June2022

ConsumerPackagedGoodsandRetailPractices

Probingrealityandmythinthemetaverse

Despitesomeskepticism,ourrecentinsightsshowthatAmericansofallagesarereadytoembracethemetaverse.

byCaraAiello,JiameiBai,JenniferSchmidt,andYuriiVilchynskyi

?BlackSalmon/GettyImages

2Probingrealityandmythinthemetaverse

Themetaverse—likemanyinnovations—isshroudedinmysticismandskepticism.Proponentsbelievethatthemetaversewillberevolutionaryandfullytransformthewaywework,shop,socialize,andplay.Othersaremoreskepticalandseeahype-fueledfadthatappealstogamersandcelebrities.

WewerecurioustolearnwhattypicalAmericanconsumersthinkandhowtheirviewscouldshapehowbrandsmayventureintothisnewspace.Tofindout,wequeriedover1,000consumersaged13to70,aswellasspokedirectlytoadvocatesandearlyadopters,tounderstandcurrentsentimentaboutthemetaverse.

Whatwefoundsurprisedus.Amajorityofconsumersknowandengagewithsomeformofthemetaverse,andmanyexpectittobecomeasignificantpartoftheirlives.Infact,wedebunkedsixmythsaboutthemetaverseandnowseethatconsumersacrossagecohortswillshapeitspurposeandprosperity.

Myth#1:Nooneknowswhatthemetaverseis

Inrecentmonths,ithasbecomeclearthatthereisnosingledefinitionofthemetaverse.Well-knownexpertsrefertoitas“theinternetofthefuture”or

pointtoimmersivedevicestodemonstratevariousplatformsanduserexperiences.

Wewantedtoseeifthesameheldtrueforconsumers.Theywerealsounabletogiveaprecisedefinition,buttheywerefamiliarenoughwiththemetaversetobeabletodescribeit.Whenitcametoawareness,55percentofoursurveyrespondentssaidtheyhadheardofatleastoneexistingmetaverseplatform,suchasRoblox,Fortnite,orDecentraland.Interestingly,nearly30percentsaidtheyhadusedorplayedatleastonemetaversegame.

Toprobedeeper,wespoketoearlyadopters

whohadrecentexperiencesusingoneormoremetaverseplatforms.Three-quartersofthisgroupcoulddefinethemetaverseinfairlyaccurateterms(Exhibit1):

—Forty-sevenpercentdescribedthemetaverse

withvibrantclarity,usingtermssuchas“immersive,”“interactive,”ora“scalednetwork.”

Oneofthemostarticulatedescriptionscame

fromateenagerwhodescribedthemetaverseas“ascaledandinteroperablenetworkofreal-time,

3-Dvirtualworlds.”

—Nearlyone-thirdofearlyadoptershadabasic

understandingofthemetaverseas“adigital

Exhibit1

Three-quartersofmetaverseearlyadopterscandefinethemetaverseinfairlyaccurateterms.

USconsumerunderstandingofthemetaverse,1shareofrespondents2

19%4%30%47%

havenoclearassociate

understandingmetaversewiththecompany

Meta/Facebook

knowofthe

metaverseasa

virtualworld

candescribethemetaverse

withoneormultipledeining

characteristicsbasedon

theirexperiences

1Question:Howwouldyoudeinemetaverseinyourownwords?

2Digitalfocusgroupofearlyadopterswhohadrecentexperiencesusingoneormoremetaverseplatforms.

Source:McKinseyVirtualWorldAdoptersandConsumersSurvey(Feb2022)

Probingrealityandmythinthemetaverse3

Millennials

worldbeyondanythingapersoncanimagine”butlackedaclearviewofhowitworks.

—Theremainingearlyadoptersofthemetaverse

couldn’tactuallydescribeitclearlyintheirownwords,despitebeingauserorplayerinoneofthedigitalworlds.Fourpercentassociated“metaverse”withthenewnameofFacebook’sparentcompany,Meta,whileanadditional19percenthadsimplynoclearunderstanding.

Myth#2:Themetaverseisafad

Attheheartofmanydebatesiswhetherthemetaverseisafadorthefuture.Evenamongthosewhoarefluentinthemetaverse,thereareskepticswhobelieveitwillbefleeting.ReidHoffman,thefounderofLinkedInandaventurecapitalist,recentlysaidinaYahoo!Financepodcast,“Idon’tseethesignsyetthattellmethatthemetaverseisgoingtohappen.”LVMH’schiefexecutive,BernardArnault,alsoproclaimedthatheiscautiousofthemetaverse“bubble.”

