms. Meta has launched a VR
experience for the Oculus Quest 2 headset that
allows users to join collaborative workspaces virtually. Horizon Workrooms creates a virtual office
space that can be accessed by up to 16 people who
can join as their avatar. While the experience

– Xiaomi (human-machine interfaces) —

producing a Chinese variant of the Oculus Go VR
headset, and establishing the foundations of a VR
ecosystem that straddles North American and
Chinese markets.

Meta’s revenues are still overwhelmingly based on ad
sales on its social media networks. The Reality Labs
division, which comprises AR- and VR-related hardware,
software, and content, including the Oculus VR headset,
provided just 3% of revenues ($877 million) in Q4 FY
2021 and is not currently profitable, losing $2.96
billion in Q1 2022 alone.18

18 Daniel, Will. “Meta’s Metaverse Business Is Losing Billions, But Mark Zuckerberg Says It’s All Part of the Plan.” Fortune, 28 April 2022.

61

Blue Shift / R E P O R T 0 0 2

Epic Games

Figure X. XXXX

Fig 22 — Epic Games

Epic Games business model

Epic Games revenue, 2018-2022E

Ad sales on Meta’s family of apps

$6.27bn

Unreal Engine (UE) works in a royalty-based model, where it succeeds
only if the developers succeed. UE charges a 5% royalty fee once the
developed game or platform has reached $1 million (accumulated).

$5.75bn

$5.63bn
$5.10bn

$4.22bn

Licensing

In-app
purchases
Premium
games

Unreal Engine

Games

Free-to-play
(VBucks to
customize
characters)
2017

2016

2015

2014

Revenue
share

2013

Epic Games
Store

Royalties

• Epic Games saw a decline in revenues in 2019, but has
since recovered and is expected to generate ~$6.2
billion in income in 2022, a growth of ~14% CAGR
since 2019.

Source: Arthur D. Little, News, GamesBeat, Blue Shift Institute

Epic Games is a US-based multinational technology
company best known for developing the Fortnite game,
which has emerged as a proto-Metaverse used for concerts and brand partnerships alongside gameplay features (see Figure 22).
To diversify revenues beyond its own games, Epic Games
now provides its Unreal Engine world engine to thirdparty developers. Due to its availability and feature
set, many industries have adopted the Unreal Engine,
including film and television as well as noncreative
fields. For example, it has been used as a basis for a

Partnerships include:

– WPP (experience continuum) — partnership to

help WPP agencies deliver new digital experiences
for brands in the Metaverse through a comprehensive training program.

– LEGO (experience continuum) — long-term partnership to shape the future of the Metaverse to
make it safe and fun for children and families.

– NVIDIA (infrastructure layer) — the NVIDIA

Edge Program provides high-end hardware to

virtual reality tool to explore pharmaceutical drug mole-

individuals and teams to create content with

cules in collaboration with other researchers, as a virtual

Unreal Engine.

environment to explore and design new buildings and
automobiles, and by cable news networks to support
real-time graphics.
Pricing for the Unreal Engine works through a
royalty-based model, with Epic Games charging a 5%
royalty fee once the developed game or platform
has reached accumulated revenues of $1 million.

62

• Unreal Engine (version 4) contributed to ~$1 billion (17%)
over total Epic Games revenue.

– Intel (world engine) — collaboration to

bring game developers low-power and mobil
-optimized support for Windows and Android +
in Unreal Engine.

Blue Shift / R E P O R T 0 0 2

Roblox

Figure X. XXXX
Fig 23 — Roblox

Roblox business model
1

Roblox quarterly revenue & daily active users
Daily active users (million)

Quarterly revenue ($m)

Robux
Robux is the currency within Roblox that is used to buy new
games, private servers, and other goods.

2

47
42

36

Licensing

37

24

10

11

13

14

16

17

18

19

387

Royalty fees
60

73

85

93

111

119

131

148

162

200

252

454

509

569

537

310

Q4 ‘21

Q2 ‘21

Q4 ‘20

Q2 ‘20

Q4 ‘19

Q2 ‘19

Q4 ‘18

Q2 ‘18

When IP is used, a licensing fee must be paid; while developers
retain all the copyrights, they agree to grant Roblox the right to
license out that content.

43

33

Partners like Toys “R” Us or Walmart pay a licensing fee in
exchange for being able to sell Roblox-branded items.

4

50

Advertising
Roblox partners with various brands, ranging from Marvel to LEGO,
that in turn promote their products and services on the platform.

3

54

COVID-19
lockdown

Source: Arthur D. Little, Roblox website, The Roblox Business Model –
How Does Roblox Make Money? (productmint.com), Roblox Business
Model: Monetizing The Metaverse – FourWeekMBA, Roblox Revenue
and Usage Statistics (2022) – Business of Apps

Roblox is an online game platform and game creation
system. It is free-to-play, with in-game purchases available through a virtual currency called “Robux.” Revenues
come from users buying Robux, advertising by brands,
licensing of the Roblox name for products such as toys
and clothes, and content royalty fees (see Figure 23).
The platform offers all the tools required for content
creation and handles publication, language translations,
billing, safety, and security of the environment. There
are professional studios being built on the platform, and
many consumer-facing brands/content are partnering
with Roblox to ensure a virtual presence.
Roblox seems to be moving the platform beyond
gaming/leisure experiences and into education and
workplace offerings. In essence, the Roblox ecosystem

– NFL (experience continuum) — launched a US
National Football League (NFL)–themed game

and hosts virtual events that coincide with the
NFL calendar.

