Navigating challenges, expanding opportunities: Insights and trends from Israel's thriving consumer-facing industry. A comprehensive review of the B2C ecosystem's performance and future prospects.cking Grpow
report by Meta (Facebook)
From a branch of the startup nation that virtually didn't exist 15 years ago, through to the first seeds planted by gaming companies, to a thriving industry riding on the waves of rising digital consumption - the Israeli B2C industry is nothing short of a success story. Reaching roughly 30% of the tech industry today, B2C is no longer a foreign concept to Israeli entrepreneurs, product experts, marketeers and investors. In fact, it may be the industry that finds the right opportunities for growth even in a time of crisis.
I know it's not trivial to talk about opportunities during this period, but as the Disruption Nation - this is what we do best. In times when reality is perfect, we as Israelis often can't find the cracks through which to break in and do something different. Instead, we're are at our best when reality requires innovative and out of the box solutions. When we have to break the rules and re-build, we have the ability to bring the same creativity we put into our products and technologies to cracking efficiencies, org structure and financial models. As scarcity drives innovation, this challenging period might actually be an opportunity to shine.
So for this upcoming period, our challenges are around maintaining profitability and efficiency, while continuing to innovate and drive growth. But if there’s an industry that can work through this delicate balance, it's the Israeli B2C industry.
In this report, you'll find our perspective on the opportunities that lie ahead, across all verticals, and the knowledge and tools you and your companies will need to seize them. As a sworn optimist, I truly believe this global economic crisis will make all of us better, stronger and more resilient and, despite all of its challenges - it will be a moment of growth.
Despite a turbulent year, Israeli consumer-first startups showcased strong resilience, both in growth and profitability.
US GDP growth returned to a positive outlook in 2022: 3.2% in Q3 and 2.9%
in Q4.
In Q4 ‘22, the number of people daily using Facebook, Instagram and WhatsApp was at its highest ever.
The landscape of consumer-first digital companies scaled massively over the last few years.
From a startup nation that mainly focused on B2B and mostly B2E (such as cybersecurity), we’ve seen a growing share of global consumer focused brands out of Israel.
Ron Tamir
Founding Partner, Kaedan Capital
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Alan Feld
Co-Founder and Managing Partner, Vintage Investment Partners
of companies surveyed reported positive growth YoY, despite the turbulence of 2022 and a high base of 2021.
of surveyed companies reported growth of over 20% YoY.
of companies that reported YoY revenue growth, also reported higher profits vs. 2021.
of companies reported higher profits by more than 20% YoY vs. 2021
Chemi Peres
Managing Partner and Co-Founder, Pitango
Year 2021 set a record breaking in investments in Israeli tech.
However, throughout 2022 we saw a decline by 43% in funding and 15% in number of deals.
When looking at funding trends by half, and considering the overall drop in 2022
We're actually at an even lower run rate, as historically H2 has been a stronger half.
The sharpest decline has been in investments in companies in growth stage, while early stage investments are less impacted.
Year 2021 set a record breaking in investments in Israeli tech.
However, throughout 2022 we saw a decline by 43% in funding and 15% in number of deals.
When looking at funding trends by half, and considering the overall drop in 2022
We're actually at an even lower run rate, as historically H2 has been a stronger half.
The sharpest decline has been in investments in companies in growth stage, while early stage investments are less impacted.
Source: Meta Investors Survey, 2022
Valuations were dramatically impacted in 2022: 60% of investors estimated valuations of their portfolio companies were down 20-50%.
Danny Cohen
General Partner, Viola Ventures
2022 was a challenging year:
US inflation was at its highest level in 40 years, reaching 9.1% in June 2022. However, it improved later in the year, ending at 6.5% in December 2022. (source: US BEA)
Consumer confidence declined significantly during 2022 amid rising prices and concerns of a looming recession.
