The metaverse – an immersive digital world created by the combination of virtual reality, augmented reality and the internet – will have “profound implications” for China and will affect gaming, advertising and e-commerce, JPMorgan said in a research report last week.
The digital world will offer an improved user experience across various internet business models, and this could lead to increased user penetration and average revenue per user (ARPU), the report said. The bank’s bullish scenario suggests that the metaverse could triple China’s online-gaming market to $131 billion from $44 billion.
The metaverse “could digitalize everything in the long term,” the bank said. It estimates a $4 trillion total addressable market (TAM) for the metaverse in China from “converting offline consumption across physical goods and services.”
The digital world could “help internet companies tap into business services and potentially double the internet time spent,” analysts led by Daniel Chen wrote. They estimated a TAM of $27 billion in China for business services and software in the metaverse.
The bank says that the development of the metaverse will also have a notable impact on the entire technology, media and telecom (TMT) ecosystem.
Tencent, NetEase, Bilibili, Sea, Krafton and Bandai Namco are seen as key Chinese internet and entertainment stocks that could benefit from the metaverse, the note added.
Headwinds to the development of the metaverse include regulatory risk around data security, and the technological preparedness and affordability of virtual reality (VR) and augmented reality (AR) devices, the network environment and AI, the note added.
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