“The Metaverse: What’s In It For Telcos?” by Arthur D. Little (ADL) examines how telcos can capture value by leveraging the metaverse. The Metaverse represents a significant new market for telcos, with early estimates putting the Metaverse opportunity at around $13 trillion by 2030. For example, Ericsson estimates that 5G fixed wireless access will generate $5 billion in 2022, growing to $21 billion in 2025 and $53 billion by 2030.
Three interconnected forces are driving the need for telcos to be proactive in their Metaverse strategies and tactics. For starters, the demand is likely to be too great to ignore. Second, the risk of failure or non-participation could be existential: hyperscalers like Amazon Web Services (AWS) and Microsoft Azure will be hot on the heels of telco players who fail to guarantee the infrastructure required by the Metaverse.
Third, consumer behavior, particularly that of Generation Z, indicates that demand for Metaverse products has already entered the mainstream. According to a recent Obsess study, 75% of Generation Z virtual shoppers have already purchased a digital product within a video game. Telcos must invest in Metaverse offerings and capabilities to connect with this generation of consumers.
Given these three factors, telcos should investigate how they can profit from the Metaverse’s growth, both through infrastructure and direct participation. Telcos will benefit from increased revenues and retention, as well as new efficiency gains across multiple axes, including carbon usage and workforce outsourcing, if they engage effectively with this new market.
Thomas Kuruvilla, Managing Partner, Arthur D. Little, Middle East, said: “The expected acceleration in Metaverse prospects is driven by a real convergence of multiple factors: internet connectivity, technology related to sensors to collect data, digitalization and AI — and the value of a reliable communication is obvious. As highlighted in the report, the Metaverse will add tremendous value to all and this should allow telcos to share a part of the benefit, as increased revenue which can be spend on network infrastructure and addressing the challenge of ultra-low-latency requirements.”
“A good connectivity will enable Healthcare and Education providers to deliver services to disadvantaged and remote communities – and at an overall lower cost – democratizing access and care for citizens worldwide. Going forward, the % increase in adoption of digital services/Metaverse will be higher with the lower income population ADL estimates the total addressable market will grow at a 33% CAGR from 2022–2025 (excluding infrastructure and enabling technologies).”
Dr. Albert Meige, Director of Blue Shift at Arthur D. Little, said: “The Metaverse provide a vision for the transition to a more connected, immersive and tech-driven world. It could also be a crucial accelerator in the search for tools that support the individual lifestyle of the next generation of consumers. It is increasingly clear that speeding up infrastructure enhancements to meet demand is not only essential but urgent, and the telecommunications sector is at the heart of this challenge.”
“The aim of this Viewpoint is to spotlight key enablers and provide recommendations for telcos to unlock the potential of the Metaverse opportunity and help them enact a fast and equitable digital transition.”
ADL Viewpoint explores the multifold benefits for telcos, from leveraging infrastructure to building new business models to capturing downstream value through active participation in the Metaverse as a “single point of service.” The Viewpoint underlines that speed is important in capturing the Metaverse opportunity, and spotlights that the Metaverse necessitates structural changes to the telecom industry on an infrastructure level and offers valuable economic and strategic benefits for those telcos that actively participate in it.
Telcos will need to develop key enabling technologies — from infrastructure to artificial intelligence (AI) and analytics — to fully participate in the Metaverse, including the following:
ADL Viewpoint explores the multifold benefits for telcos, from leveraging infrastructure to building new business models to capturing downstream value through active participation in the Metaverse as a “single point of service.” With excellent customer understanding and trust alongside a fundamental role in enabling the Metaverse (infrastructure), telcos are well positioned to move through the value chain to capture a greater slice of the pie.