Consumer savings were at their lowest level in decades. In December 2022, the personal saving rate (i.e. the ratio of personal savings to disposable personal income) in the US amounted to 3.4%, down from 7.5% in December 2021. (source: US BEA)
There are some signs for cautious optimism, but it remains to be seen how 2023 will shape up:
GDP growth returned to a positive outlook with 3.2% in Q3-22 and 2.9% in Q4-22 (source: US BEA)
The US labor market remained strong with a low unemployment rate of 3.5% in December 2022 (source: US BEA)
Consumer spending (in real value) in the US remained strong in 2022 (but consumers did dig deep into their savings) (source: US BEA)
Retail sales were up 9.2% YoY during 2022 vs. 2021 (source: US Census)
Fashion
Jewelry
Beauty
Home
Other
The majority of companies are bootstrapped or have raised less than $5M to date. Funding isn’t as common in e-commerce as in other tech industries in Israel. As a result, most of these companies are profitable and healthy businesses - an advantage in 2022.
However, companies continued to invest in improving efficiency during 2022. 40% of companies reported they improved their profitability by over 20% vs. 2021.
US e-commerce continued to pace strong even in a challenging year:
Online shopping significantly accelerated in 2020. The question was what would happen onced stores opened up. It turns out that old habits die hard.
However, e-commerce's share out of total retail in the US has remained strong and at a stable, high rate of ±15% out of total retail. This is 85% growth vs. pre pandemic.
Source: Statista
Felix Leshno
Founder & CEO, Underoutfit
Eytan Levit
Co-Founder, Mixtiles
The rise of the bootstrapped health businesses
The ongoing question around consumers in health
The multi-serve model is becoming mainstream
Consumer packaged health goods: Formulated foods designed to meet people or pets' nutritional needs.
Wellbeing: Holistic solutions to improve people's quality of life and prevent disease.
Health tech: Supportive technologies throughout the patient's journey or for particular health conditions.
We saw decline in mega-rounds (-60%), M&A activity (-50%), and IPOs and SPACs (18 vs. 99 in 2021).
On the positive side, we saw 107 startups reaching unicorn status (second highest year after 2021) and a 29% increase in median angel deal size.
Source: CBS Insights, State of Digital Health 2022 Report
Only 37% of the digital health companies that raised in 2022 were D2C, compared to 43% in 2021.
Together with health D2C stocks feeling market pressure (Peloton, Beachbody and more), and mobile privacy updates raising customer acquisition costs, it’s easy to understand the environment in which health bootstrapped companies have been born – and why health companies expanded their offering to additional revenue streams (payers, providers, employers and government applications).
High prioritization of health and wellness attributes today, Millenials vs overall, % of respondents
Future high prioritization of health and wellness in the near term, Millenials vs overall, % of respondents
Dror Ceder
Founder and CGO, Lumen
Although health and wellbeing is an essential part of our quality of life, the question remains if consumers have the affinity to pay-out-of-pocket for those products or solutions, especially in times of crisis.
Health consumers can be segmented by age and health status (healthy, single chronic, polychronic, etc), but it’s obvious that there are additional factors like genetics, social, life habits, financials, motivations and many others that determine each person's perceived health and wellbeing (equalling happiness and life expectancy).
Digital health solutions have been gaining momentum in recent years, and the pandemic has accelerated their adoption. These solutions offer numerous benefits, including increased access to healthcare services, improved patient outcomes and reduced healthcare costs.
Access to health data is already becoming a critical component of personalized care and this trend is likely to continue. Personalized care is an advanced approach that tailors treatment and self-care to the individual needs of each patient, based on their unique medical history, genetics, lifestyle and other factors.
AI has already shown promise in a variety of healthcare applications, such as medical image analysis, clinical decision support and predictive analytics.
XR technologies, such as AR and VR, are also becoming increasingly prevalent in healthcare, particularly in areas such as medical education, surgical planning and pain management.
