The Metaverse: Unlocking Business Value, Enhancing User Experiences, and Navigating the Dark Side with Policy
- Dr Bidit Dey
- Aug 20
- 7 min read
Executive summary
The metaverse has progressed beyond a mere futuristic idea associated only with tech companies. Originally coined nearly 35 years ago, the term gained significant traction in the past decade, especially during the 2020s. In 2025, the business volume of the metaverse experienced an impressive 45% growth compared to the previous year. Experts predict that the total volume could reach $5 trillion within the next decade, as major corporations increasingly seek to explore opportunities within these virtual platforms. The metaverse presents users with a paradox of benefits. While it serves as a valuable resource for education, investment, and business ventures, linking users' real lives with the digital sphere, it also allows for the possibility to transcend personal and social limitations to create an alternative and anonymous life disconnected from reality. But inherent anonymity within the metaverse can also give rise to abusive and harmful behaviors. Furthermore, the interconnectivity of various platforms and the collection of personal data pose significant privacy risks, highlighting the darker aspects of the metaverse. Governments and policymakers worldwide are acutely aware of these challenges and are actively working to implement regulatory measures that balance control over these platforms without hindering innovation.
Introduction
The metaverse, often referred to as an umbrella term, encompasses the integration of virtual, augmented, and physical realities. The growing accessibility and sophistication of technologies such as augmented reality (AR), virtual reality (VR), blockchain, and 5G are essential for crafting immersive and interactive experiences within the metaverse. As of 2024, the global metaverse market size was estimated to be between $105 billion and $124 billion, with McKinsey & Company projecting the potential to reach $5 trillion within the next decade.
The metaverse has evolved beyond a mere futuristic concept reserved for tech companies; it is now a practical tool adopted by a diverse range of businesses across various sectors to create new opportunities, engage customers, and enhance internal operations. In retail and e-commerce, brands are pioneering immersive and interactive virtual stores and showrooms to aid consumer decision-making and boost customer engagement. A notable example is Nike's creation of "NIKELAND" on Roblox, a virtual environment where users can play games and dress their avatars in digital Nike merchandise. There are also notable uses of the metaverse in various industries, including education, healthcare, banking and finance, manufacturing, and travel and tourism.
Background and future direction
The term "metaverse" has gained considerable attention in recent years, but the concepts underlying it have been evolving for decades. Coined by author Neal Stephenson in his 1992 cyberpunk novel Snow Crash, the term encapsulates a rich history marked by science fiction, technological innovation, and shifting ideas about our interactions with digital environments. In the novel, the metaverse is portrayed as a communal, immersive, three-dimensional virtual environment that individuals can access using virtual reality (VR) headsets. Users interact with this digital realm through avatars, acquiring virtual properties and participating in a digital society, often as a way to escape from reality. Stephenson's work is widely regarded as a foundational text for the metaverse concept, influencing many subsequent ideas and technologies.
The concept of the metaverse is not solely driven by a desire to escape reality or create a fictional world. Since the dawn of the internet and the subsequent rise of digital realms, there has been a continuous effort to bridge the gap between the virtual and physical worlds. The creation of avatars, for example, reflects designers' aspirations as well as users' desires to merge their real identities with their digital counterparts. The launch of the video game Second Life in 2003 by Linden Lab marked a significant development in the realm of virtual worlds. It is often regarded as a metaverse or a precursor to the contemporary concept of the metaverse. Unlike traditional video games, Second Life serves as a platform for users—referred to as "Residents"—to create avatars, engage with others, develop their own content, and participate in a virtual economy.
The advent of Web 2.0 technology transformed this endeavor of converging virtual and physical worlds, making the internet and digital platforms far more interactive. Social media has played a pivotal role in mirroring real life in the digital domain, with the popularity of selfies, check-ins, and live broadcasts enabling users to share their real-life experiences within digital spaces. Similarly, the emergence of virtual reality has provided new avenues for individuals to immerse themselves in digitally constructed worlds.
The popularity of the term "metaverse" reemerged in the 2020s, fuelled by significant advancements in hardware and a heightened interest in remote business opportunities. This shift was accelerated by changes in consumer behavior during the pandemic. The launch of more accessible and powerful VR headsets, such as the Oculus Rift (acquired by Facebook in 2014), made immersive virtual experiences increasingly available to consumers. Simultaneously, Facebook rebranded itself as Meta, further amplifying the excitement surrounding this evolving domain.
Current trend
The global metaverse market is anticipated to experience significant growth over the next decade. Between 2024 and 2025, the market is projected to expand by nearly 45%, underscoring its tremendous potential. Among the three primary product categories—hardware, software, and services—hardware holds the largest market share, followed by software.
Facebook boasts the highest number of users within its virtual platform. At the heart of its metaverse vision lies Meta Horizon Worlds, the company's primary virtual platform. This online virtual reality (VR) application allows users, represented by customizable avatars, to socialize, engage in games, and design their own virtual spaces. It plays a crucial role in Meta's initiative to transcend traditional 2D screens and foster a more immersive and collaborative digital experience. Gaming/esports and crypto markets have the second and third-largest user groups.
