In 3 sentences:
- The Metaverse will require huge processing power, which is provided by this major chipmaker.
- Another company will provide developers with the graphical tools they need.
- The third company will serve as the architect of the metaverse by scanning and mapping real-world buildings.
The Metaverse has caused a stir, and companies and investors are scrambling to claim their right to the digital gold rush. However, this concept is not yet anchored in reality. So what exactly is the Metaverse?
Simply put, the Metaverse combines a range of emerging technologies including augmented reality (AR) and virtual reality (VR) with elements of pervasive technology like social media and video. This should lead to an immersive digital world where users can work, play, shop and socialize. Optimists are calling the Metaverse the next evolution of the internet. It is a network of constantly available virtual spaces in which people can interact.
Naturally, investors are looking for a way to capitalize on this rapidly changing landscape, which many believe will be the next big thing. Let’s take a look at three successful companies that will capitalize on the tremendous opportunities of the upcoming metaverse.
Nvidia: engine of the metaverse
The metaverse will require enormous computing power. And come here Nvidia (WKN: 918422) in-game. Their graphics processing units (GPUs) are the undisputed industry standard for generating realistic visuals in video games, giving the company an edge in the metaverse.
The humble GPU has a superpower that will make it a fundamental technology in the digital world. Parallel processing allows GPUs to process large numbers of complex mathematical calculations simultaneously and at lightning speed.
This capability ushered in the age of artificial intelligence (AI), making Nvidia GPUs the workhorse of every major cloud computing operation and growing number of data centers. Developing the Metaverse will require similar speed and precision, so Nvidia’s cutting-edge semiconductors are the obvious beneficiaries.
But even though the Metaverse takes years to materialize, Nvidia keeps growing. In the first nine months of this year, Nvidia’s revenue jumped 65% year over year and its earnings per share jumped 132%. Nvidia generated about $16.7 billion in revenue last year, but that’s a drop in the bucket compared to the overall addressable market, which management predicts will hit $250 billion by 2023.
The incredible potential offered by the Metaverse is just the icing on the cake for long-term shareholders.
Unity Software: Creating the Metaverse
unit software (WKN: A2QCFX) while not a household name, is well known in the gamer and developer community. The company provides a suite of software tools that help developers create, run and monetize real-time interactive 2D and 3D content for mobile phones, tablets, PCs and consoles, as well as AR and VR devices. These tools will create the real-time graphs underlying the metaverse.
Unity recently advanced these goals by acquiring certain assets from visual effects specialist Weta Digital. Weta Digital has been involved in the creation of visual effects for popular films such as avatar, The Avengers, game of thrones, planet of the Apes, suicide squad, Black Widow and many others involved. Thanks to Weta, Unity will continue to accelerate the emergence of the Metaverse.
But Unity Software doesn’t need the metaverse to succeed, as its third-quarter results show. The company generated revenue of $286 million, up 43% year-over-year. At the same time, Unity posted a loss of $0.41 per share, an improvement. Not only did the company exceed expectations, but it also raised its guidance for the full year. Unity now expects revenue of around $1.08 billion, up around 40% from the midpoint of the forecast.
Annual key figures complete the picture. Games developed on the Unity platform accounted for 71% of the top 1,000 selling mobile games in the fourth quarter of last year. Unity ended 2020 with 2.7 billion monthly active users, up 63% year over year. At the same time, apps built with Unity were downloaded 5 billion times per month, an increase of 41%.
Whether the Metaverse takes a year or a decade to come to life, Unity Software will thrive both ways.
Matterport: Digital Replicas of Physical Spaces
Matterport (WKN: A3CVYR) is another little-known company, but one that will be crucial for this new era of the Internet. The spatial data company uses 3D cameras to capture and digitize real-world spaces, then creates scaled, photorealistic virtual replicas. This process allows customers to manage spaces more efficiently. But this is only the beginning.
Matterport recently formed strategic partnerships with the cloud titan Amazon and Meta platforms’ Facebook AI Research (FAIR) announced. Additionally, the company launched Matterport for Mobile. This makes Matterport’s 3D capture tools available to anyone with a Google Android phone from alphabet or an iPhone from Apple possesses.
Through its specialized offerings, Matterport currently serves a niche market that has the potential to grow exponentially. In the first nine months of this year, the company generated total revenue of $84 million, up 35% year-over-year. Revenue from subscriptions and licenses grew even faster, by 54% to around $49 million.
Note that Matterport has only been listed on the stock exchange since July and is therefore still at a very early stage. As a result, operating expenses have exceeded revenue so far this year and the company continues to burn cash. This should change over time as the company expands its digital software ambitions.
Matterport uses a freemium model to attract paying customers. In the first nine months of this year, the total number of subscribers more than doubled to 439,000 and grew by 116%, massively expanding the potential customer base. At the same time, the number of paying subscribers increased by 35%. Additionally, the net dollar expansion rate was 114%, meaning existing customers were spending 14% more than the same time last year.
Management estimates Matterport’s total addressable market at $240 billion – and that’s before any potential contribution from the Metaverse. The company has also positioned itself for the upcoming digital world and its tools are likely to play a key role in mapping the new digital world.
The virtual world offers real opportunities
The Metaverse has yet to be translated from the drawing board to reality, but many of the necessary components are already in place. And the chances are substantial. Brian Nowak, analyst at Morgan Stanley, estimates that the Metaverse is worth around $8 trillion. dollars, so there’s still a lot to be gained here.
The Metaverse could propel any of these already successful businesses to new heights. If you back the right horse here, you could be even richer in 2022 and beyond.