Categorized by the following revenue streams
Money raised to date
Number of employees
Annual revenue
Revenue growth in 2022
Education (startups such as Simply, Masterschool and TinyTap)
Productivity (startups such as AI21, CallApp and Karma)
Security (startups such as Guardio and Ironvest)
Creativity (startups such as Lightricks and Bazaart)
Eden Shochat
Equal Partner, Aleph
Over the last year we’ve witnessed a major breakthrough in the field of generative AI and its wide adoption by users. The auto-creation of content by algorithms can potentially impact every consumer product with audio, visual content (video and images) and text etc.
We’ve also seen initial use cases in the B2C tech ecosystem, especially with viral products by Lightricks (Facetune) and MyHeritage.
Although the use cases are just starting to unfold, it’s only a matter of time before we start experiencing a broader adoption in the B2C tech. ecosystem, including pioneering companies with generative AI at the core of their technologies, such as AI21 Labs and Loora.
In mid-2021, Apple released iOS 14.5 which transformed the digital marketing industry. Since then, those changes have received mass coverage – but the main issue is the adoption of the SKAN protocol.
The main implication was restricted, aggregated and delayed signals for performance advertisers that led to limited measurement capabilities and the need to explore new ways to acquire users in order to mitigate signal loss.
One significant technique that’s becoming more common within the industry is product diversification – with an emphasis on the onboarding funnel.
Companies that have historically relied solely on an app-based funnel (Google Play and App Store) have begun activating web-based acquisition funnels in order to reach new audiences and utilize web-based performance capabilities.
Those web funnels come in a variety of formats, from very simple landing pages to “quiz funnels” in which the user goes through a series of interactions with the product before the paywall.
Omer Gal
VP Performance Marketing, Lightricks
Adopting data-driven decision making with an incrementality mindset in times of efficiency
Measuring the true value of every channel, while conducting an always-on incremental testing approach, has never been more important than today. Meta solutions, such as open-source tool GeoLift, allow performance advertisers to make data-driven decisions regarding their marketing budgets.
Enhanced consumer experience with the rise of 5G as a mass-market opportunity in North America
From ~80M devices in 2021 to ~230M in 2023: the potential audience with 5G devices has nearly trebled, providing a huge opportunity for consumer apps.
In 2021, Israeli game publishers raked in revenues of $8.6 billion representing a 5 year increase of 800 percent and CAGR of more than 55%
(Source: Deloitte & GameIS, The Israeli Video Games Ecosystem 2021, p. 32)
~14,000 people were employed last year
~200 Israeli gaming publishing companies, compared to only 4,000 employees in 2017 – a 250% increase and a CAGR of nearly 38%
(Source: Deloitte & GameIS, The Israeli Video Games Ecosystem 2021, p. 18)
59% of the companies sizes in 2021 have 1-10 employees; 26% have 11-50; 15% have 50+
(Source: Deloitte & GameIS, The Israeli Video Games Ecosystem 2021, p. 22)
74% of the Israel’s mobile gaming publishers specialize in social and casual games, followed by 15% in mid and hardcore genres
(Source: Deloitte & GameIS, The Israeli Video Games Ecosystem 2021, p. 31)
Guy Ben-Dov
Chairman, GameIS, The Digital Games Industry Association in Israel
Rovio hits nine-month high on starting talks with Playtika (Yahoo! finance) and Playtika is looking for a buyer just one year after IPO (Calcalist)
Mobile gaming company Voodoo acquires Beach Bum (TechChurch)
Moon Active acquiring Zen Match for estimated $100-150 million (Calcalist)
Unity and ironSource’s $4.4B merger is now complete (TechChurch)
SciPlay continues expansion into fast growing casual market with acquisition of Alictus, a leading Turkey-based developer of hit mobile games (BusinessWire)
In 2022, 3.2 billion players helped the global games market generate $184.4 billion, down -4.3% YoY. By 2025, this will grow to 3.6 billion players helping the market generate $211.2 billion.
2022 was a corrective year for the games market following two years of lockdown fueled growth. The primary driver of growth is mobile, generating revenues of $92.2 billion (50% of the market).
49% of all consumer spending on games in 2022 came from China ($45.8 billion) and the US ($45.0 billion). Potential growth in 2022 was reflected in MENA ($6.8 billion, 6% YoY) & LATAM ($8.4 billion, 3.4% YoY).
