By
Temitope Olatunji
April 16th, 2024
JPMorgan sees huge growth potential in china’s total addressable market for the Metaverse. The baking giant notes companies which will have a competitive edge operating with different applications of Metaverse such as gaming and social networks.
Wall Street baking giant JPMorgan is keeping a close watch on the developments in the Metaverse space. Interestingly, it is exploring the Chinese stocks that can really benefit if the whole Metaverse industry takes off.
The Metaverse resembles a virtual world that has humans interacting with each other in three-dimensional virtual avatars. The hype surrounding the Metaverse has picked especially with Facebook rebranding itself to Meta. However, the hype has yet to translate into real-world adoption.
In addition to the top tech giants in the US companies across the globe have been exploring Metaverse. JPMorgan says that the Metaverse development in Asian countries is facing challenges relating to regulatory scrutiny. furthermore, transacting cryptocurrencies in the Metaverse is also something that the regulators have been watchful about.
But JPMorgan reveals that there are some Chinese internet firms that can benefit immensely from Metaverse developments. The top picks among JPMorgan’s list of potential beneficiaries include companies like Tencent, Bilibili, and NetEase. Some of the non-internet companies from Asia include players like China Mobile, Sony, and Agora.
These are companies that JPMorgan believes to have a competitive edge operating with different applications of Metaverse such as gaming and social networks. In their report, JPMorgan analyst Daniel Chen and his team said:
“Development of mobile internet and AI in the past 5-10 years suggests that a company’s competitive advantage in one part of the tech ecosystem is often more important in determining long-term value creation to shareholders than which part of the ecosystem the company operates in”.
Metaverse’s Key Growth Drivers
The JPMorgan analysts also noted two major areas wherein companies can make good money as the Metaverse grows. The first area is that of gaming! The Wall Street giant is pretty confident that China’s online gaming market will triple from $4 billion to more than $131 billion.
NetEase and Tencent are pretty strong players having strong gaming businesses. Besides, they have also partnered with global players worldwide. Tencent has some stake in virtual gaming firm Roblox. Similarly, NetEase has partnered with Warner Bros for a Harry Potter-themed mobile game.
JPMorgan also added that the “metaverse will likely double digital time spent”. Thus, companies are likely to generate more revenue per internet user. As per JPMorgan, the total addressable market in China for software and business services in the Metaverse will stand at $27 billion.
But JPMorgan also notes that there are several obstacles to overcome. It added that VR devices are currently too heavy for long hours of use. Also, the Metaverse content and cloud computing abilities remain limited as of now.
“We think ‘perfect form’ of the metaverse could take decades to achieve. While we believe the [total addressable market] for the metaverse is enormous, we believe there are various technological obstacles to overcome,” wrote the analysts.