Logo of Phnom Penh Post newspaper Phnom Penh Post - Investing in the metaverse: Look before you leap

Investing in the metaverse: Look before you leap

Content image - Phnom Penh Post
An attendee demonstrates the Shiftall Megane X virtual reality headphones and microphone for metaverse experiences on January 3, ahead of the Consumer Electronics Show in Las Vegas, Nevada, the US. AFP

Investing in the metaverse: Look before you leap

Touted as the next big thing, the metaverse has been undeniably the talk of the global town since last year. The metaverse frenzy accelerated further when Facebook changed its name to Meta in October.

Hoping to take the lead in the new online virtual world, all sectors regardless of their specialisations have jumped on the metaverse bandwagon. This has led to lofty projections luring individual investors.

The global metaverse market is forecast to reach $829 billion in 2028 from $48 billion in 2020, with a compound annual growth rate of 43 per cent during the period, according to Emergen Research.

Metaverse exchange-traded funds (ETF) soared in South Korea when the first four were launched in October, drawing inflow of 150 billion won ($125 million) in just two weeks.

As promising as the term “metaverse” sounds, however, experts and analysts advise individuals against being swayed into making precipitous choices when investing in the metaverse.

“For every investment, there is a risk. Do not go all-in on the metaverse. As the saying goes, put your eggs in different baskets,” said Choi Jae-yong, president of the Korea Institute of Metaverse.

“In my case, I bought Meta’s stock as I thought the metaverse was going to take off. But the stock dropped 30 per cent, so I’m playing the waiting game now.”

Referring to an earlier report released by Gartner, which predicted that 25 per cent of people worldwide will spend at least one hour a day in the metaverse for work, shopping, education, socialising or entertainment by 2026, Choi said more people will be eventually using the metaverse regardless of metaverse-related stock prices.

Im Byoung-min, a columnist, said that various new terms have come and gone with the development of technology. He cited terms such as ubiquitous technology, internet-of-things and the fourth industrial revolution as examples.

“Surely, certain things about the metaverse have been exaggerated in order to draw investment,” he said.

An analyst at a securities firm pointed out that the term “metaverse” itself is very attractive to companies. Big global corporations are announcing their plans to pursue a future in the metaverse, which may blur their true value.

“The metaverse is a fitting theme to bring out the interests of the investment market,” the analyst said.

“Although metaverse-related stocks and securities showed strong growth last year, it is concerning that they got bigger with little to zero specific outputs or earnings.”

The analyst noted that metaverse ETFs have been on a downhill slide since the beginning of this year.

According to the Korea Exchange, the prices of the country’s first four metaverse ETFs – Hanaro FN K-Metaverse MZ, KBSTAR iSelect Metaverse, KODEX K-Metaverse Active and TIGER Fn Metaverse – dropped over 20 per cent since the beginning of January.

Some scholars have even denounced the metaverse as an overhyped craze driven by brokers, governments and the media.

“In fact, it is not easy to accurately define what the metaverse is. Isn’t it a term necessary for people who want to make a lot of money by attracting attention, regardless of whether this world comes or not?” Kim Sang-wook, a physics professor at Kyung Hee University, wrote in a post via Facebook.

“Excessive publicity before a technology is completed gives distrust to science and technology and poisons itself. In this sense, the term ‘metaverse’ is evil,” Kim added.

Wi Jong-hyun, a business professor at Chung-Ang University, said that the government and companies are constructing buildings in the metaverse which are becoming deserted ruins with no visitors.

“Stock markets, the government and some media are inflating the value of the metaverse. Related stock prices have soared now, but at the current level of the metaverse, the bubble will eventually burst and it will result in damages for retail investors,” he said.

Last month, the Korean government announced its goal to become the fifth largest metaverse market in the world by 2026, and nurture 40,000 professionals and 220 companies specialised in metaverse technology in the process.

At the moment, metaverse platforms are most popular with teenagers who use it mostly for fun. But its current focus on mere entertainment and gaming activities is still far from what it wants to become – a virtual world that incorporates every aspect of human life.

According to a survey by school uniform maker Smart F&D, about 27 per cent of teenage respondents said they spend most of their time in the metaverse hanging out with friends they made on the metaverse platform. The second most picked answer was playing games in the metaverse with 26 per cent.

Workers in the metaverse industry stress the importance of relevant technologies being developed much further from their current states for the metaverse to go beyond entertainment.

“In order for the metaverse to be an online virtual space where users can truly live life like in reality, it has a long way to go,” said an official at a local developer of virtual reality technology.

“The frontrunners in the industry like Naver’s Zepeto and SK Telecom’s ifland need to offer more than entertainment content in the long run. Otherwise, it may end up as Second Life 2.0.”

Launched in 2003 as an online game where players can create their own avatars and interact with others in a virtual world, Second Life attracted millions of users, but soon lost users’ interest. The game is considered an early metaverse-like experience or a prototype of the metaverse.

THE KOREA HERALD/ASIA NEWS NETWORK

MOST VIEWED

  • Joy as Koh Ker Temple registered by UNESCO

    Cambodia's Koh Ker Temple archaeological site has been officially added to UNESCO’s World Heritage List, during the 45th session of the World Heritage Committee held in Riyadh, Saudi Arabia, on September 17. The ancient temple, also known as Lingapura or Chok Gargyar, is located in

  • Famed US collector family return artefacts to Cambodia

    In the latest repatriation of ancient artefacts from the US, a total of 33 pieces of Khmer cultural heritage will soon return home, according to the Ministry of Culture and Fine Arts. In a September 12 press statement, it said the US Attorney’s Office for the

  • Cambodia set to celebrate Koh Ker UNESCO listing

    To celebrate the inscription of the Koh Ker archaeological site on UNESCO’s World Heritage List, the Ministry of Cults and Religion has appealed to pagodas and places of worship to celebrate the achievement by ringing bells, shaking rattles and banging gongs on September 20. Venerable

  • Kampot curfew imposed to curb ‘gang’ violence

    Kampot provincial police have announced measures to contain a recent spike in antisocial behaviour by “unruly’ youth. Officials say the province has been plagued by recent violence among so-called “gang members”, who often fight with weapons such as knives and machetes. Several social observers have

  • PM outlines plans to discuss trade, policy during US visit

    Prime Minister Hun Manet is set to meet with senior US officials and business leaders during his upcoming visit to the US for the UN General Assembly (UNGA), scheduled for September 20. While addressing nearly 20,000 workers in Kampong Speu province, Manet said he aims to affirm

  • Manet touches down in Beijing for high-level meetings

    Prime Minister Hun Manet arrived in Beijing on September 14 for his first official visit to China, where he is slated to attend the 20th China-ASEAN Expo and meet other leaders including Chinese President Xi Jinping. Upon his arrival, Manet laid a wreath at the Monument