– Nike (experience continuum) — created Nike-

land, a virtual world modeled after Nike’s headquarters. Users can dress their avatars in Nike
gear, play mini-games, and eventually join in
in-play moments from global sporting events.

– Hasbro (experience continuum) — developed a
Roblox version of the Monopoly board game and

released a range of Roblox-inspired Nerf Blasters.

– Sony (experience continuum) — collaboration
includes a 2020 Lil Nas X concert inside

includes creator economy features, a virtual platform,

Roblox, as well as a 2021 virtual dance party

and some interoperability.

with Zara Larsson.

Partnerships include:

– Alo (experience continuum) — launched the Alo
sanctuary, an immersive wellness space for yoga
and meditation.

– BMG (experience continuum) — strategic agreement to empower talent with new ways to reach

and engage fans, bringing new artists, labels, and
publishers into the Metaverse.

– McLaren (experience continuum) — unveiled its
new car via the Metaverse and developed the
McLaren F1 Racing experience, enabling fans
to race virtually.

63

Blue Shift / R E P O R T 0 0 2

NVIDIA

design and animation tools and the Omniverse.

Figure X. XXXX

Fig 24 — NVIDIA

NVIDIA business model
1

NVIDIA annual revenue, 2017-2021

Graphics processing units

$16.68bn

Includes GeForce GPUs for gaming and PCs; this segment
consists of GeForce NOW game-streaming service and related
infrastructure; total revenue generated in 2021 = $9.834 billion.
$11.72bn
$10.92bn

2

$9.71bn

Compute and networking
Second-highest earner for NVIDIA; this segment includes
data center platforms and systems for AI, HPC, autonomous
vehicle solutions, and accelerated computing; total revenue
generated in 2021 = $6.841 billion.

$6.91bn

2021

2020

2019

2018

2017

• NVIDIA launched Omniverse enterprise in November 2021 and FY
revenue rose 53%.
• Omniverse is an open platform designed for virtual collaboration and
physical-level accurate real-time simulation.
• Creators, designers, and engineers can connect major design tools,
assets, and projects to collaborate and iterate in a shared
virtual space.

Source: Arthur D. Little, NVIDIA Annual Report, Blue Shift Institute

• Omniverse is more of a Metaverse builder that allows worlds to link
together and form a web of accessible spaces.

NVIDIA is a US-based multinational technology company well known for its GPUs. The company caters to
gamers and professional markets, and in addition to
its chips-powering Metaverse infrastructure, it has
launched NVIDIA Omniverse, a scalable, real-time
development platform for 3D simulation and design
(see Figure 24).
In the Omniverse, creators, designers, and engineers can
connect major design tools, assets, and projects to
collaborate and iterate in a shared virtual space. Over
700 companies, including Lockheed Martin, Sony
Pictures Animation, and BMW Group, are using these
tools to advance innovation in their products.
Partnerships include:

– Adobe (infrastructure layer) — collaboration on

a Substance 3D plugin (a dynamic texture generator) to enhance Omniverse capabilities.

– Pixar (infrastructure layer) — incorporating Pixar’s open source universal scene description into
Omniverse, enabling large teams to work
simultaneously across multiple software
applications on a shared 3D scene.

– Blender (experience continuum) — allowing

materials to be exchanged between Blender’s 3D

64

– BMW (experience continuum) — a virtual version
of the BMW factory floor to allow collaborative
simulation and planning (as described in the
Industrial Metaverse use case section).

– Ericsson (experience continuum) — using the
Omniverse to build virtual cities to accurately
simulate 5G cells within the environment.

Blue Shift / R E P O R T 0 0 2

Decentraland

Figure X. XXXX

Fig 25 – Decentraland

Decentraland business model
1

MANA
Decentraland makes money by issuing and holding its
MANA tokens — a native ERC-20 token with a limited
supply

Decentraland funding
Decentraland, according to Pitchbook, has raised a total of $51
million in funding across four rounds (neither a valuation nor
the firm’s revenue was disclosed during the rounds).

• During its ICO, Decentraland’s team sold only a portion
of MANA tokens, reserving and slowly distributed some
to the platform’s developers and employees.

Deal type

• The higher the value of one token, the greater the
incentive for developers to contribute to the platform
(since they are compensated in MANA).

Seed round

08/18/2017

$25mn

Completed

Generating
revenue

• Decentraland drives demand for MANA by issuing plots
of land to other users, who build various attractions
that fill its Metaverse with activities.

Accelerator/
incubator

11/01/2017

$50k

Completed

Generating
revenue

• Decentraland does not participate in any transactions
(e.g., if an artist sells a piece of artwork, then all the
proceeds go to him or her).

Secondary
transaction
– private

Completed

Generating
revenue

Later stage
VC

04/30/2021

$25.5mn

Completed

Generating
revenue

Date

Amount

Status

Stage

Notable investors

Source: Arthur D. Little, PitchBook, Productmint, Blue Shift Institute

Decentraland is one of the world’s first virtual real
estate companies, allowing users to purchase, build,
develop, and sell digital land parcels in a 3D virtual
world (see Figure 25). Users can log in to play games,
earn MANA (the native token of Decentraland), and purchase or create NFTs, including land or collectibles. The
use of NFTs gives players real-world interoperability for
their time spent in-game.
While early in its development, Decentraland has experienced rapid user growth, with 500,000 monthly unique
users in March 2022 versus just 30,000 in March 2021
(see Figure 25). Examples of some more popular busi-

– Samsung (experience continuum) — Samsung’s
first Metaverse virtual store, an exact replica of
a live store in New York City, was available for
around one month.