According to AppsFlyer, there is a clear difference in gaming app in-app purchase (IAP) revenue between iOS and Android. Games are much more affected by app tracking transparency (ATT) and the drop in data signals for optimization, which is why gaming apps haven’t grown in revenue as much as non-gaming since ATT launched.
(Source: Driving ROI through a storm: 2023 app trends & C-level predictions)
However, contrary to IAP, Appsflyer see continuous ad revenue growth driven primarily by games across both platforms, with Android notching a sizable 48% YoY increase in in-app advertisement (IAA), and iOS not too far behind with a 38% YoY growth, attributed to hybrid monetization models.
(Source: Driving ROI through a storm: 2023 app trends & C-level predictions)
AppsFlyer - Most gaming IAPs involve micro payments (which are easier when facing an economic downturn), while more costly IAPs in non-gaming verticals like e-commerce, travel and transportation etc. might mean consumers think twice.
(Source: Driving ROI through a storm: 2023 app trends & C-level predictions)
Eitan Reisel
Found & Managing Partner, vGames
Lending and financing
Financial management
Commerce, trading and investments
Banking and money transfers
Insurtech
$1.6B raised in 2022, down from $6.1B in 2021
The number of rounds declined from 174 in 2021 to 78 in 2022
Average round size in 2022 was 20.5M$, significantly larger than than the B2C average in 2022 (8M$), yet smaller than 2021 Fintech growth-stage round which averaged at 58M$
Capital raised by round type:
Third largest sector in the Israeli ecosystem, accounting for 10% of capital raised (down from 18% in 2021) - cyber (21%) and IT/DevOps (13%) are the leading two sectors.
Sub-vertical investment activity shift – trading and banking on the rise while payments, insurtech and financial software are declining.
Macroeconomics and business models
March 2022 ended a two-year period of nearly-0% interest rate globally - forcing fintechs to adapt their spreads, risk appetite and business models.
Udi Ryba
Analytics & Measurement Lead at Lemonade
eToro’s $50 million acquisition of Gatsby to better cater to US users, while doubling-down on their options trading proposition.
Lemonade’s $145 million acquisition of Metromile to expedite its auto insurance product penetration in the US, while leveraging its AI risk assessment and underwriting model with Metromile’s first-party data.
Plus500 continues its global expansion to the Japanese market with the acquisition of EZ Invest.
FTX collapse - from a mainstream Super Bowl commercial to insolvency in nine monthseds
Bitcoin crashing from over $45,000 to $13,000 (and climbing back up)
The NFT bubble burst and valuations of digital assets went down
Marketing technologies
Finance
Productivity platforms
Deal amount decreased in 2022 68% Y/Y and 22% 2Y/Y
Number of deals decreased by 40% Y/Y and 9% 2Y/Y
Source: IVC, 2023
Seffy Kotz
Chief Growth Officer, CHEQ
We recommend finding the right balance between runway optimization via CAC payback and NDR and fueling growth with logo count by developing and rethinking PLG/PLS programs at scale: be it in the realm of rethinking about ICP or re-evaluating your pricing model.
On the topic of pricing, for example, usage-based pricing (UBP) was “the thing” in SaaS pricing evolution during recent years, and fit PLG motions to a great extent. The main issue with using this pricing model under the current macroeconomic sentiment is that UBP creates a certain level of ambiguity around collection and cash flow predictability.
Therefore, a good balance would be to resume PLG motions and defer back to “classic” pricing packages - with an emphasis on promoting annual or multi-year packages to extend cash runway.
Velocity and volume
Simply put, a marketing organization must ensure it pushes a constant flow of fresh ads into the platforms. Some new ads showcase a completely new creative concept but most are iterations performed on existing ads based on media results. A recent survey conducted by Meta in Israel found that top performing advertisers create 50-70 new ads a week.
Diversity
It’s important to remember that these new ads are worthless if they’re too similar to existing ones. To make a real difference in fatigue they must be noticeably different. A new ad with a different font or color is technically new – but is just more of the same to the potential consumer.
