What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing the holy grail of stock market. Investing is to find the emerging technology mega trends which are not obvious today, but will be the underpinnings of a trillion dollar company tomorrow. This is obvious in hindsight. If you bought amazon stock in 1997, when the internet was first emerging, you could have made a more than hundred fold return on your investment.

If you put in just one thousand dollars back, then you would now have almost two million dollars a truly life-changing amount of money. Of course, hindsight is 2020 and there are multiple times in amazon's history where it looked like they had serious risk of going bankrupt. Our jobs as investors is to identify the trends today that have the potential to create the next trillion dollar company. Of course, no matter how much research you do not every one of your disruptive technology plays will work out, but the upside is so great that you can diversify into many different companies.

Even if you had one percent of your portfolio allocated to amazon in 1997, this would have been more than enough to massively outperform the market in this video we'll be looking at one area of technology, which has the potential to be just as disruptive over the next 20 years as the internet was over the last 20. we're talking about the so-called metaphors, the broad idea of the metaverse is a virtual online environment, where people engage in various social activities that they previously would have done in person. While this might sound far-fetched, we've already started to see this. Today, in april of 2020, over 27 million people viewed a travis scott concert virtually in the online battle royale game fortnite.

This is greater than the entire population of australia and obviously, orders of magnitude greater than the number of participants that could attend in person. The idea of a metaverse is an open world virtual environment kind of like an mmorpg, but instead of just being a video game, people can do all types of things, such as meeting with friends or even going to the office. Tech giants, including facebook, are already investing billions in creating their own metaverses and industry. Analysts expect the total industry could be worth 280 billion dollars by 2025..

If the metaverse turns out to be a trillion dollar industry in 10 years time, there will likely be many companies in their infancy or not even yet started today, which will become the googles and amazons of the 2030s. Before we delve into the specifics of the metaverse, we'll go over what it takes for an emerging technology to become mainstream, we'll start off with the example of e-commerce. In the 1990s, e-commerce was in the early stages and you can only buy a limited range of products on amazon. How could you have predicted that it would grow into a behemoth that is today? The conditions for a new technology to be successful are as follows.

Firstly, it must be technologically and economically viable to implement on a large scale. Secondly, if it replaces an older technology, it must provide a better consumer experience, be cheaper or both. And thirdly, if it is a completely new technology that cannot be compared to older product offerings, it must meet a real consumer desire in the case of amazon. These conditions are clearly met.

E-Commerce cuts out the middleman of the physical retail store, which reduces cost significantly. They can also offer a much wider variety of products as they are not constrained by the limited space of each retail location. Consumers can browse through thousands of products from the comfort of their couch without the hassle of going to the mall able to offer a wide range of products at cheaper prices. It is obvious in hindsight that amazon would eventually take market share from established retailers.

An example of a technology that failed to be revolutionary is home. 3D televisions after the 2009 hit film avatar success, 3d release companies such as panasonic and lg started pumping hundreds of millions of dollars into the development of home 3d tvs. Consumer demand turned out to be much lower than anticipated and most models were cut after just a few years. People simply didn't care enough about 3d to justify paying thousands of dollars extra over an ordinary tv.

So now, let's look at the metaverse specifically and try to determine whether this will be the next amazon or if it will fizzle out like 3d televisions. The idea of the metaverse is that we will eventually live a significant portion of our lives in a virtual reality. Environment, where we can perform day-to-day tasks such as talking to friends or even going to the office, while this might sound like a far-fetched, futuristic scenario, it's really not that far from the state of the world today for many people, the majority of their social interactions happen Within the virtual world of online video games and the pandemic has taught companies around the world how to communicate virtually through zoom. It's not a stretch to think that in a few years time, employees could come into virtual online offices using a virtual reality.

Headset mark zuckerberg certainly seems to think the metaverse is the future, and facebook has spent billions of dollars developing hardware and software to make this a reality. They're currently beta testing an oculus game called horizon worlds, where players can explore a realistic, open world environment. Video games such as fortnite can also be considered metaverses, as this virtual world has evolved to be much more than just a game. It's a social environment where people can interact with their friends for the metaverse to become the next big mega trend.

It must meet the criteria of being technologically and economically feasible, being superior to existing alternatives or satisfy unmet consumer desires. On the hardware side virtual reality, headsets can already provide an immersive real-world experience on the software side. The unreal and unity game engines which power, fortnite and league of legends respectively, are incredibly powerful and can support vast virtual worlds. We know that the metaverse is possible.

The question now becomes whether or not there will be significant demand from consumers and all available evidence indicates that will be extremely popular. Perhaps the earliest iteration of the metaverse is minecraft, which was first launched in it currently has over 130 million monthly active users who spend billions of hours per year, making elaborate structures in its blocky virtual terrain. If somebody can make a bigger virtual building game that incorporates vr and social media functions, this would be taking minecraft to the next level and, of course, the 27 million attendee travis scott fortnite concert further exemplifies how eager consumers are to consume all types of virtual entertainment Online virtual worlds give people a way to escape from the monotony of their day-to-day lives in the metaverse. Anything is possible, it doesn't matter how much money you make or what walk of life you are from.

Anyone can be successful in the virtual world just a few years ago, most people viewed esports as a joke, but in 2020 the league of legends worlds event had 46 million concurrent viewers at the same time that nfl and nba viewership is steadily declining. The fact is, younger generations are increasingly attracted to online entertainment and are willing to try out new technologies. Any company that can create a compelling and engaging metaverse should have no trouble attracting tens or even hundreds of millions of users. Perhaps the biggest beneficiaries to the metaverse will be the game engines which power these online worlds.

This space is occupied by a duopoly of privately held unreal engine which powers fortnite and publicly traded unity which powers league of legends in facebook's, upcoming horizons, vr game. These companies could be as important to the metaverse as microsoft and apple were to personal computers. The other major beneficiaries will obviously be the metaverse platforms themselves. Currently, the biggest metaverse like platforms are fortnite, roblox and minecraft, but over time there will be many new entrants into the market.

One of the most interesting startups in this area is a company called manticore games, which creates the core metaverse platform. Core allows players to use portals to seamlessly shift between game worlds, similar to roblox. The worlds are all generated by independent creators who monetize through microtransactions. It runs on the unreal game engine and the graphics look very similar to fortnite core is still in its early stages and is a privately held company.

Silicon valley knows that the metaverse is the future and is pouring billions of dollars into an arms race to develop new platforms. If you believe that these platforms are the future, you should pay close attention to companies like manticore as they ipo over the coming years. Alright guys that wraps it up for this video, do you think the metaverse will be as revolutionary as the internet itself? Let us know in the comments section below also like this video, if you want us to make a new weekly video series where we go over the latest developments in the metaverse and which up and coming companies stand to benefit the most. As always.

Thank you. So much for watching and we'll see you in the next one wall, street millennial, signing out.