– Under Armour/Stephen Curry (experience

continuum) — NBA athlete Stephen Curry and his
key sponsor, Under Armour, announced a partnership in December 2021. Further details have yet
to be shared.

– Metaverse Group (extended reality) —

Metaverse Group, a virtual real estate company,

ness activities within Decentraland include art galleries

bought an “estate” for ~$2.4 million. It will use

(where owners can showcase and auction their digital

this to support its expansion into the digital

NFT art), offices for business collaboration, games and

fashion industry.

casinos where players can win MANA, advertising via
digital billboards, sponsored content, and music venues
where DJs and musicians can hold concerts.
Partnerships include:

– Metaverse Fashion Week (experience

continuum) — world’s largest, entirely digital,

Metaverse Fashion Week, featuring brands such
as Selfridges and Dolce & Gabbana.

65

Blue Shift / R E P O R T 0 0 2

Niantic

Figure X. XXXX

Fig 26 — Niantic

Niantic freemium business model

Pokémon GO annual revenue, 2016-2021

$918mn

$905mn

In-app
purchases
$662mn
$617mn

$588mn

$435mn

Merchandise

Revenue
generators

Revenue
generators

2021

2020

2019

2018

2017

2016

Partnership
deals

• In November 2021, Niantic unveiled its Lightship AR Developer Kit
(ARDK), which makes tools to develop AR games publicly available for
free to anyone who has a basic knowledge of the Unity game engine.
• Companies like Coachella, Historic Royal Palaces, Universal Pictures,
SoftBank, Warner Music Group, and the PGA of America have already
used ARDK to create AR experiences.

Source: Arthur D. Little, Niantic Annual Report, Blue Shift Institute

Software developer Niantic aims to overlay virtual
reality onto the physical world in what it calls the
“real-world Metaverse.” Niantic is doing this through
smartphone-based AR games such as Pokémon Go
and Harry Potter: Wizards Unite, whereby virtual objects,
people, clues, and so on, appear in the real world as
part of the story (see Figure 26).

real-world AR experiences that demonstrate the
possibilities of 5G.

– Qualcomm (human-machine interfaces) —
developing affordable AR glasses.

– Starbucks (experience continuum) — turning
more than 7,800 US Starbucks locations into

In November 2021, Niantic unveiled its Lightship AR

Pokémon Go locations to entice players in, as

Developer Kit (ARDK), which makes tools to develop AR

well as a Pokémon Go-themed Frappuccino.

games publicly available for free to anyone who has a
basic knowledge of the Unity game engine. Companies
such as Coachella, Historic Royal Palaces, Universal
Pictures, Softbank, Warner Music Group, and the
Professional Golfers’ Association of America have
already used ARDK to create AR experiences.
Partnerships include:

– Sony (human-machine interfaces) — combining

technologies to develop headphones that have an
auditory AR experience.

– Nintendo (experience continuum) — developed
the Pikmin app, which includes gameplay activi-

ties to encourage walking outside through points
for steps and exploration.

66

– Verizon (infrastructure) — creating next-level

Blue Shift / R E P O R T 0 0 2

67

“You take the blue
pill — the story ends,
you wake up in your
bed and believe
whatever you want to
believe. You take the
red pill — you stay
in Wonderland, and I
show you how deep
the rabbit hole goes.
Remember: all I’m
offering is the truth.
Nothing more.”
— Morpheus,
The Matrix, 1999

67

CHAPTER

4

68

IV. THE WAY
FORWARD

Blue Shift / R E P O R T 0 0 2

#4

The way
forward

The prospects for the Metaverse may be
subject to a large degree of hype, but its
current acceleration is driven by a real
convergence of multiple factors around
software, hardware, and user growth. In
turn, this has driven a major acceleration
of funding and commercial activity over
the last two years.
Many observers remain skeptical about people’s desire to spend
large amounts of time in virtual worlds. However, the value of the
Metaverse lies for a large part in its linkages with the physical world,
and the creation of an extended reality across a spectrum of combinations of real and virtual experience.

70

between vendors on one hand, and users and

transform the quality and cost of the virtual experience

brands on the other. Vendors invest massively in

and lower the barriers to adoption. However, as we have

the development of these proto-metaverses and

said, the technology required to realize the Metaverse as

will want a return on investment, and therefore

the “future of the Internet” is not likely to be available

will have a strong incentive to keep users

for a decade. In the meantime, the proto-metaverse of

captured within their private environment. Users

the present still offers considerable opportunities for

and brands, on the other hand, will get more value

many industries.

out of the Metaverse if they can share experiences

Finally, our study has shown that among all the trends
and factors currently shaping the Metaverse, three of
them are especially critical because they combine high
potential impact and high uncertainty. These three critical factors are:
1. Immersivity. The development of new AR/MR
technologies that effectively overcome current
technical obstacles would be a strong accelerator
of new usages in the coming years. In the same
way that smartphones made the digital economy
shift from computers to mobiles, we believe that
user-acceptable AR/MR glasses would drive a
similar shift from screen-based Metaverses to
more immersive Metaverses. However, there is
still a high degree of uncertainty about the device
(or devices) that will be the main gateway to the
Metaverse. Depending on what device emerges as
dominant in the coming years, usages may be very
different from one scenario to another.
2. Interoperability. Interoperability is the key to
ensure seamless experiences and to maximize
value for users and brands. As we explained
previously, we currently are in a state of protometaverses. Each vendor (Microsoft, Meta, Apple,
Roblox, etc.) is a gateway to a specific synthetic
world not connected to the others: users of these
proto-metaverses cannot share experiences or
resources with users of other proto-metaverses.
In the coming years, there will be a tension

