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What the Future May Hold for the Metaverse

1 min read · 29 views Bong-Geun Choi Jan 20, 2023

The metaverse has the potential to bridge the gap between the physical and digital worlds and break down barriers such as time and distance.  Interest in the metaverse has risen dramatically, as evidenced by the tenfold increase in search activity between 2020 and 2021, according to a report prepared by Wunderman Thompson Intelligence (WT).[1]

 

WT also highlighted recent developments in the metaverse industry.  What are some of these developments?

 

Technology Is Our Future

Technology is becoming more and more a part of our daily lives.  Some 93% of global consumers agree that technology is our future.  More than 76% say that their everyday lives and activities are dependent on technology. Those figures are more pronounced among young people.  More than half say their happiness, livelihood, and social lives depend on technology.

 

As people spend more time online, the walls between the physical and digital walls are coming down.  We are replicating more of our lives in digital space. 

 

Companies Responding by Developing More Immersive Experiences

In response to the move online, companies are racing to develop the technology that will power immersive 360-degree digital experiences.  This includes both companies developing the hardware, such as VR (virtual reality) headsets, and the companies utilizing this technology to provide immersive experiences.

 

The Gamification of Everything

Part of video games is the social aspect – meeting up with people and communicating. Many individuals play games to stay in touch with family and friends.  Gaming, social media, and entertainment insiders say their platforms are merging into one. 

 

Currently, WT estimates gaming could become a $300 billion industry, surpassing the $101 billion peak of the global film industry’s 2019 all-time high.  For younger people, gaming is replacing TV and films.

 

As a result, the entertainment industry is turning to the gaming industry to reinvent itself.  Broadcasters are creating channels within games.  Concerts are performed on gaming platforms.  Filmmakers are using gaming technologies to create movies and television shows.

 

No Definitive “Before and After”

There will be no clear “before” and “after” for the metaverse.  Although metaverse technology may be considered revolutionary, its adoption will likely be evolutionary.  In many respects, we are already in the metaverse.  AR (augmented reality) and VR technologies are creating immersive experiences.

 

What is likely to happen is the technology will continue to improve, expanding its applications, improving the experience, and hastening its adoption.

 

Metaverse Technology May Affect Every Aspect of Living

Metaverse technology may touch all aspects of daily living, including:

  • MetaLives – transplanting our daily habits into the metaverse
  • MetaSpaces – bringing traditional gathering spaces into the metaverse
  • MetaBusiness – conducting business in the metaverse.

 

The move onto the metaverse may offer benefits to companies developing and utilizing metaverse technology.

 

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.
 


[1] All data sourced from: Into the Metaverse, Wunderman Thompson Intelligence, 9/14/21


 

Bong-Geun Choi

Chief Economist

bchoi@fountinvestment.com

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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. 

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MTVR · SUBS