Latest news on Metaverse market in Korea
Public and private sector are actively investing in the metaverse industry, looking for penetrating a market with a high growth potential. According to the global consulting firm PricewaterhouseCoopers (PwC), the metaverse-related market size will grow from $95.7 billion last year to $1.54 trillion by 2030. In this context, the Korean government has defined the metaverse technology as a key task in its Digital New Deal 2.0, while private companies are either developing in-house metaverse platforms or collaborating with technology providers to develop synergies.
A metaverse refers to a three-dimensional virtual world that is more advanced than the existing virtual reality, and is a space where various companies and entities coexist and accumulate and utilize data. Metaverse allows people to communicate without spatial constraints, enabling them to explore new knowledges, and entertainments through experiences that would be impossible in the real world. It is drawing attention as this is a new popular community space for young generations while being applicable to a wide range of industries (e.g., education, medical care, defense, finance, service, entertainment, etc.)
Chaebols to speed up Metaverse Adoption
In particular, the Korean metaverse industry is attracting a number of large companies, looking for establishing new business models. This is the case of one of the largest holdings that recently announced its plans to promote various services such as virtual reality (VR) commerce and virtual offices by combining its in-house cloud platform and the metaverse technology.
The group already applies metaverse to fields such as e-commerce, construction, and distribution. For example, one of its branches is speeding up digital transformation of the housing business by introducing a metaverse platform (cf. image below) developed in collaboration with a real estate-related app provider. The platform aims at digitalizing offline model houses in the metaverse space while providing online housing products introduction and sales consultation at once.
The metaverse technology is also being applied to the e-commerce branch of the company to promote items in a metaverse-based virtual camping site (cf. image below). Customers can use their avatar to experience various camping equipment and interior accessories and purchase products directly.
The home appliance’s branch of the holding is also implementing metaverse to promote its own brand by opening its own space in the Nintendo game ‘Animal Crossing: New Horizons’. A variety of spaces such as PR zone, town hall, and cafe were created where customers can share and communicate information.
Another major holding has also entered the metaverse market as one of its branches recently opened a Metaverse Town aiming at providing more intuitive experiences and information to customers while preparing them to metaverse and digital transformation. It is a virtual environment where users can experience the digital transformation services provided by the company, such as cloud, artificial intelligence (AI), logistics, and security, and it consists of a showroom, a seminar room, and a lounge. In the showroom, users can watch videos showing examples of digital transformation for each business. The seminar room was implemented in the form of a conference hall, enabling remote communication through video meetings with presenters. The lounge was created as a space for networking and events.
Korean telecommunication companies are also planning to use metaverse as a new growth engine by leveraging the 5G technology they already have developed. One of them has already launched a metaverse platform with the aim of creating a representative metaverse of the 5G era.
Another operator formed the ‘Metaverse One Team’ with a couple of companies related to virtual reality (VR), augmented reality (AR), and mixed reality (MR). The Metaverse One Team currently consists of 9 companies engaged in VR, AR, and MR related businesses that aims at seeking ways to develop Korea’s metaverse technology and expand services through continuous and regular discussions. A third operator is chairing the Extended Reality (XR) Alliance, a global 5G content alliance with the aim of promoting the growth of the XR industry.
Innovative Metaverse-based applications nurtured by fintech companies
In addition to the telecommunication companies, payment companies are also looking for partnering with metaverse platforms to ease transaction process within virtual worlds. Recently, a payment company announced its plans to provide an electronic payment system while enabling users to buy virtual asset in a metaverse platform related to Cyworld.
The implementation of virtual assets in metaverse might be challenging in Korea. In particular, the metaverse should not be considered as a game provided that the export of profits in games (blockchain games) is prohibited in Korea. However, since Cyworld is not a game, users will be able to purchase the virtual asset and to freely use them in the metaverse.
Recently, the National Assembly Legislative Investigation Agency also stated in the ‘Metaverse Status and Future Tasks’ report that “Metaverse and games are different” while mentioning that the content deliberation and revenue model regulations applied to games should not be applied to Metaverse as it is.
The adoption of metaverse also enables the creation of innovative use cases as reflected by the ‘Healing Tour Metaverse project’ (cf. image below) that is being developed by an artificial intelligence and blockchain-based fintech company in collaboration with a mixed reality (XR) company. The ‘Healing Tour Metaverse project’ allows customers to buy virtual tour tickets according to their flight schedule and travel with their friends on Metaverse. Users can experience historical sites around the world as well as communicate with avatar friends they meet while traveling. The virtual tourism content created here can be traded on a cryptocurrency exchange later in the form of NFT.
Korean Government to support Metaverse Ecosystem
Private companies’ efforts are actively supported by the Korean government through the ‘Metaverse Alliance’. The latter held a meeting on July 26 to discuss areas of collaboration on Metaverse-based projects that could be commercialized.
Metaverse Alliance is a public-private cooperation organization led by the Ministry of Science and ICT and where the National IT Industry Promotion Agency (NIPA) and the Korea Radio Promotion Association (RAPA) serve as secretaries. The Alliance was created as part of the government’s virtual convergence economy development strategy and it is operated through a forum to share industry status and technology trends, and a legal system advisory group dealing with regulations. The purpose is to create a metaverse ecosystem while enhancing the creation of an open metaverse platform in Korea. Over 200 companies have joined the Metaverse Alliance so far where they exchange business ideas and information, focusing on promising platform and innovative technology companies.
In the last gathering, an official from the Ministry of Science and ICT (MSIT) mentioned that by October, the Alliance will set about 10 projects to be promoted and will provide sufficient budget support for each project. It is expected that a total of 20 to 30 billion won will be provided to the Alliance projects in 2022. The MSIT also stated that it will support (1) platform and service development (2) human resource development (3) infrastructure (4) R&D (5) professional company development (6) fund investment to create a new market through the metaverse.
The active involvement of the Korean government in the development of a metaverse ecosystem can be explained by its belief that metaverse is capable of unlimited economic territorial expansion. In this regard, it is actively supporting the creation of new markets through metaverse, such as building an open metaverse platform led by the private sector or laying the groundworks for supporting the ecosystem. Thus, the government has been operating the Korea Virtual Augmentation Complex and the Metaverse Hub in order to strengthen the infrastructure that supports the growth of metaverse-related companies. In addition, the Metaverse Academy will be operated from next year to nurture professional manpower tailored to the needs of the field. The government will also build 10 metaverse labs for XR-based metaverse development education, and also create 35 education courses in 4 fields based on metaverse technology. It will also spread the metaverse technology to regional areas by establishing further metaverse hubs, while also planning a metaverse cluster project to deploy the technology to 47 national industrial complexes across the country.
Our View: actively supported by the government, the metaverse ecosystem is growing at a fast pace in Korea and is now being applied in a variety of fields. Korean residents can access a wide range of services by connecting to virtual worlds that are no more being considered as games. While being pushed by the pandemic, the technology also benefits from the global trend as global tech companies are also investing in the industry such as Facebook that is turning into a metaverse company. Looking at the comments from industry experts, one of the main reasons for the adoption of metaverse is that it would provide their operators with a new way for collecting unlimited data about users. For example, through the platform, operators will be able to identify the contents users are looking at, the type of environment the users prefer, etc. In other words, while offering a plenty of new possibilities, it may also create privacy concerns that should be addressed beforehand.