Blue Shift / R E P O R T 0 0 2

Looking ahead, technological advances are likely to

and resources irrespective of their access point.
Due to these diverging interests there is no
guarantee that interoperability will be achieved.
3. Abundance. In the physical world, scarcity
drives the value of assets in a market economy.
In the traditional digital economy, since a digital
file can be duplicated at no cost, scarcity was
reintroduced artificially through systems such
as digital rights management (DRM). In a virtual
world with blockchain and NFTs, a new economic
paradigm of “abundance” may appear, implying
a more fundamental value shift from physical
assets to experience and, perhaps, status.
The extent to which this will happen, and its
implications for business, are uncertain.
The Metaverse offers a large potential market with
great opportunities, but also with tremendous uncertainties. Businesses should therefore certainly not
ignore the Metaverse and the possibilities it delivers
for consumers, enterprises, and industrial uses. As
with other emerging technology areas, strategies for
responding to the Metaverse should comprise some
basic elements:

– Envisioning the future.
– Assessing opportunities to create advantage.
– Building ecosystem capabilities.
– Testing and learning.

We describe these further below.

71

Blue Shift / R E P O R T 0 0 2

Envisioning the future
To access the full potential of the Metaverse, companies
should adopt a creative mindset when defining their
strategy, going beyond obvious opportunities such as
using it for new marketing approaches, or increasing
internal collaboration and training through virtual tools.
Organizations should therefore take time to envision the
future in three to five years’ time and beyond, and think
creatively about their role in this future. This should
not be defined solely in terms of current products and
services, but rather by the values and sense of purpose
of the company. This means understanding how new
products, services, and business models are made possible through the existence of the Metaverse. Involving
suppliers and customers in this process is valuable if
feasible and appropriate.
Given the high degree of uncertainty about the speed
and nature of development of the future Metaverse,
it is important to use scenario thinking to establish a
strategy that is resilient to change.

– Enterprise. New ways to work, collaborate, train,
and educate internally.

– Industrial. New approaches for key operational

processes that leverage the virtual/digital environment, including, for example, design, development, operational improvement, maintenance,
and so on.

Companies should consider opportunities across new
products, services, and business models as well as use
cases for the existing business, including:

– New products and services. What are the poten-

tial areas where the company’s products or services, or the underlying capabilities and know-how
the company possesses to realize them, could
translate into new virtual products or services?
Are there ways that new virtual offerings could
be developed to help sell physical products and
services?

– New business models. Are there any oppor-

tunities for new or disrupted business models
resulting from the emergence of the Metaverse

Assessing opportunities to
create advantage
A key aspect of any Metaverse strategy is to identify and
assess potential opportunities to create competitive
advantage and ensure resilience. Based on the vision of
the future, a good starting point is to think creatively
about what business model innovations could be feasible with the Metaverse. Some examples to consider
include new ways to create/capture value, new ways to
change the boundaries of the business, or new ways to
share roles with other parties. These opportunities span
three key segments

Consumer. New ways to identify, attract, serve,
communicate with, and engage with customers
(including customers in the business-to-business
sectors) and to market products and services in
the Metaverse.

72

as a place to do business? For example, could the
company’s position in the value chain change,
could the company form new relationships with
partners, use assets differently, or adopt a new
pricing or cost model? What are the threats and
opportunities for the current business?

– New applications and use cases. In current busi-

ness operations, which aspects could benefit from
the virtualization opportunities the Metaverse
offers? For example, global collaboration, training,
or problem solving?

Long lists of potential opportunities can then be
screened and ranked in terms of factors such as impact
and ease of execution.

Testing & learning

Ensuring that you have access to the right skills and

be predicted with any certainty. Experience suggests

capabilities to respond to the opportunities and threats
of the Metaverse is key. This is especially important as
the endemic shortage of experienced digital and IT specialists continues, which is likely to become even more

The future development path of the Metaverse cannot
that a smooth growth curve is improbable, and there
are likely to be sudden accelerations and slowdowns
reflecting breakthroughs and setbacks. An agile “test
and learn” approach is therefore essential, rather than a

acute in the coming years.

rigid plan.

For example, key skills that may not already be available

There are already existing Metaverse opportunities

in a typical nondigital native company include experience design, UX design, 3D artist/design, motion design,
community growth/engagement, and software development. These can be accessed via suitable partners,
based on a careful make/buy strategy if it is unfeasible
to employ people directly.
It is also advisable for businesses to start to become
involved in the ecosystem of players currently engaged

Blue Shift / R E P O R T 0 0 2

Building ecosystem
capabilities

and use cases for companies to consider in nearly
all industry sectors. Companies that are not already
engaged should consider the possibility of running
pilots and trials, and engaging with other partners.
By becoming actively engaged, companies are in a far
better position both to develop skills and capabilities,
and to monitor ongoing technological and commercial
developments.

in Metaverse development, for example through direct
contacts or via conferences and other networks.

73

APPENDIX

1

74

I. EXPERIENCE CONTINUUM
USE CASES

Blue Shift / R E P O R T 0 0 2

Here we outline a large number of case examples across industry sectors to illustrate the
range of opportunities within the consumer,
enterprise, and industrial Metaverses.

