JPMorgan Enters the Metaverse With Virtual Decentraland Lounge

key takeaways

Analysts from the bank predict in-game ad spending will reach $18.4 billion by 2027
The average price of virtual land doubled from $6,000 to $12,000 in six months last year, according to JPMorgan

JPMorgan took a big step into the metaverse Tuesday, jumping into the nascent space with a virtual lounge in popular blockchain-based world Decentraland.

The “Onyx lounge” was unveiled along with a report from the bank outlining metaverse-related growth opportunities for businesses and causes for its “explosive interest.”

“When you think about the economics of the metaverse — or metanomics — there are opportunities in almost every market area.” the bank wrote. “We are not here to suggest the metaverse, as we know it today, will take over all human interactions, but rather, to explore the many exciting opportunities it presents for consumers and brands alike.”

The metaverse, JPMorgan said, has a market opportunity of $1 trillion in yearly revenue, as creators tap Web3 to monetize their work in new ways.

“This democratic ownership economy coupled with the possibility of interoperability, could unlock immense economic opportunities, whereby digital goods and services are no longer captive to a singular gaming platform or brand,” according to the report.

The bank cited household names such as PWC, Walmart, Nike, Verizon, Gap, Adidas, Hulu and Atari as early adopters and investors in the blockchain economy.

“Business leaders and boardrooms around the world are now asking themselves, ‘What is my metaverse strategy? What am I supposed to be doing in the metaverse? What is the metaverse anyway?’” the note said.

The average price of virtual land has doubled from $6,000 to $12,000 in six months last year, according to data from four popular metaverse platforms. The bank predicts in-game advertising spending will reach $18.4 billion by 2027.

Although the metaverse has evolved “very quickly,” and it is “difficult to base a business strategy on such a dynamic space,” JPMorgan said that the risk of “being left behind is worth the incremental investment needed to get started.”

JPMorgan’s metaverse move follows Morgan Stanley’s related note to clients last month.

Analysts at the bank predict the metaverse’s initial total addressable market (TAM) in China will be roughly $4 trillion, as it replaces the mobile internet with a more “immersive experience.” Once the metaverse begins “disrupting offline activity,” such as real-estate showings, vehicle test-drives and education, that figure is projected to soar to $8 trillion.

“We expect the metaverse TAM to be expansive and go beyond the current online consumption market, which is mainly dominated by e-commerce and online entertainment spending,” the note said.

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