The Metaverse: The Next Evolution of the Internet and Social Media

One of the most popular topics of the latest months is the Metaverse. The Metaverse can be described as a hybrid world between the real and digital spaces, where virtual reality, augmented reality, and artificial intelligence work together to offer users a more immersive online experience.

Social media company Facebook recently changed its name to “Meta”, to highlight its shift from the social network space to the Metaverse one, projecting the whole segment in the spotlight. Meta’s CEO, Mark Zuckerberg, defined the Metaverse as a set of virtual spaces where people can create, explore, work, learn, and interact with others, whether they are in same place or not. The main difference from the traditional social platform is that, in the Metaverse, people will feel a more tangible sense of presence, thanks to a more immersive experience and the combination of innovative technologies such as AR and VR. For example, users will be able to attend a concert with thousands of other people directly from their couch or appear in a real meeting as a hologram.

Software giant Microsoft is also combining the real world with AR and VR, to provide users with a 3D platform for virtual meetings, called “Mesh for Teams”. Microsoft’s CEO Satya Nadella aims to create an enterprise metaverse: with the adoption of AI, users will be able to create their own avatar mirroring their body language, tone of voice and facial expressions. Additionally, users will be able to sit around a table in the same virtual 3D conference room, and change their clothes based on the specific situation.

One of the most successful players in the Metaverse is Roblox, an online gaming platform where millions of people create and share their own games. Roblox does not use AR or VR but is focusing on building an immersive world for its community – the platform has about 47 million DAU. Recently Nike announced a partnership with Roblox to offer a virtual 3D space called Nikeland where players can interact in free sport games and outfit their avatars with special Nike products. In addition to create a virtual place where people can come together to do millions of different activities such as learning, playing, and socializing, Roblox’s CEO David Baszucki aims also to build an online shopping platform empowered by its own virtual coin: the Robux currency.

According to Bloomberg Intelligence, the Metaverse is expected to be an $800billion market by 2024. Among the key factors expected to skyrocket market revenue growth over the next decades, is the synergy between fintech companies and tech giants. In addition, since it is impossible to build an immersive environment in a 2D world, specialized hardware companies will also benefit from the secular growth of the Metaverse.

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The information in this article should not be regarded as a description of services provided by Delian Partners SA. The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. The views reflected in this article are subject to change at any time without notice.

Live Streaming is Replacing Traditional Media

Even if live streaming has been around for many years, it experienced a tremendous acceleration during the pandemic as people spent on average 30% more time engaging with their smartphones and media devices.

As technology and media consumption remains higher than pre-covid levels, the success of Live Streaming is growing on a global scale. One of the sectors in which it has been more successful is e-commerce: E-commerce consumption accelerated by three years during the pandemic, and the increased competition in the virtual space worked as a catalyst, pushing companies to improve their users’ online experience and catch their attention.

Chinese tech giant Alibaba was the pioneer of Live Streaming in e-commerce. Through the Live Streaming platform Taobao, Alibaba created a new personalized shopping experience, connecting companies with roughly 800 million monthly users who visit Alibaba’s e-commerce site. Taobao’s range of products available in live streaming has been growing massively and the platform is expanding its offer to those categories previously available only offline, such as cars and large appliances.

Live streaming has also become a key feature in the social media landscape. With 2.6 billion downloads, 1.6 billion worldwide users (including Duoyin), and 800 million monthly active users, TikTok is one of the fastest-growing social media platforms ever. What makes TikTok unique is its AI algorithm. Once a video is uploaded on the platform, the AI algorithm uses Natural Language Processing (NLP) to analyze and categorize the video – including audio, hashtag, and images, which allows TikTok to provide users with highly targeted content that they find most interesting. In this way, TikTok’ content can engage its new users for up to 10 minutes, which is three times the capability of Instagram.

Another example is the Amazon-owned platform Twitch, which hosts 91% of all video game streaming and provides the content of more than 4 million broadcasters, monthly. In a high-competitive video games landscape, Twitch differs for the “Just Chatting” category: Streamers can engage with the community and talk to viewers even when they are not playing any game. To understand the impressive growth of the platform, consider that Twitch peaked at around 1.7 billion hours watched in November 2020, versus Facebook’s all-time-high of 250 million in September.

The live streaming market can become the largest entertainment medium. As reported by TechJury, the global live streaming market is surpassing the traditional media ecosystem - such as TV or social media- and it is expected to be worth over $247B by 2027. The growth trajectory is supported by a secular shift in consumer habits, considering that 63% of people aged 18-34 watch live streaming content regularly.

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The information in this article should not be regarded as a description of services provided by Delian Partners SA. The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. The views reflected in this article are subject to change at any time without notice.

Technology Innovation is Supporting the Digital Ad World

2021 so far is showing an acceleration of the strong growth trend in Digital Advertisement. As businesses re-open worldwide and previously canceled campaigns are resumed, advertisement budgets have been increasingly directed towards Digital Ad because the use of social media platforms and streaming services have risen almost everywhere.

Digital vs. Traditional Ad Spending (US)

Source: eMarketer

Not surprisingly, the main beneficiaries in the Digital Ad ecosystem are Alphabet, Facebook, and Amazon, which all reported strong growth in Ad revenue in 2020. Among these, Alphabet continues to dominate the Digital Ad market: In 2020, Google accounted for about 29% of the total Digital Ad revenue in the US, followed by Facebook and Amazon with 25.2% and 10.3% respectively.

US Digital Ad Revenue Share, By Company, 2019 & 2020

% of Total Digital Ad spending

Source: eMarketer

Google built its success in Digital Ad by leveraging AI software to collect and integrate data from users in a more sophisticated and faster way. While Google’s platforms connect businesses with billions of people every day through Search and YouTube, AI helps them to create highly tailored content based on consumers’ needs and preferences of the moment.

With an impressive 1.87 billion daily active users in 1Q21, Facebook can count on one of the largest and most diverse advertising audience ever and collect a huge amount of data for the benefit of advertisers. Facebook also introduced innovative features to its Ad service: The use of Machine Learning helps determine the likelihood that a given user will act as the advertiser wants, such as visiting the advertiser’s website, installing their app, or buy a product. And then, the algorithm will rank the quality of Ad content through an Ad quality score so that the advertiser can fix the campaign following the best way to achieve his goals.

In recent years, Amazon’s Ad business also experienced a tremendous growth, mainly fueled by the acceleration of online shopping: According to EMarketer, Amazon advertising revenue in the US will surpass $20B in 2021. To keep up with the competition, the e-commerce giant also implemented an AI driven algorithm which analyzes real-time data generated by shoppers’ behavior, allowing advertisers to provide specific content to a narrowly targeted audience.

Digitalization is changing consumers’ behavior and companies must be increasingly data-driven to be able to communicate with people who spend more time navigating through the Internet while scrolling social media, checking emails, or reading the news. Digital Ad is becoming mandatory for companies to attract new customers and build a relationship with their brand.

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The information in this article should not be regarded as a description of services provided by Delian Partners SA. The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. The views reflected in this article are subject to change at any time without notice.