#1

Experience
continuum
use cases

Figure
X. XXXX
Fig 27 — Current
proto-metaverse applications within the consumer, enterprise, and industrial Metaverses
Travel &
transportation

Energy &
utilities

Healthcare

Retail &
consumer

Aerospace &
defense

Financial
services

Manufacturing
& automotive

Entertainment

Education

Early adopters/
key players

Typical focus
of applications
Consumer

• Virtual care

• In-journey
entertainment
• Customer
interface

• Digital assets

• Virtual lounges

• Virtual
try-ons/
shops/
auctions

• Virtual support
for clients
• VR apps for
account
opening

• Virtual
experiences
Enterprise

Industrial

• VR/AR training
• Digital twins
for asset
design,
manufacture,
operation,
maintenance

• Sector was
early adopter
of VR for
training
Remarks

• Future
potential for
virtual tourism
is a threat/
opportunity

Source: Arthur D. Little

76

• Virtual meetings and events
• VR to design,
inspect, test &
validate equip.
• Live operating
data

• Remote
monitoring
• Digital human
simulations to
test therapies

• Operator/
engineer
training

• Digital twins of
facilities

• Digital twins
already present
in some facilities

• Better
diagnostics and
solutions

• Levels of energy
consumption of
the Metaverse
could be an issue

• Personalized
medicine
• Show patients
the surgery
before
performing it

• Product
customization
and comparison

• Virtual
events/
experiences/
simulators
• Virtual assets
• Virtual worlds
• E-sports/music

• Remote collaboration and workshop tools
• Digital twins
to optimize
operations/
maintenance

• Decentralized
finance

• Campus
digital twins

• Digital twins
of factories
• Human behavior
simulation

• Future combat
air system

• Simulations of
supply chains
• Asset mgt. and
maintenance

• Boost brand
awareness

• Reduce costs of
training

• Collaborations
with platforms

• Increase pilot
safety

• New payments

• Enable
predictive
maintenance

• NFT creation
• User behavior
tracking

• Reduce
emissions

• Enhance
personalization,
“human
approach” for
banking

• Enable
performance
improvement
across supply
chain

• New financial
products arising
from Metaverse

• Digital twinning
already
established
• Industry 4.0 will
help Metaverse
adoption

• Convergence of
social experiences
and entertainment
• Gaming companies
among most active
in shaping Metaverse

• Generate more
realistic
simulations
for students
• Enable new
forms of
collaboration
among
students/
teachers

Travel and transport

Leveraging VR to improve
in-flight entertainment
In-flight VR offers over 200 hours of native VR content designed
for the maximum immersive experience, covering cinema and TV,

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1

games, travel and relaxation, kids’ corner, and culture and sports.
The company has different business models from which airlines can
choose hardware, content, marketing, and various add-ons.

Benefits

In a saturated market such as the airline sector, VR and immersive experiences can be a differentiator.
In-flight VR promises simple setup and logistics, intuitive user
onboarding and discovery phase, diverse content experience,
and platform agnosticism.

Enabling virtual tours
Matterport provides a 3D space-capture platform to enable
businesses to provide virtual tours of hospitality, event, and
leisure facilities.
For example, it could deliver an immersive trip of a lifetime
around specific historical or geographical landmarks — all
without requiring tourists to leave their sofa.

Benefits

According to Matterport, these 3D tours drive 300% higher engagement compared to 2D imagery and a 14% increase in bookings.

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Providing flight crew training
JAL is using VR to train flight crews on pre-take-off checks,
in-flight preparation, and emergency evacuation drills.
The system includes a head-mounted display, dedicated
controller, and voice recognition software.
The system can learn work procedures and areas that need
to be checked.

Benefits

Offers the ability to simulate the experience of daily operations as
well as those that are difficult to perform. Accessible to the crew
member, irrespective of time or location.

Digital twin to manage all airport
assets
Using a digital twin helps Amsterdam Schiphol airport monitor and
manage all the assets that make up its systems in real time from
a single dashboard. The digital twin, known as the Common Data
Environment (CDE), organizes data from multiple sources: building
information model data, geographic information system data, and
data collected in real time on project changes and incidents as well
as financial information, documents, and project portfolios.

Benefits

The digital twin allows the airport’s operators to track and maintain
more than 80,000 assets, from networks, runways, and lighting
systems to information booths and fire extinguishers. The airport
can interact and simulate with different predefined scenarios, optimizing operations and saving money and time.

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Energy/utilities

Using digital twins to manage assets
and improve investment decisions
Switzerland’s Federal Energy Act focuses on the reduction of
energy consumption, increasing energy efficiency, and pro-

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moting renewable energy.
Network operator Groupe E has begun its transformation process. It must be able to justify investment plans while keeping
safety and reliability at their current levels.
Through digital twins, Groupe E is able to simulate everyday
actions performed on each asset. Simulations are performed
for long periods of time.

Benefits

Through simulation, users can experiment with variables to see
exactly what impact different choices have in terms of OPEX,
CAPEX, outage minutes, or any other metric.
“Getting results over such a long simulation period brings fresh
insight into where we currently stand and where we’re actually
heading. It’s only then that we can be sure to make the right decisions for the next 10 to 15 years,” says Aurelien Lair, Lead Strategic
Asset Management at Groupe E.19

3

Healthcare

Creating a digital patient for personalized
healthcare
Fraunhofer has created a prototype digital patient model by
merging unstructured, multidimensional health and disease
data sets to form a digital patient image.
This can be used to test thousands of drugs on the digital twin
to identify the best-performing drug for a particular disease.

