The Metaverse hype started gaining steam towards the end of last year. A host of mainstream companies got in to test the waters. Of late, however, the hype has—to some extent—started fizzling out.
In the third quarter of 2022, the total investment and financing of the Metaverse industry in China reached 22.84 billion yuan, marking a drop of 2.22 billion yuan [8.9%] when compared to the second quarter. However, the total number of investment events stood at 339, indicating an increase of 188 events relative to the second quarter.
From the perspective of track distribution, the investment and financing areas of the domestic Metaverse market mainly included four major sectors: hardware, software, infrastructure, and scene applications. As far as the breakup of the hardware and software division is concerned, the report noted,
“The total investment and financing of the hardware sector were 21.6 billion yuan, accounting for 64% of the total investment and financing. Quarterly growth is more than 10 times… The software sector financing amounted to 610 million yuan, accounting for 2.7% of the total investment and financing, down 73% from the second quarter.”
With respect to terms of capital risk appetite, domestic Metaverse investment and financing in the third quarter continued the trend of the first half of the year. Additionally, investors were mostly companies that have a certain reputation in the field of virtual reality, and have the need to develop technologies, expand markets, and attract talent.
The report concluded by highlighting,
“China’s economy is shifting from a high-speed development stage to a high-quality development stage.“
China and its Metaverse prospects
Even though the financing has taken a slight hit, it should be noted that the country is keen on expanding its footprint in the space. In July, Shanghai bet big on the Metaverse and announced its plan to build a $52 billion industry by the end of 2025. At that time, Wu Jincheng—Head of Shanghai’s Economy and Information Technology Committee—said that industries such as the Metaverse were expected to “constantly spur” new business schemes and models.
He also added that it would give rise to “killer” applications and popular products, thereby releasing huge market value. Alongside, the government was also planning to provide 10 billion yuan in assets, particularly for the Metaverse development.
Read More: Shanghai Plans To Build a $52 Billion Metaverse Industry
Alongside, the Hang Seng Index company that manages Hong Kong’s largest share index, the HSI, launched an index to track 30 metaverse-related companies operating in Hong Kong and China, in a move to cash in on growing investor demand, justifying the said narrative.
Leaving aside China, the macro-trend, however, does not seem to be in very good shape. As reported in a recent article, users are not essentially returning back to the Metaverse on a daily basis. As a result, the daily active user count on top Metaverse platforms remains to be malnourished.
Read More: As Decentraland, SandBox Active Users Decrease, Is Metaverse Interest Dropping?