Fashion and luxury retail will drive the metaverse industry
Globally, the metaverse ecosystem has recorded strong growth amid the surging interest in emerging technology. Private organizations and government entities have both undertaken innovative metaverse projects to make further inroads into emerging technologies. The resulting investment in the market has assisted the industry to record robust growth over the last 12 months.
Over the next three to four years, there is immense growth potential in the metaverse market, especially in the GCC. The growth in the region will be driven by a combination of factors such as a young and tech-savvy population, a well-funded startup ecosystem, and a favorable regulatory environment. All of these factors have presented a solid foundation upon which the metaverse industry can be further explored.
Fashion and luxury retail are expected to lead the growth of the metaverse industry globally, including the GCC. Currently, the uptake of metaverse and NFTs remain moderate in the GCC, with less than 20% of the luxury consumers stating that they own or use digital assets. The growing adoption of cryptocurrencies in the region, which is emerging as the key component of the metaverse sector, also indicates that the metaverse will present a big growth opportunity for players in the GCC.
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Notably, GCC luxury consumers have shown a strong awareness of cryptocurrencies, NFTs, and metaverse. While cryptocurrencies enjoy the highest awareness among luxury consumers at over 80%, NFTs and metaverse are following at 44% and 36%, respectively.
Many of the leading global fashion and luxury retail brands have already forayed into these emerging technologies. Nike and Gucci are among the fashion brands that have generated millions through their NFT projects. Bulgari and Tiffany have also already forayed into the Web3 world.
The growing digitalization around the world has opened up new revenue opportunities for brands globally, as seen in the case of Nike, Tiffany, and Gucci. A handful of brands have already started to focus on driving revenue through alternate projects, rather than focusing on the one that exists, including sales through in-store visits. This trend is expected to further accelerate over the next three to four years, as retailers focus on meeting their customers wherever they are, which also includes the metaverse.
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With GCC one of the major markets for luxury consumers, the metaverse can become a game changer for brands that are looking to drive incremental revenue in the region. Consequently, TechInsight360 expects more brands to enter the GCC region over the next three to four years, and launch innovative projects to capitalize on the lucrative, high-growth market.
According to TechInsight360 estimates, the spend on and through metaverse ecosystem is expected to contribute over US$21 billion to GCC economies annually by 2030. This will be led by the United Arab Emirates and Saudi Arabia, both of which have been investing heavily in the development of metaverse infrastructure. Furthermore, two of the biggest Arab nations, along with Qatar and Bahrain, have already announced favorable regulatory frameworks that encourage the use of Web3 technologies.
Globally, the metaverse is seen as an emerging economic opportunity, however, it is heavily dependent on how much the firms are willing to invest in the development of the sector to drive innovation. Notably, the GCC countries have already shown that they are willing to lead the global metaverse industry when it comes to driving innovation in the segment.
· In September 2022, Dubai announced its metaverse strategy through which the city aims to boost the contribution of the emerging technology to the economy to US$4 billion by 2030. As part of the strategy, Dubai aims to bring more blockchain firms in the city, while also creating 40,000 jobs in the sector. Saudi Arabia, which is developing one of the most ambitious and futuristic cities around the world, Neom, has invested US$1 billion in the metaverse in 2022.
Gaming is another sector that will assist the growth of the metaverse industry globally. Even here, luxury retailers are making their presence felt. In Roblox, one of the most popular online games, Gucci has a place called Gucci Town, which has been visited over 35 million times. Notably, the Italian fashion house allows gamers to earn digital currencies, which can be used for buying limited-edition virtual items.
With a sizable percentage of gamers in the GCC region, TechInsight360 expects fashion and luxury retailers to target the gaming metaverse market over the next three to four years. This will subsequently assist the growth of the industry from the short to medium-term perspective. Startups, in the region, are already innovating in the space and are raising funding rounds to build a gaming metaverse. For instance,
· In November 2022, Rekt Studios, a Dubai-based startup, announced that the firm had raised US$1.5 million from a Web3 venture capital firm Cypher Capital. The firm is planning to use the capital for launching the first gaming metaverse, thereby offering a distinct gaming ecosystem in the region.
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More such innovative projects are expected to be launched in the GCC countries over the next three to four years, as Arab nations seek to become the global hub for metaverse innovation and development. As the GCC countries continue to take several steps in integrating the metaverse into their economy and society, TechInsight360 projects the region to lead the growth of the global metaverse industry from the short to medium-term perspective.
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