Benefits

The US Food and Drug Administration estimates that current medication is ineffective for 38%-75% of patients with common diseases.
Delivering personalized, more targeted, and effective prevention and
diagnosis will therefore not only provide better patient outcomes
but will also improve the cost-effectiveness of treatment.

19 How the Swiss Power Grid Benefits from Digital Twins.” Cosmo Tech, 23 August 2021.

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Enabling more lifelike virtual
surgical training
FundamentalVR is a startup leveraging VR and haptic feedback for
more efficient surgery training.
It provides a surgical simulation system for training composed of:

– Head-mounted display allowing users to visualize surgery from
various angles.

– Haptic devices providing feedback, allowing operators to feel
the skin and bones and to experience sensations while
operating.

Benefits

Experience can be gained anywhere and at any time. Avoids the need
to practice on actual patients.

Providing a digital twin of the human heart to
develop, test, and validate medical solutions
By replicating in vivo conditions, Dassault Systèmes Living Heart can
disrupt different industries:
Education and training. Surgeons can train on a full model of the
human heart.

– Medical device design. Companies can develop and refine

ideas faster, leading to more effective, safer medical devices.

– Device testing. Improves testing, accelerates regulatory

approval, and reduces the cost and need for clinical trials.

Benefits

Heart disease is the leading cause of death globally. Time required
for the development, testing, and validation of drugs and medical
devices for a wide range of pathologies is notoriously long.
Living Heart could improve the effectiveness and reduce the time
and cost of developing, testing, and validating drug and medical
devices for cardiovascular applications.
The market size for cardiovascular medical device market was
$48 billion in 2021 globally.

80

In the healthcare sector, new devices and innovations are constantly
introduced at an accelerating pace. Modern surgical procedures
tend to be significantly more complex.
Osso VR’s surgical simulation training gives healthcare professionals

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Learning & practicing new surgical skills

better ways to share, practice, and learn new skills and procedures
using VR. Its analytics enable professionals to measure engagement
and proficiency.
As a Preferred Partner of Oculus, Osso VR leverages off-the-shelf
technology that is affordable and scalable.

Benefits

Enables cheaper training, without the need for real surgical theaters.
Trainers can track the progress of the user or larger cohorts through
a customizable dashboard.
Analysis allows trainers to identify where procedures are most challenging to inform product education or training enhancements.
Surgeons can stay on top of the latest advancements and quickly
learn any procedure.

Simulating vaccine manufacturing
through digital twins
Partnering with Siemens and Atos, GSK has launched a digital twin
initiative, creating a real-time simulation of the vaccine manufacturing process.
Each step in the vaccine manufacturing process is equipped with
sensors. This data is combined with physical, chemical, and biological models to build a digital twin of the future vaccine, creating a
live, in-silico replica of the physical production processes.

Benefits

The project, launched in 2020, has already shown promise in:

– Reducing manufacturing times.
– Optimizing product quality and other areas.

“With digital twins, you’re able to do huge amounts of digital experiments and minimize the number of wet experiments that you do,”
says Matt Harrison, head of sciences, digital innovation and business
strategy at GSK Vaccines.20
Digital twin–based experiments can also eliminate the need to build
new test facilities, which can potentially take years.

20 Buntz, Brian. “An Inside Look at GSK’s Digital Twin Initiative.” Drug Discovery & Development, 24 June 2021.

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4

Retail/consumer

Staging virtual fashion experiences
Gucci has entered the Metaverse through a partnership with Roblox.
The virtual Gucci Garden exhibition space opened its doors to
everyone on Roblox for two weeks.
Similar to a physical space, the Gucci Garden experience on Roblox
was divided into themed rooms, where visitors could immerse themselves into a creative vision with diverse inspirations and share the
experience of the exhibition with their friends.

Benefits

A limited edition of virtual bags sold for $4,115 (more than their
$3,400 retail value).
This shows that the Metaverse can be leveraged as an effective
marketing and communication channel for virtual goods, and at the
same time provide exposure in the real world.

Using virtuality to improve the customer experience

Virtual stores

Virtual experiences

Virtual auctions

Others

Boosting brand
awareness via virtual
factory tours and

Digital assets are being
sold on the Metaverse

shop on Roblox in which

(such as Gucci bags and

virtual “Boorito” users can

Zara, Ralph Lauren, and

get a free main course after

Nike collaborations with

completing a maze on the

Zepeto).

platform.

Virtual try-ons through
apps (such as Forma).

In a collaboration between
Louis Vuitton and Riot
Games for the 2019

Virtual shops (H&M is in

League of Legends World

talks with Ceek).

Championship Finals
in Paris, Louis Vuitton

User behavior tracking.

designed prestige skins

Ability to shop from

along with other digital

anywhere.

82

Chipotle opened a virtual

assets.
Shopify envisions shopping
enhanced by VR/AR.

Coca-Cola NFT sold for

x Nike sneakers being

an “Epic level” Gap
NFT will also receive

blockchain

and NFTs.
Collaborative R&D for
design, simulations,
and services.
Leveraging the voice
of the digital customer
to improve real-world

an exclusive physical
hoodie.

Payments via

and testing of products

at a virtual auction.
Collectors who bought

products and services.

cryptocurrencies,

auction.
A pair of Louis Vuitton

Virtual presentations of

technologies,

$575,000 in an online

auctioned for $80,000

interactive assemblies.

customer experience.
Product customization
and comparisons.

