A lot of people believe that the metaverse could be the next big thing. But just how big? There are different estimates.
Bloomberg Intelligence thinks the metaverse market could reach nearly $800 billion per year in 2024. However, that forecast doesn't extend into the second half of the decade when the metaverse is likely to really pick up momentum.
An annual metaverse market of $1 trillion (and perhaps a lot more) could be on the way. Here's where one big bank is placing a bet.
Setting up shop
You can count J.P. Morgan (JPM 0.59%) among those who project the metaverse opportunity totals at least $1 trillion per year. The financial services giant wrote in a recent report, "The metaverse will likely infiltrate every sector in some way in the coming years."
J.P. Morgan's report noted that "companies of all shapes and sizes" are entering the metaverse. It stated that the management teams of businesses around the world are mulling over their metaverse strategies.
What is J.P. Morgan's own metaverse strategy? The company has three primary areas of focus:
- Providing "bank-grade products and digital assets platform access" to metaverse platform developers
- Helping metaverse content creators commercialize their products
- Supporting the use of different currencies and payment methods across the metaverse
But the company also recently took a highly visible step -- it set up shop in Decentraland (MANA -1.38%). In the process, J.P. Morgan became the first big bank to establish a metaverse presence.
J.P. Morgan pointed out several Web 3.0 metaverse platforms in its report about the opportunities in the metaverse. Decentraland was in the group, along with The Sandbox, Somnium Space, and Cryptovoxels.
The big bank chose to build its first metaverse location in Decentraland's Metajuku mall. Its lounge features a digital picture of J.P. Morgan CEO Jamie Dimon and a tiger that walks around -- something you won't see in any of the company's brick-and-mortar locations.
Why did J.P. Morgan pick Decentraland? The fact that it's the largest metaverse cryptocurrency based on market cap perhaps played a part in the decision. The financial services company also probably saw Decentraland real estate as a good investment.
As J.P. Morgan pointed out in its metaverse report, "Virtual real estate is a growing market." The report specifically mentioned that Every Realm purchased a land package in Decentraland for $913,000 last year to develop the Metajuku shopping district.
A first step
J.P. Morgan's bet on building in Decentraland doesn't necessarily mean that the platform will be the biggest winner in the metaverse. It wouldn't be surprising if the company eventually establishes a presence on other platforms.
There are also some technology issues that J.P. Morgan believes need to be addressed for the metaverse to fully achieve its potential. These include improved avatars and interoperability across different virtual worlds.
Larger players such as Meta Platforms and Nvidia are arguably in a better position to tackle such challenges. It's possible that these metaverse stocks could reap the greatest rewards for investors.
But J.P. Morgan clearly believes that the metaverse presents a huge opportunity. The company's selection of Decentraland as the first step in its own metaverse strategy appears to be a solid endorsement of the platform.