The relationship between the crypto market and virtual platforms is profound and mutually beneficial. Cryptocurrencies and blockchain technology not only serve as essential components within virtual worlds but often form the very foundation that enables and shapes them. Non-Fungible Tokens (NFTs) play a crucial role in bridging the gap between cryptocurrency and virtual platforms, facilitating the trade of digital assets such as plots of land and other virtual properties.
Benefits of the metaverse
Figure 3 illustrates that the use of the metaverse is often motivated by hedonistic and romantic desires. This virtual environment provides users with the opportunity to create spaces and experiences that may be inaccessible or unattainable in their real lives. For individuals facing limitations that hinder social interaction or travel, the metaverse offers a way to transcend these barriers. Additionally, there are practical and utilitarian advantages to engaging with the metaverse, such as launching new ventures, making investments, and pursuing knowledge and education. Thus, the metaverse presents a paradoxical reality: on one hand, it offers an entirely new world detached from the physical realm, enabling users to immerse themselves in imaginary and romantic experiences; on the other hand, it serves as a platform for remote learning and business opportunities that are closely linked to the tangible world.
Figure 3: Benefits of the metaverse; source: Metaverse Statistics By Revenue, Users and Facts
Additionally, the metaverse offers a significant enhancement for businesses. It is transforming the retail sector by creating engaging and immersive shopping experiences within virtual environments. Retailers can establish virtual storefronts where customers can explore products, make purchases, and interact with virtual sales representatives. This opens up new opportunities for customer engagement, personalized experiences, and access to a global customer base. Gucci created a virtual space within the metaverse to showcase and sell its products.
The metaverse's application in the gaming and entertainment industries is widely acknowledged. Fortnite has established itself as a prominent metaverse platform, hosting large-scale virtual concerts featuring artists like Travis Scott and Ariana Grande, which attract millions of viewers simultaneously. This platform illustrates how a game can evolve into a bustling social and cultural hub.
In the realm of automation, BMW has developed digital twins—virtual replicas of its factories—to improve production processes and train employees in a simulated environment before implementing changes in the real world. Meanwhile, Hyundai has partnered with Roblox to create a virtual experience called "Hyundai Mobility Adventure."
The dark side of the metaverse
The "dark side" of the metaverse encompasses the social, psychological, and ethical challenges that have arisen or are anticipated within these immersive digital environments. The metaverse is always "on" and exists in real-time. It's a shared digital space where multiple users can interact simultaneously, and the environment continues to exist even when a user is not there. While the metaverse presents new opportunities for connection and creativity, its negative aspects often stem from the very characteristics that make it appealing: anonymity, immersion, and the blending of real and virtual realms.
The immersive anonymity prevalent in the metaverse creates an environment that creates opportunities for harassment, abuse, and unethical or illegal behavior. The ability to hide one's identity behind an avatar can lead individuals to engage in more extreme and harmful actions. Additionally, there is a risk posed by predators who exploit these spaces to groom minors, a threat that is intensified by the deeply immersive and seemingly "real" nature of the interactions.
One of the primary objectives of the metaverse is to create a seamless experience that enables users to navigate effortlessly across various virtual worlds and platforms. Achieving this involves maintaining a consistent avatar, digital assets, and identity throughout different environments. As a result, privacy concerns are paramount, especially in light of the growing reports of identity theft and impersonation. Moreover, VR headsets and other devices collect a wealth of personal information, which may include users' physical movements, eye-tracking data, pupil dilation, vocal nuances, and even physiological responses such as heart rate. This information can be analyzed to infer emotional states, assess reactions, and construct a comprehensive profile of an individual's personality and behaviors.
Internet users worldwide express concerns about addiction, privacy issues, and mental health problems related to the metaverse. Figure 4 illustrates these negative perceptions of metaverse usage.
Government policies and interventions
Countries around the globe are grappling with the challenge of regulating the metaverse. The immersive, interconnected, and often anonymous nature of these virtual environments presents unique difficulties that existing laws may not sufficiently address. As a result, policymakers are exploring a variety of strategies, frequently augmenting current digital regulations while also considering new policies designed explicitly for the metaverse. Initiatives such as the General Data Protection Regulation (GDPR) in the EU and age verification and child protection measures in the UK aim to safeguard privacy and security within the digital realm, including metaverse platforms. The EU's Digital Services Act and the UK's Online Safety Bill exemplify policies that mandate platforms to establish effective systems for content moderation and to combat illegal activities. Additionally, efforts in countries like South Korea and the EU are delving into the concept of the "digital citizenship" and the rights and responsibilities that should be defined in these emerging virtual spaces. This exploration includes critical issues such as non-discrimination, freedom of speech, and the mitigation of new forms of social and political manipulation.
Dr Bidit L. Dey
Associate Professor in Marketing
Sheffield University Management School (the University of Sheffield), UK
LinkedIn: Bidit Dey | LinkedIn
References: Metaverse Statistics By Revenue, Users and Facts
