Youth IDEAS Report 70 Tapping into the Economic Opportunities of the Metaverse

Tapping into the Economic Opportunities of the Metaverse

The concept of the virtual world, “Metaverse” has been popularised since 2021 and is considered a new trend that everyone should know about. This report looks at what can be done so that Hong Kong taps into this global economic opportunity.

The Metaverse signifies the arrival of Web 3.0 with a new economic structure. Web 3.0 is a decentralised network based on blockchain technology. Users are able to obtain financial returns for content they contribute as well as retaining ownership thereof. Therefore, the Metaverse can generate many business opportunities. According to Bloomberg, the Metaverse market may reach US783.3 billion in 2024 vs. US$478.7 billion in 2020, representing an annual growth rate of 13.1%.1 A few governments have already introduced policies to support the economic development of the Metaverse. For instance, the Korean government has introduced the “Basic Plan for Metaverse Seoul” in which a metaverse ecosystem will be built for all administrative services including the economy, culture, tourism, education and civil complaints. In the US, the government has started to formulate policies related to cryptocurrency and digital assets with an aim to maintaining technological leadership in central bank digital currency. In Hong Kong, the government has not yet introduced any measures to regulate cryptocurrency or digital assets, nor has it indicated any support for their development. As an international financial centre, it is necessary to look at what kind of policy and measures Hong Kong should formulate in order to strengthen its position.

Key responses from respondents

• 69.3% said they have heard about the Metaverse but only 37.4% said they had any real knowledge about it • 56.0% said they had taken part in the Metaverse and main activities were gaming (46.1%), entertainment (17.0%) and meeting friends (16.7%) • Interest in the Metaverse was rated at an average of 6.11 points out of 10 • Confidence in cryptocurrency and NFTs was rated on average at 4.98 and 4.83 points out of 10 respectively

Main points from in-depth interviews

• There is optimism about the long-term development prospects of the Metaverse economy but interviewees agree that more applications are needed to build confidence among the public. • Experts generally think that the Metaverse can bring about more choice for enterprises but SMEs are still searching for suitable business models to upgrade their business. • Some interviewees think that the application of the

Metaverse is relatively mature in the games industry and that this experience and technology can be extended to businesses that focus on play, visual and auditory experience.

1 Bloomberg Intelligence. (December 1, 2021). “Metaverse may be $800 billion market, next tech platform.” Retrieved February 14, 2022. bloomberg.com/ professional/blog/metaverse-may-be-800-billion-market-next-tech-platform/

Comments from Youth I.D.E.A.S. think tank members

Silver Ng, group member: “Hong Kong should formulate a digital economy development policy as soon as possible in order to catch up with the global trend. It should also recognize the status of digital assets such as cryptocurrency and NFTs. Furthermore, Hong Kong should carry out measures to improve the development environment of Web 3.0 including the plan to enhance network infrastructure, popularize digital assets based on blockchain technology as well as regulate cryptocurrency transactions and various decentralized financial products.”

Raymond Mak, group member: “The government should launch a “Metaverse Development Pilot Programme” to alleviate the difficulties faced by SMEs in developing Metaverse businesses. It could also incubate SMEs in industries with potential, such as gaming, entertainment, art and design through the relevant chambers of commerce providing technical and application knowledge as well as opportunities to visit successful companies in the field. Funding could be provided for projects which can upgrade businesses using Metaverse technology.” Issac Poon, group member: “The government should play a more active role in promoting the Metaverse. It could launch Metaverse public services to meet the needs of the general public through the Trade Development Council, the Tourism Board and the Leisure and Cultural Services Department, building Metaverse versions of the convention and exhibition venues for those who may not be able to come to Hong Kong, reconstructing historical buildings in the virtual space and building the Metaverse version of performance and recreation venues.”

Report No.70 HKFYG Youth I.D.E.A.S. Economic Development group Published title Tapping into the Economic Opportunities of the Metaverse Respondents 1,292 young people aged 15-34 were polled in April 2022. 20 young people working in the area of the Metaverse and 7 experts were also interviewed. More details in Chinese: yrc.hkfyg.org.hk/2022/07/31/yi070/ Enquiries Amy Yuen 3755 7037