Creating thousands of different ads a year is a challenge – it can cost a fortune and overload a company’s operational teams. Moreover, making consistent smart creative decisions requires capabilities that mix left and right brain.
When you create four campaigns a year, regular creative teams with regular creative processes can do the job. When you aim at 1000X of that amount, the regular way collapses and the solution must be systematic: the world’s leading creative and marketing teams are those that manage to build a system around four creative dynamics: ideation, production, analysis and iteration. On a weekly basis, teams come together to input (analyze, brainstorm) and output (script, produce) on the company's creative arsenal. These companies create content as if they were publishers, and their creative teams move fast as if they were content creators.
Growth creative manager
Builds and leads a culture of data-driven creative experimentation that delivers ever more effective business results. Connects creative ideas to hardcore performance data.
Production streamer
Creative volumes are increasing, organizations aim to create more ads with high diversity in formats and concepts. This role ensures that the expanding need for creative content is managed effectively and efficiently working with multiple internal and external teams.
In-team creator
Ads that are in-line with how people speak on the platforms perform better and creators are the most fluent speakers of the social media language.
Creators make content for the sake of creation by using digital technology to share unique and creative content and monetize through advertising, subscriptions and direct payment from platforms.
An influencer is someone who has built a personal brand and established a reputation online in a specific niche or industry.
Creators are investing in creating engaged communities and turning niche passions into common experiences for their audience.
Gen Z are into mixed media: 40% of them say they’ll listen to a podcast of a creator they follow. Creators are exploring a range of mediums and we see an increase in “multi-platform creators” who can adjust their content through the different platforms.
Brand
+15% ROAS increase from leveraging creators marketing in media.
Creator
+13% increase in followers; +23% increase for creators with less than 10K followers.
Consumer
2x as many people prefer creators ads over traditional ads.
Type of creators
90% are leveraging micro-influencers, 60% use customer reviews for sourcing creators and creatives.
Sourcing
60% of companies are using multiple methods to source creators including manual sourcing through social networks to leveraging platforms.
Process - team
Operating method is still shaping up: 80% still don’t have a dedicated creators team. There is no clear organizational method on how to manage paid creators work.
Process - briefing
Most collaborations are based on “light” briefing from the brand.
The rapid increase in short video consumption across social media
Short video consumption is rapidly increasing across all social media platforms, as evidenced by various key trends and statistics. According to a survey by Deloitte, about 1 in 5 US consumers use social media to discover new video content. Further research by Deloitte found that almost a third of respondents have increased their consumption of video on social media or live streaming services in the past six months. And a survey by Dynata and Streamlab showed that nearly 60% of US adult internet users watch social videos weekly, while 36% share social videos on a weekly basis.
Instagram and Facebook's role in driving short-form video viewing
Instagram and Facebook have played a major role in driving the change towards short-form video viewing, particularly with the popularity of Reels. With more consumers using social media and finding new video content, and the viewing of video on social media increasing overall, it’s crucial for advertisers to take a video-first approach to social media content and ads. Whether for organic social media marketing, paid advertising or influencer marketing, short-form videos should be a key part of every marketer's strategy.
The success and monetization potential of Reels
Reels is a fast-growing feature on Instagram and Facebook – and it’s proving to be an exciting opportunity for advertisers. The feature has seen a significant increase in growth and engagement, with 140 billion plays across Facebook and Instagram every day – a 50% increase over the previous six months.
Reels is Meta’s fastest-ever growing format and is generating higher revenue than Stories did at identical times, post-launch. Over 40% or our advertisers use Reels ads across our apps. That demonstrates the strong monetization potential of Reels and makes it an attractive opportunity for advertisers.
Reels’ focus on AI-driven content and creator-first approach
Reels’ appeal to advertisers goes beyond just its strong growth and monetization potential. The feature also has a focus on AI-driven content and a creator-first approach, making it an attractive platform for reaching and engaging with users. Reels continue to grow quickly across our apps - both in production and consumption. Reshares of Reels have more than doubled on Facebook and Instagram in the last 6 months. The AI technology that powers Reels' content recommendations is expected to double throughout 2023, further contributing to its growing engagement.