Nestle is using AR to

In January 2022, P&G

Unilever is creating

Coca-Cola has unveiled

Heineken launched an

speed up factory sup-

announced

new worlds of branded

a new innovation plat-

NFT collection called

port. It is using tools

BeautySPHERE, an

communities in which

form for limited-edition

Lucky Tiger, linked to its

such as remote desktop,

immersive virtual

products play a central

products (Coca-Cola

Tiger Beer brand.

smart glasses, 360-

experience that allows

role, populated by con-

Creations). The platform

degree cameras, and 3D

visitors to virtually

sumer advocacy.

will introduce a series of

software so specialists

interact with P&G

limited-edition flavors,

can advise on complex

Beauty’s portfolio of

collaborations, and

tasks without needing

brands through live and

experiences spanning

to travel to the site.

simulated content.

the physical and digital

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Creating new consumer experiences
& boosting efficiency in fast-moving
consumer goods

worlds.

5

Aerospace & defense

Enabling a virtual trade show
For Asian Sky Group, Mytaverse partnered with PureWeb
to deliver an immersive 3D virtual trade show, built on Epic
Group’s Unreal Engine.

Benefits

By offering customized, photorealistic 3D design packages, Asian
Sky Group gave business aviation vendors the ability to display lifelike models of their aircraft, have digital face-to-face chats with
customers in real time, and deepen business relationships in an
entirely virtual environment.

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Delivering fully immersive flight
training through VR
The Royal Danish Air Force (RDAF) has partnered with the VR aviation training provider VRpilot to introduce a fully immersive training
experience on ground.
The virtual cockpit solution can be specifically tailored to RDAF
needs and includes VR headsets as well as a haptic feedback loop in
the seat and controls, and shared VR reality simulation for several
students at the same time.
Mentors have the ability to follow student performance in real time
and change simulation conditions as required.
Pilot training is very costly: basic training for a US Air Force fighter

Benefits

pilot costs ranges between $5-$10 million. Similarly, a fully
FAA-approved flight simulator costs between $10-$20 million.21
This solution could lead to a reduction of training costs.
It can be used for training on flight maneuvers on the ground as well
as a supplement to flight training in the actual aircraft.
The global civil aviation training market was worth approximately
$6 billion in 2021.22

Deploying digital twin technology to optimize
aircraft maintenance
Rolls-Royce creates a digital twin of every engine in use, kept up to
date through all the data and metadata around the engine.
This includes real-time data during flights, operations data after
landing, data on original and replacement parts, as well as the entire
maintenance history.

The ability to carry out predictive maintenance extends the time

Benefits

between maintenance for some engines by up to 50%, thereby enabling Rolls-Royce to dramatically reduce its parts inventory.23 The
global aircraft maintenance market was $18.34 billion in 2021 and is
expected to increase to $28.73 billion in 2029.24
The approach has also greatly improved the efficiency of engines
and reduced carbon emissions per flight. The global aviation industry
represents about 2% of all greenhouse gas emissions.25

21 McCarthy, Niall. “The Cost of Training US Air Force Pilots.” Forbes, 9 April 2019.
22 Salas, Erick Burgueño. “Global Civil Aviation Training Market Size 2017-2021.” Statista, 12 April 2021.
23 Olavsrud, Thor. “Rolls-Royce Turns to Digital Twins to Improve Jet Engine Efficiency.” CIO Magazine, 10 June 2021.

84

24 “Aircraft Line Maintenance Market Is Projected to Hit USD 28.73 Billion in 2022-2029; Aircraft Line Maintenance Industry Exhibit a CAGR of 5.8%.”
Fortune Business Insights, 31 March 2022.
25 Ritchie, Hannah. “Climate Change and Flying: What Share of Global CO2 Emissions Come from Aviation? Our World in Data, 22 October 2020.

Financial services

Opening a virtual lounge for customers
JP Morgan has opened its Onyx virtual lounge. This provides a blockchain-based platform for the exchange of value, information, and
digital assets.

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6

JP Morgan aims to transform the way money, information, and assets
move around the world.
The lounge provides the opportunity to experiment with decentralized finance collateral management.

Every year, an estimated $50 billion is spent on virtual goods —

Benefits

almost double the amount spent buying music.
JP Morgan aims to use the virtual lounge to facilitate cross-border
payments, foreign exchange, financial assets creation, trading, and
safekeeping in the virtual world.

7

Manufacturing & automotive

Creating the factory of the future
NVIDIA and BMW are working to create the factory of the future,
using digital twinning of both machines and humans.
Digital humans are trained with data from real employees and can be
used in simulations to test new workflows for worker ergonomics and
efficiency.
BMW’s global teams can collaborate to design and plan factories in
3D, with all changes visible in real time.

Facilitates factory reconfigurations for new lines; helps to improve

Benefits

workflows, ergonomics, and safety; and is envisaged to ultimately
deliver 30% more efficient planning processes.

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8

Entertainment

Holding high-profile music & entertainment
events in the Metaverse
Epic Games has organized multiple nongaming experiences in its
Fortnite platform, including music concerts by Travis Scott (audience
of 12 million), and the Rift Tour (over 78 million).
Decentraland held a Metaverse music festival in October 2021,
attracting 50,000 virtual attendees who claimed 11,204 unique
digital NFTs.26
Roblox has hosted numerous events, including for example Lil Nas X,27
who performed four shows that garnered 33 million views in total.
Spotify is launching a new virtual island on the Roblox platform that
lets users meet their favorite musical artists, play different sounds,
explore quests, collect virtual merchandise, and listen to music.
The Metaverse offers new ways to engage with consumers and

Benefits

generate revenues beyond gaming.
There is a growing user community accustomed to using game
platforms for a wider range of experiences.

