Investment Institute

Metaverse Academy: Socialising

  • 03 October 2022 (5 min read)

Socialising is the next key sub theme of the Metaverse to consider in detail; here, we look not only at the exponential growth of social media, but also how the growing normalisation and acceptance of virtual and augmented reality capabilities combine to create disruptive, wide ranging and increasingly sophisticated opportunities for investors.

Generation Game – from MySpace to Metaverse

Just like the Gaming sub theme discussed in our previous article, the growth of opportunities within the Socialising sub theme is linked to the availability of modern internet infrastructure and wi-fi, as well as the development and affordability of hardware devices fast and capable enough to make immersive real-time social media use both feasible and enjoyable for users.  The capabilities of social media have certainly come a long way in recent decades. While older Millennials may look back with some fond memories of the early message boards and text-based chat rooms of the dial-up internet era such as AOL, Yahoo!, MSN, and the emerging blog scene, it’s a very different story for Generation Z (born between 1997 and 2012) who have been born into a far more sophisticated and pervasive social media universe. Social media has evolved from a novelty to the norm, and the consumers of today and tomorrow would probably struggle to conceive of a world without it.

Meta Platforms, previously known as Facebook, was not the first social media network to exist but its development in 2004 and more widespread adoption in 2006 helped accelerate an emerging trend towards real-time electronic socialising. Mark Zuckerberg’s pet project capitalised on the success of both MySpace – one of the first social networking sites to allow embedded music and videos – and LinkedIn, the enduring network marketed at professionals with an emphasis on real names and contact details over anonymity.1 Initially restricted to those in academia, Facebook soon spread to all demographics and to this date it remains, with YouTube, one of the most popular ‘socials’ across all generations, including the over-50s.2 It’s also, alongside the acquired WhatsApp and Instagram, arguably the source of a large part of the growing social media lexicon; likes, follows, hashtags, DMs, being ‘unfriended’ etc. are part of the younger generations’ growing normalisation of the social media landscape. Alongside the rival tweets, snaps, and TikToks, the widespread acceptance and ubiquity of these terms across age ranges is a further indication of just how entrenched social media has become into daily life. Meta has stated clear intentions to continue to invest over $30bn into artificial intelligence (AI) and the development of a Metaverse platform named Horizon. It also intends to continue to invest in hardware - devices such as Oculus Virtual Reality (VR) smart glasses and augmented reality (AR) lenses are expected to boost both the profile of Meta in an increasingly crowded and competitive landscape, and also draw more people into increased utilisation of the capabilities of the Metaverse.3

Dedicated followers of #fashion

Companies which may previously have restricted their social media activity to advertisements or sponsored ‘influencers’ are now finding more dynamic and targeted ways to engage with consumers via the growing capabilities of the Metaverse. This isn’t a new concept for corporations; Google’s (now Alphabet) prototype augmented reality (AR) glasses, a trailblazing Metaverse endeavour, sought to seize this opportunity early on in 2013. The lacklustre success of these was attributable to the launch at a time when the high cost of purchasing hardware with such early capabilities was inversely proportional to the low appetite for early, bulky wearable technology.4 However, nearly a decade later, the capabilities to harness the power of the Metaverse for technology and other consumer sectors are evolving and growing. These can range from using smartphones or webcams to virtually try out fashion and beauty products before purchase, through to the sale of non-fungible tokens (NFTs) to denote ownership of digital items. Nike, the globally prominent sports and leisurewear brand, has already begun the sale of digitally designed footwear. The 2021 acquisition of digital clothing company RTFKT Studios has allowed the brand to offer consumers the ability to customise and buy virtual Nike shoes for significant sums of money.5 This also provides a boost to Snap Inc, the company behind the mobile app SnapChat, which offers AR filter technology to allow the owners of such items to view them in a ‘real life’ scenario. Similarly, Z Holdings’ Line Corporation is an online messaging app with around 180 million users in Japan, Thailand and Taiwan; it is seeking to partner with Opulous, a provider of NFTs for the music industry. HYBE, the owner of the Korean based Weverse mobile app and web platform specialising in multimedia and enabling communication between musicians and fanbases is also looking to follow suit with both its joint venture with the visual effects company Giantstep, as well as a future pipeline of NFT offerings.

Swipe right on the Metaverse

It’s not just retail goods providers that can benefit from the capabilities of the Metaverse. Communication is no longer restricted to narrow bandwidths for voice and text and is likely to only expand further as people become used to a more immersive virtual presence. We mentioned Tencent Holdings within the Gaming sub theme; while the company has a strong suite of online gaming names, it also has a large and growing social media presence, particularly in its domestic market of China. Here it can position itself for premium exposure to a potential domestic user base of over one billion for its Tencent QQ instant messaging and WeChat mobile voice apps.

Another social phenomenon that has become part of everyday life in the 21st century is online dating. The CEO of Tinder, the most popular dating app for Gen Z users, has already pointed to evidence earlier this year that younger users are already seeking to demand a more immersive experience that connects with other outlets for their online presence such as gaming and music streaming.6 This potentially bodes well for social discovery and video technology companies with ambitions to harness the power of the Metaverse to provide an avatar-based virtual experience, such as Japanese social media company GREE Inc., an early adopter of the ability to develop and monetise virtual avatar use.

Under the influence

Social media is now so widespread and part of the fabric of our lives; it’s easy to underestimate the sheer number of opportunities emerging that can leverage existing and new user bases to make full use of the expanding and exciting capabilities of the Metaverse. It’s not all fun and games though – catch up with our next sub-theme to discover how the Metaverse is revolutionising the workplace and industry.

Companies shown are for illustrative purposes only as of 08/09/2022. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities.


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