How the Metaverse May Change 'Business as Usual'
With the creation of new virtual spaces and worlds, the metaverse has the potential to change the way that business is conducted. At the very least, it may force companies to rethink how they engage with their customers. What are some potential ways the metaverse may affect business?
Engaging Consumers Digitally
Younger consumers are less likely to watch network or cable television, read newspapers and magazines, or listen to the radio, according to a study published by Wunderman Thompson Intelligence (WTI).[1] As a result, traditional marketing strategies historically employed by companies may no longer be relevant.
However, today’s consumers are more comfortable, and often prefer, interacting with brands digitally. WTI found that:
- 73% of consumers said it’s easier to relate to a brand that has a digital presence
- 66% prefer to engage with brands digitally
- 62% feel they have a closer relationship with brands with a strong digital presence.
Gaming may provide a medium for companies to connect digitally with consumers.
Gamevertising
Consumers are spending more time on gaming, resulting in brands upping their presence on these platforms. For example, Netflix, Hellmann’s, and Ally Financial created branded islands in Nintendo’s Animal Crossing: New Horizons gaming platform. Automaker Ferrari created its latest model in Fortnite.
Additionally, some brands are creating their own gaming presence. Fashion brand Balenciaga released its 2021 collection via a video game created expressly for them. Players navigate a futuristic world, passing characters wearing the luxury brand’s latest designs. In addition, brands such as Burberry, Stella Artois, and Coca-Cola launched their own non-fungible tokens (NFTs) available either on gaming platforms or via direct auctions.
Metaverse gaming may provide a way for brands to connect with difficult-to-reach younger consumers.
New Retail Formats
Metaverse technologies, such as augmented reality (AR) and virtual reality (VR), are presenting new ways for brands to sell online and in physical locations.
Via VR, brands are able to construct 3-D stores through which consumers may browse and pick out items as they would in a brick-and-mortar store. Some are creating digital twins of their flagship stores, creating flagship digital stores.
Physical stores are blending digital overlays using AR technology. One example is AR try-ons of clothing and even cosmetics.
Working in the Metaverse
As more companies embrace remote work, metaverse technologies, such as VR, may help to bridge the gap of physical distance. Companies can set up virtual offices where employees, via avatars, can interact and collaborate. As technology continues to improve, the digital representation of the office and the individual will likely become more realistic, fostering a more interactive environment. Such platforms may allow companies to hire the most qualified individuals, irrespective of where they live.[2]
How may individuals gain exposure to metaverse-related companies?
The Fount Metaverse ETF (MTVR)
The Fount Metaverse ETF seeks to provide investment results that, before fees and expenses, generally correspond to the performance of the Fount Metaverse Index. The index was designed to measure the performance of companies that develop, manufacture, distribute, or sell products related to metaverse technology.
MTVR may be an attractive vehicle to gain exposure to metaverse-related companies.
For a full list of MTVR holdings, please click here.
[1] All data sourced from: Into the Metaverse, Wunderman Thompson Intelligence, 9/14/21
[2] For more information, please see our blog Can the Metaverse Improve the Work-From-Home Experience?
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Risk Disclosure:
Investing involves risk, including possible loss of principal. There is no guarantee the Funds will achieve their stated objectives. In addition to the normal risks associated with investing, international investments may involve the risk of capital loss from unfavorable fluctuation in currency values, differences in generally accepted accounting principles, or social, economic, or political instability in other nations. Emerging markets involve heightened risks related to the same factors, as well as increased volatility and lower trading volume.
The Funds’ concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors. For MTVR, the Fund may be concentrated in the entertainment and interactive media & services industries. The entertainment industry is highly competitive and relies on consumer spending and the availability of disposable income for success, which may cause the prices of the securities of companies to fluctuate widely. The prices of the securities of companies in the interactive media & services industry are closely tied to the overall economy's performance. Changes in general economic growth, consumer confidence, and consumer spending may affect them. MTVR may also be subject to the specific risks associated with metaverse companies. These risks include but are not limited to small or limited markets, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation. Smaller, start-up companies tend to be more volatile than securities of companies that do not rely heavily on technology. Metaverse Companies may rely on a combination of patents, copyrights, trademarks, and trade secret laws to establish and protect their proprietary rights. There can be no assurance that these steps will be adequate to prevent the misappropriation of their technology or that competitors will not develop technologies that are equivalent or superior to such companies’ technology.
For SUBS, the Fund may be concentrated in the software industry. Technological changes, pricing, retaining skilled employees, changes in demand, research & development, and product obsolescence can affect the profitability of software companies causing fluctuations in the market price of company securities.
Both Funds are subject to communication services sector risk, which can involve the same risks as being concentrated in the software industry. Network security breaches, potential proprietary or consumer information theft, or service disruption can negatively affect companies’ stock prices.
The Funds are non-diversified. The Funds are new and have limited operating histories for investors to evaluate. New and smaller funds may not attract sufficient assets to achieve investment and trading efficiencies. In addition to the normal risks associated with investing, investments in smaller companies typically exhibit higher volatility.