Again,wewonderedwhatconsumersthinkandhowtheyact,andwefoundthatthetransitionfromonlinetoimmersivetometaverseisalready

happening.Tostart,morethan20percentofthepopulation,onanetbasis,1saytheywillspendmoretimeonlineexercising,working,reading,andshoppinginthefuture.Furthermore,people’sinterestinimmersivedigitalactivitiesandexperiencesisgrowing.Infact,roughly10percentofthepopulationhasalreadytriedaugmentedreality(AR)ormetaversedating,andamajorityenjoyeditmorethanthereal-lifealternative.

Moreover,consumerstoldusthattheyexpectthemetaversetobeasignificantpartoftheireverydaylives,spendingfourhoursadayinthemetaversewithinthenextfiveyears.GenerationZandmillennialsexpecttospendclosetofivehoursperday,butoldergenerationsalsoexpecttospendseveralhoursinthemetaverseeachday(Exhibit2).Thisexpectedshiftisdrivenbyadesireforgreaterconvenience,connectivity,andentertainment.Alongwithrecentfanfareandstrongmedium-terminterestfromconsumers,webelievethatthemetaverseisthefuture,notafad.

Myth#3:Themetaverseisforgamers

Today,whenpeopletalkaboutthemetaverse,theyoftendescribegamingplatformslikeRoblox,Minecraft,andAnimalCrossingas

Exhibit2

USconsumersexpecttospendalmostfourhoursperdayinthemetaverseinfiveyears.

Expectationsoftimespentinmetaversein5years,bygeneration,1hoursperday

GenZ

4.7

4.7

GenX

3.6

Babyboomers

1.8

Average

~3.7

1Question:In5years,approximatelyhowmanyhoursperdaydoyouthinkyou’llspendinthemetaverseonanaverageday?

Source:McKinseyMetaverseConsumerSurvey(Feb2022)

1Calculatedasthedifferencebetweenpercentexpectinganincreaseandthoseexpectingadecreaseintimespent.

4Probingrealityandmythinthemetaverse

examples.Thegamingindustryisattheforefrontofthemetaverse,soitisnosurprisethatmetaverseuserstodaydooverindexasgamers.Thosefamiliarwiththemetaversespend1.5morehoursperweekplayingvideogamescomparedwiththosewhoareunfamiliarwiththemetaverse.

Whilegamingremainsoneoftheleadingexperiences,consumersareincreasinglylookingforentertainmentandshoppinginthevirtualworld.Oneinfivemetaverseusershasattendedvirtualliveeventssuchasconcertsandfilmfestivals.

Wealsoaskedconsumerswhatimmersivedigitalactivitiesmightbeofinteresttotheminthefuture.Fortypercentsaidtheywereinterestedinplayingsocialgameswithothersinvirtualreality

(VR)orAR—thisrankedninthonalistoffutureactivities(Exhibit3).Morepopularinterestsincludeimmersiveshopping,booking,learning,traveling,andsocializing.Ouranalysisalsoshowsthatapproximatelyoneinfourconsumerswillbemetaverse“superusers”wholeveragevirtualworldsforavarietyofpurposes.

Myth#4:Themetaverseisgearedto

GenZ

GenerationZisenthusiasticaboutthemetaverse;oneexampleisthattwo-thirdsofRoblox’s50milliondailyusersareundertheageof16.LuxuryandmainstreambrandslikeGucciandVansarerampinguptheirmetaversestrategywithafocusonattractingyoungerconsumers.Bothbrandsare

Exhibit3

FutureUSconsumerinterestinthemetaversespansarangeofotherdigitalactivities.

Interestinimmersivedigitalactivityorexperienceinthenext5years,1%ofrespondents

48Shopping 47Attendingatelehealthappointment 46Attendingalivelearningcourse 46Travelingtootherplacesinavirtualworld 45Meetingwithfriendsorfamily 43Learninganddevelopment 43Attendingaliveevent 40Receivingliveorautomatedcustomersupport 40Playingsocialgames 38Exercising 37Attendingaworkconference 35Collaboratingwithothersinadigitalorhybridenvironment 32Usingdigitalpaymentstopurchasephysicalorvirtualgoods 28Goingonadate

1Question:Howinterestedareyouinparticipatinginthefollowingimmersivedigitalactivitiesorexperiencesinthenext5years?Percentofrespondentswhoare“veryinterested”or“somewhatinterested”areshown.

Source:McKinseyMetaverseConsumerSurvey(Feb2022)

Probingrealityandmythinthemetaverse5

experimentingonmultipleplatformstodeterminewhereandhowtorecruitlifetimecustomers.

WhatweseeisthatGenZisnottheonlygenerationthatwantstotakeadvantageofthemetaverse.