The rapid increase in short video consumption across social media
Short video consumption is rapidly increasing across all social media platforms, as evidenced by various key trends and statistics. According to a survey by Deloitte, about 1 in 5 US consumers use social media to discover new video content. Further research by Deloitte found that almost a third of respondents have increased their consumption of video on social media or live streaming services in the past six months. And a survey by Dynata and Streamlab showed that nearly 60% of US adult internet users watch social videos weekly, while 36% share social videos on a weekly basis.
Instagram and Facebook's role in driving short-form video viewing
Instagram and Facebook have played a major role in driving the change towards short-form video viewing, particularly with the popularity of Reels. With more consumers using social media and finding new video content, and the viewing of video on social media increasing overall, it’s crucial for advertisers to take a video-first approach to social media content and ads. Whether for organic social media marketing, paid advertising or influencer marketing, short-form videos should be a key part of every marketer's strategy.
The success and monetization potential of Reels
Reels is a fast-growing feature on Instagram and Facebook – and it’s proving to be an exciting opportunity for advertisers. The feature has seen a significant increase in growth and engagement, with 140 billion plays across Facebook and Instagram every day – a 50% increase over the previous six months.
Reels is Meta’s fastest-ever growing format and is generating higher revenue than Stories did at identical times, post-launch. Over 40% or our advertisers use Reels ads across our apps. That demonstrates the strong monetization potential of Reels and makes it an attractive opportunity for advertisers.
Reels’ focus on AI-driven content and creator-first approach
Reels’ appeal to advertisers goes beyond just its strong growth and monetization potential. The feature also has a focus on AI-driven content and a creator-first approach, making it an attractive platform for reaching and engaging with users. Reels continue to grow quickly across our apps - both in production and consumption. Reshares of Reels have more than doubled on Facebook and Instagram in the last 6 months. The AI technology that powers Reels' content recommendations is expected to double throughout 2023, further contributing to its growing engagement.
Creative tips to make your next Reels ad shine
How to create ads in the language of Reels?
Reels is a fun, creative and shareable way of consuming digital content. Rather than merely a format, we consider it more of a language.
Make it entertaining
The best Reels ads are surprising, magical and uplifting. They provoke an emotional response and dazzle and delight with visual effects.
Nail the visual hook
All Reels ads should be immediately clear. If you can nail the hook and capture the viewer’s attention in the first few seconds, it helps make it clear that they should stay and watch the full video.
Keep it relatable
Reels ads are easily accessible when viewers can recognize their stories, codes and tone and feel a connection through them.
#SOUNDON
93% of Reels are watched with sound on. Sound can affect the thumb-stopping rate of an ad and be a vital part of storytelling – it should be taken into consideration when thinking about planning your next Reel creative.
of Reels are viewed with sound on.
of Reels are using effects.
higher CTA for Reels showcasing a person in the creative.
Augmented reality (AR), virtual reality (VR) mixed reality (MR), extended reality (XR), blockchain and non-fungible tokens (NFTs or “tokens”) are fledgling technologies of today that are expected to be the backbone of the metaverse or form its social and economic activity. For example, blockchain and NFTs are expected to play a central role in the exchange of digital goods within the metaverse.
Some of the early components of the metaverse are already here – but in bits and pieces. And these components are already having significant societal, commercial and business impacts. As users continue to adopt these technologies, their potential to transform society in unpredictable ways will only accelerate. In the long run, the metaverse’s reach could extend well beyond things we can conceive of today, becoming integrated with traditional businesses, creating new jobs and affecting consumers in novel ways.
In the US, metaverse technologies are currently expanding access to sports, helping to combat biases via simulations, and merging physical and virtual worlds in gaming. For example, iGYM is an AR system for inclusive play created to give young people with mobility disabilities access to physical play activities with their nondisabled peers.
