Metaverse landscape is fragmented with M&A opportunities
The metaverse landscape is fragmented and still lacks any single dominant player. This could create an opportunity for companies to use mergers and acquisitions to purchase critical components and fill strategic gaps, consultancy Deloitte says in a report.
Specialists do not really agree on what the metaverse will look like. Some, like Meta CEO Mark Zuckerberg, had expected more of a boom already while others soberly note that the metaverse to some extent already is here in gaming etc.
A majority of experts in a Pew Research survey say that by 2040, the metaverse will for a half billion people or more globally be a well-functioning part of daily life.
Consultancy McKinsey has estimated that the metaverse could generate USD 4 trillion to USD 5 trillion in value by 2030.
Deloitte notes that technology, media and telecommunication (TMT) companies made 75% of the metaverse deals during the last 24 months.
“Four main trends emerge from analysing M&A in the metaverse. Important acquisitions centre around immersive content, digital economies, hardware and software”, the report says.
“Technology, media, and telecommunications (TMT) companies play important roles in building the metaverse. As they stake out positions and plan their offerings, industry players could move to build and buy metaverse-related capabilities like spatial computing, tokenized assets, 3D modelling, AI and machine learning, and augmented-, virtual-, and mixed-reality devices. “
The report says there are three findings when analysing metaverse M&A:
Content remains king: Over the past 23 months, content-related transactions accounted for the largest deals by value and average deal size. Although bolstered by a US$69B gaming deal, content will likely remain at the forefront of metaverse-related deal activity.2 This could be especially true for gaming studios and technology providers that may already be closest to delivering metaverse experiences.
User devices may not be a key differentiator: While some deals may be looking at key enabling technologies like optics for AR glasses, overall deal value for user devices tends to be low.
Financial firms are the biggest movers: When considering the volume of deals, financial buyers have been the early movers, likely given their access to capital and appetite for risk. Over 40% of deals analyzed occurred through at least one financial buyer or by groups of smaller private equity shops. In the near term, Deloitte expects cash-rich financial investors and consortium participants to continue gaining familiarity and comfort with the metaverse. However, this may put pressure on other potential buyers hoping to establish early competitive advantage.
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