Ourresearchshowsbroadawarenessandinterestinthemetaverseacrossawideagerange.Infact,millennialsshowedthegreatestawarenessofthemetaverse,withtwo-thirdssayingtheyhadpreviouslyheardofitandhalfexpressingexcitementaboutit.GenZandGenXtrailcloselybehind,andsurprisingly,nearlyhalfofbabyboomersareawareofthemetaverse(Exhibit4).

Whenwedigintowhysomeconsumersare

moredriventhanotherstoparticipateinthemetaverse,weseesomedifferencesingenerational

motivations,withyoungerconsumerssayingthatitreinforcestheirsenseofself-identificationandindividuality.Whenitcomestobeingonline,46percentofourGenZsurveyrespondentsand55percentofmillennialsseetheirvirtualidentityasanextensionofthemselvesinthephysicalworld.Abouthalfofbothgroupsbelievefriendshipsformedonlinecanbeasstrongasfriendshipsformedinreallife.Forty-onepercentofGenZand37percentofmillennialsbelieveitiseasiertobethemselvesonlinethaninreallife.

Myth#5:Youcan’tmakemoneyinthemetaverse

Althoughmanybrandshaveexperimentedwiththemetaverse,ithasbeenchallengingtogetdata

Exhibit4

InterestandexcitementaboutthemetaverseishighestamongGenZandmillennials,whohavethestrongestdigitalidentitiesandpersonalbeliefs.

Metaverseawareness,excitement,andpersonalbeliefs,bygeneration,%ofrespondents

GenZMillennialsGenXBabyboomers

Awareness1Excitement2Personalbeliefs3

70

60

50

40

30

20

10

0

70

60

50

40

30

20

10

0

FriendshipsIhavealotofItiseasiertobeWhoIamonline

formedonlinecanfriendsonlinemyselfonlineisanextensionof

beasstrongasthatIhaveneverthaninreallifemyselfinthereal

thoseinreallifemetinpersonworld

1Question:Themetaverseisadigitalworldthatallowspeopletointeractwitheachotherindigitalspaces.Beforetakingthissurvey,hadyouheardofthemetaverse?

2Question:Basedonwhatyoucurrentlyknow,howexcitedareyouforwhatthefutureofthemetaverselookslike?

3Question:Pleaseindicatehowstronglyyouagreeordisagreewitheachofthefollowingstatements.Percentofrespondentswho“agree”or“stronglyagree”areshown.

Source:McKinseyMetaverseConsumerSurvey(Feb2022)

6Probingrealityandmythinthemetaverse

38

28

22

20

20

17

15

14

15

15

12

11

10

8

4

4

onthereturnoninvestment.Somecompaniesaredivingin,andmanyarestilldebatingwhetherthereisapayoffininvestinginthemetaverse.

Ourconsumerresearchsuggeststhatcommercialvalueisalreadyscatteredacrossdifferentdigitalproductsandservicesforcompaniestocapture.Consumers,onaverage,spend$219annuallyondigitalassets,ofwhichmorethan30percentisonmetaverse-relatedassetssuchasin-gamepurchases,virtualenhancementsandrealestate,andnonfungibletokens(NFTs).Consumersexpecttheirspendonmetaverse-relateddigitalassetstoincreaseinthenextfiveyears,with11percent

Myth#6:Thespeedoftechnologywillsetthepaceforadoption

Manypeoplebelievethatthebroadadoptionof

themetaverseishinderedbecausetechnologyisnotkeepingpace.Thereremainslowpenetrationofimmersivedevicesamongconsumers,andthereareinfrastructurebarriersinthewayofatrulyscaled,immersivemetaversefuture.AtDecentraland’sMetaverseFashionWeekinMarch,manypeoplecomplainedofglitches,crashes,andclunkygraphics.2Closetoone-thirdofmetaverseusersseetechnologyasseverelylimitingtheirdreamexperience.

lookingtospendmoreonin-gamepurchases

Itistruethatdeviceswith3-Dimmersive

(Exhibit5).

Wealsoexpectspendinghabitsinthemetaversetoshiftovertime,asGenZgetsolderandgainsmoreearningpower.Currently,millennialsarethehighestspendersonmetaverse-relateddigitalassets,with$151onaveragespentinthepastyear.OurGenZrespondents’spendingshowsasplit:overall,theyspend$47peryear,butolder,employedGenZconsumersspend$107onaverageonmetaverse-relatedassets.

experienceshavelowpenetrationtoday.VRisthemostaccessibletechnologyatjust20percentpenetration,yettheadoptioncurvetodatefollowsthetrajectoryofothertechnologiesthatbecamewidelyavailableovertime.Penetrationforrecentbreakthroughssuchassmartphones,tablets,andsocialmediagrewfrom20percentto50percentinonlyahandfulofyears.Lowercost,increasingcontent,andimprovedusabilityaredrivingadoption(Exhibit6).TheaveragepriceofaVRheadsetdroppedfrom$500in2016to$300in2021.Oculus

Exhibit5

USconsumerspendingondigitalproductsandassetsisexpectedtogrowinthecomingyears.