Selling virtual & real items via the Metaverse
Luxury fashion house Balenciaga collaborated with Epic Games to
design four virtual outfits and various accessories for avatars, available for players to purchase through Fortnite.
Limited edition physical Balenciaga x Fortnite merchandise was also
available through the brand’s shop and website.
Balenciaga has also created its own separate business division,
solely dedicated to the Metaverse and its future opportunities.
“The usability of digital fashion is the point that’s missing, but that’s
making gigantic steps every day,” said Balenciaga Chief Executive
Cédric Charbit.28
As the physical and digital worlds continue to merge, consumer

Benefits

brands are becoming increasingly entrenched in the Metaverse.
Some fashion brands are creating digital garments solely for virtual
avatars, generating another source of revenue.
Brands can also leverage the Metaverse as a marketing/communication channel for real goods, engaging with a younger generation.

86

26 Shumba, Camomile. “Decentraland’s Four-Day Metaverse Festival.” Business Insider Africa, 30 November 2021.
27 “Lil Nas X Performs His First Virtual Concert on Roblox.” BBC News, 16 November 2020.
28 Adegeest, Don-Alvin. “Balenciaga to Launch Metaverse Business Unit.” Fashion United, 2 December 2021.

The Sandbox is a decentralized, community-driven virtual world, one
of several blockchain-based virtual worlds attempting to change the
dynamics of the gaming market and reward creators for the value
they produce. The Sandbox is made up of three products:

– VoxEdit allows users to create and animate 3D objects in the

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Creating, sharing, and monetizing assets and
games

Metaverse.

– Sandbox Marketplace is a venue in which users can publish and
sell their assets.

– Sandbox Game Maker allows users to create 3D games for free.
Virtual worlds enable companies to take part in the new economy by

Benefits

helping creators monetize their assets.
As one of the pioneers, the Sandbox has positioned itself as one of
the most relevant virtual worlds.
It represents the convergence of different technological trends,
including gaming, social media, blockchain, cryptocurrencies,
mobile, 5G, AI, and cloud.

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9

Education & training

Delivering immersive, effective training
Developed from work in the Stanford University Virtual Human Interaction Lab, Strivr’s Immersive Learning solution offers VR-based
training solutions covering areas such as operational efficiency,
health and safety, customer service, and soft skills.
It aims to combine the sense of presence of VR with advanced
learning theory, data science, and 3D design.

According to Strivr, users have already seen the following benefits:29

Benefits

– 96% reduction in pickup tower training at Walmart.
– 10% increase in customer satisfaction in less than six months
at Fidelity.

– 97% of professionals felt prepared when put in dangerous
situations at Verizon.

Facilitating and optimizing the operation,
maintenance, and energy efficiency of buildings
in real time
Universidad de Málaga has started to create a digital twin of a
university building.
The digital twin will be composed of a 3D digital model of the
building generated by BIM modeling tools, 3D laser scanning technique (LIDAR), along with all relevant information associated with
the building components (including brands and models, manuals,
technical data sheets, and supplier contacts).
The digital twin also integrates real-time environmental conditions
for the building, such as occupancy, temperature, and humidity.

The digital twin enables predictive maintenance, reducing costs

Benefits

and time; provides more accurate, deeper information for decision
making; and will collect performance data from its sensors for
energy-efficiency improvement.

88

29 Strivr

A VR space for teams to connect, collaborate, and
develop ideas together
Through its Horizon Workrooms, Meta envisages “a new kind of

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10
Collaboration —
Across enterprise Metaverse

remote teamwork.”30
The space enables people to come together to work in the same
virtual room for meetings and workshops. It also aims to provide a
virtual space for work colleagues to socialize or have conversations.
Users have the ability to bring their real keyboard and desk into VR,
share the screen, access whiteboards, receive phone notifications,
and see 2D apps in the screen.

Advantages claimed include:

Benefits

– Richer teamwork and collaboration with a better sense of presence than normal screen-based remote working.

Improving virtual meetings
Microsoft has developed the Mesh collaboration toolset with the
aim of enabling its users to take
virtual meetings one step further.
It claims to enable presence and shared experiences from anywhere — on any device — through MR applications.

Mesh enables better, more natural virtual meetings and the ability

Benefits

30 Oculus

to access the tool through a range of VR headsets, mobile phones,
tablets, or PCs via any Mesh-enabled app.

89

APPENDIX

2

90

II. TECHNOLOGY
READINESS
LEVELS

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#2

Technology
readiness
levels

TRLs provide a commonly accepted means
of describing technology maturity. They
are referred to in Section II of the report
with respect to the technology building
blocks at each level of the Metaverse.
Figure X. XXXX

Pre-concept
refinement

Concept
refinement

Technology
development

System development
and demo

Production &
deployment

Source: Arthur D. Little

92

TRL 1

Basic principles are described or observed, at the theoretical or experimental stage.

TRL 2

Technological concepts are formulated and not yet necessarily tested.

TRL 3

Proof of concept is carried out in a laboratory, at the level of the technical process.

TRL 4

Technology is validated in the laboratory as a whole.

TRL 5

Technology model in a production-grade environment is created.

TRL 6

Technology prototype is demonstrated in an environment representative of the intended use case.

TRL 7

Prototype is evaluated in an operational environment.

TRL 8

Complete system has been evaluated and qualified.

TRL 9

Complete system is operational and qualified in production.