Read more ↓
For anti-bias training, the Lab for Applied Social Science Research (LASSR) at the University of Maryland created a training program for law enforcement personnel that includes immersive VR simulations, in which officers interact with civilians in different policing situations.
In Europe, industrial companies are adopting XR technologies to simplify and streamline prototyping, training, remote guidance and customer relationship processes. German manufacturer Siemens offers a VR product for product design and prototyping called Teamcenter VR. The ability to change the design and characteristics of the prototype in 3D has the potential to cut significant time and costs – iterating in 3D reduces both raw materials and production time.
Read more ↓
Professional industrial training also stands to benefit from VR applications: BMW, Peugeot and Audi are among the early adopters of industrial VR training, which has been shown to reduce training budgets without reducing quality.
In the Middle East, Expo 2020 Dubai embraced metaverse technologies, opening its virtual doors to visitors from all over the world through the Expo Dubai Xplorer multiplayer experience. The app allowed virtual visitors to enjoy views of an interactive “digital twin” of the Expo site via AR spectacles, synchronized with the real-world location.
In Africa, Africarare – coined as “the first South African metaverse” – launched in October 2021. A digital land called Ubuntuland offers immersive VR experiences, including an art marketplace. Africarare featured the premiere NFT art collection from well-known South African artist Norman Catherine. After the collection sold out, the artist said, “NFTs have opened up a whole new medium for artists to explore. This is a new era of investment art”.
In Latin America, Brazilian company MondoDX created the first XR platform for online retail shopping, VYRCH. VYRCH allows customers to visit a virtual store where they can walk around, pick up and try on items, speak to a shopping assistant and more. VYRCH has experienced a higher customer conversion rate than standard online stores, attracting much interest from retailers.
In East Asia, the metaverse is drawing attention and investment from major digital platforms and gaming companies, the entertainment industry and governments. In South Korea, major gaming company Krafton and internet conglomerate Naver are partnering to jointly develop a “user-generated NFT metaverse platform.” Naver has already developed Zepeto, a social gathering and digital goods shopping platform that boasts over 200 million users globally.
In India, Chennai-based startup TardiVerse made headlines for enabling India’s first metaverse marriage. Developed based on Polygon Technology blockchain and led by Vignesh Selvaraj, TardiVerse announced in January 2022 they were to host a couple’s wedding reception in the metaverse. The digital reception was Hogwarts-themed, and accessible to friends and family of the couple from around the world, with the guests choosing their own avatars.
Read more ↓
According to XROM, a Mumbai-based Extended Reality venture, there are over 2,000 AR/VR startups in India that will drive economic growth in the near future.
We can contextualize our results against current projections of the economic potential of the metaverse by assuming that it exists today, and calculating the contribution to GDP after 10 years in US dollars. Our model implies that if metaverse adoption began in 2022, then the metaverse’s total contribution to global GDP in 2031 would be $3.01 trillion (measured in 2015 U.S. dollars), one third of which, or $1.04 trillion, is attributable to APAC. Additionally, contributions to Canada, Europe, India, LATAM, MENAT, SSA and US GDP are $0.02, $0.44, $0.24, $0.32, $0.36, $0.04 and $0.56 trillions, respectively. The global estimate lies within the range of existing projections. Industry analysts and observers have offered a wide range of estimates for the potential valuation or addressable market size of the metaverse. Near-term estimates range from about $800 billion to upwards of $2 trillion over the next few years [42].
Long-term estimates range from approximately $3 trillion to $30 trillion by the time the metaverse reaches widespread adoption, with the most optimistic estimate being over $80 trillion [43]. A number of sources project that a mature metaverse could be a multi trillion-dollar industry, though they do not estimate the amount of time needed for the metaverse to reach maturity.
If metaverse adoption were to begin today, our estimate of a $3.01 trillion (in 2015 US dollars) contribution to global GDP in 2031 would be on the high end of the near-term projections, consistent with our 10-year timeline being longer than that of the near-term projections.