Averagespendondigitalproductstoday,1

$inpast12months(100%=$219)

Consumersexpectingincreaseinannualspendingondigitalproductsin5years,2%oftotal

Regulardigitalproductsorassets

Metaversedigitalproductsorassets

45

Videogames

Digitalmovie/MobileTVrentalsapps

Books

Audio

content

In-gamepurchase

Virtual

cosmetics

NFT3

Virtual

realestate

16

1Question:Approximatelyhowmuchmoneyhaveyoupersonallyspentonthefollowingdigitalproducts/servicesinthepast12months?

2Question:Howdoyouexpecttheamountofmoneyyouspendonthefollowingdigitalproducts/servicestochangeinthenext5years?3Nonfungibletoken.

Source:McKinseyMetaverseConsumerSurvey(Feb2022,n=1,011)

Probingrealityandmythinthemetaverse7

Exhibit6

100

80

60

Device

penetration,

%of

population

40

20

0

Quest2supportsmorethan200gamestoday,doublingthenumberfromfiveyearsago.

Suchgrowingconsumerdemandismotivatingfurtherinvestmentbytechnologycompanies.AppleboughtVRcompanyNextVRin2020andplanstolaunchitsfirstVR/ARheadsetin2022.Consumersareaskingforbetterusabilityandareinspiringtechcompaniestoinnovateandcreatearacebetweendeviceandplatformcompaniestolevelupthemetaverse.

Ouranalysisofexistingplatformsindicatesthatthereisahighcorrelationbetweenusersexpectingarealisticexperienceandfrequencyofuse.Thatpushescompaniestobuildmoreimmersiveexperiences.

Finally,consumerexpectationsregardingdatawillchallengecompaniestodevelopcreativesolutions.Sixty-twopercentofconsumersexpectfullcontrolovertheirdata,butnearlyhalfwillgivethatupforapersonalizedinternetexperienceanddeviceinterconnectivity(forexample,PC,mobile,console).

Devicesenablingimmersiveexperiencesinthemetaversehavelowtoday,buttheyarefollowingmainstreamdeviceadoptioncurves.

Devicepenetrationbyincome1

game

console

Smart-homesecurity

Smart-homeappliances

Virtual-reality(VR)device

Wearabletech

Augmented-realitydevice

3-Dprinter

Laptop

Smart-homehub

SmartTV

Streamingdigital-mediadeviceDesktop

Hapticdevice

Smartphone

Video

Tablet

NFC2tags

25303540455055

Incomepenetration,3%ofhigh-incomepeopleowningthedevice

1Question:Haveyoupersonallyeverpurchasedanyofthefollowingdevices?

2Near-fieldcommunicationtags.

3Income>$100,000.

Source:McKinseyMetaverseConsumerSurvey(Feb2022)

penetration

Devicesenabling

immersive

metaverse

experiences

Mainstream

device

adoption

curve

2IsabelCameron,“MetaverseFashionWeek:Thegood,thebadandtheglitches,”Charged,April8,2022;LukeLeitch,“Glitches,glamour,andgraphicscards:NotesfromDecentraland’sfirstMetaverseFashionWeek,”Vogue,March29,2022.

8

Implicationsforbrandsenteringthemetaverse

Ourresearchshowsthatconsumersareexcitedaboutbrandsenteringthemetaverse.Two-thirdsofrespondentsindicatetheywouldbeexcitedtoengageinadigitalexperiencewiththeirfavoritebrands.Overhalfofpeoplewhoattendvirtuallifestyleandluxuryeventsreportapositiveshiftinbrandperception.

Itisclearthatweareonlyatthebeginningofthemetaverseasweknowittoday.Asexperimentation

broadens,therewillbeanexplosionofcreative,commerciallyviableideasthatwilltransformthewaywework,play,connect,andengage.Brandswillneedtodefinetheirmetaversestrategy—andthedecisiononwhichpathtotakewilldependonwhattheybelieveaboutadoption,opportunity,andinvestmentrequired(Exhibit7).

Onethingiscertain:whatevershapethemetaversewilltake,consumerswillbethedrivingforcebehindtheevoluti