Metaverse
Vision Pro: a new ‘iPhone moment’?
With huge excitement around developments in AI and the launch of generative AI models such as ChatGPT, is the launch of Vision Pro an ‘iPhone moment’ for the Metaverse?
The pace of progress in AI continues to accelerate, with new AI solutions being built and deployed across all industries.
The biggest winners from this wave of innovation are likely to involve the creation of business models that haven’t yet been thought of.
Our Metaverse and AI portfolio is placed to take advantage of the AI revolution as well as some of the key trends we are seeing.
In February 2023 OpenAI’s blockbuster chatbot ChatGPT became the fastest app to reach 100 million monthly users.
This rapid emergence and acceptance of generative-AI apps like ChatGPT has been accelerating the development of the Metaverse.
The pace of progress hasn’t let up, with new AI solutions being built and deployed across all industries. Here we look at how some of the businesses in our Metaverse and AI portfolio are placed to take advantage of the AI revolution as well as some of the key trends we are seeing.
OpenAI’s ChatGPT has enjoyed first-mover advantage. The chatbot has become a leader in gen-AI chatbots, and performance has improved as its algorithms have been fed more data. Early adopters are benefiting too.
For example, Klarna, the Swedish based financial services company, has been using the app to automate its business. Klarna recently said that its new AI assistants “ are doing the equivalent work of 700 full time agents.” Their chatbots have handled more than 2.3m conversations, which could lead to a saving of $40m in costs in 2024.
Google has been slower to respond, but its market leading research and unmatched infrastructure leave it very well-placed for the AI era. The recently released Gemini models are multi-modal. This means they can reason seamlessly across text, images, audio, video and code, enabling entirely new and valuable use cases.
Adobe has recently introduced Firefly, its AI-powered image generation and expansion tool, into Creative Cloud, the software suite of choice for professional image and video editing.
The move has accelerated subscription growth for the app, with the company considering price increases for sections of its user base.
One of the risks we have identified for Adobe, is the potential for new video AI models like OpenAI’s Sora to reduce its monetisation potential in this area.
However, the current version of Sora is still not available for public use and creating videos from text prompts is only a small part of the creative process.
Creative Cloud covers pretty much the entire workflow, from feeding in raw video (or output from the likes of Sora) to format conversion, final editing and post-production.
The way Adobe continues to innovate is reflected in the huge support it gets from the community of professional creatives. The offer of copyright indemnification for Firefly users only further engenders that loyalty.
Either way, the emergence of tools such as Firefly, Sora or Dall-E is transforming the productivity of content creators. They will also make it faster and easier to create user generated content (UGC), an important element of virtual, persistent worlds.
Another great example of how AI is the key that can unlock the potential of the Metaverse.
Roblox continues to innovate, introducing features to make it easier for users to create new characters/experiences, and thereby sustain an engagement with the platform.
The company is introducing new AI technologies to reduce the time it takes to create avatars and 3D models. The latter enables creators to quickly change the look of 3D objects using plain language text prompts, such as asking the feature to generate a weathered look on the side of a house.
The company have also launched real-time AI chat translations, breaking down language barriers for its users across the globe. It has built a system capable of translating up to 16 languages including English, Chinese, Spanish and Korean in real-time.
Meta has been investing heavily in AI to help rebuild its advertising technology. Apple’s App Tracking Transparency (ATT) initiative had disrupted its access to users’ data and impaired its performance marketing capability.
Last year, Meta rolled out gen-AI tools for advertisers, with features that simplify and speed up the process of creating campaigns as well as predict the performance of ads.
According to Meta, ads utilising these AI tools have already seen an average increase of 32% in return on ad spending - while the cost of acquisition has been reduced by c. 17%. Nespresso increased Black Friday sales by 18% with AI-powered ad-optimisation.
With AI, as with the Metaverse more broadly, we are still early in the infrastructure build-out phase. However, as Jensen Huang (Nvidia’s CEO) has confirmed, corporates are rapidly looking to adopt and build their own AI solutions, at scale.
Data privacy and security are amongst the biggest areas of concern around the use of AI, and a reason why companies are treading cautiously, keen to keep control of their own data. It is also leading to greater demand for computing power and data centres at the edge of networks, rather than relying solely on hyperscalers and the public cloud.
AI is underpinning the next stage in the evolution of the internet, bringing together the digital and physical in an immersive experience. We remain alert to opportunities and the risk of disruption, but we're still at a very early stage.
The biggest winners from this wave of innovation are likely to involve the creation of business models that haven’t yet been thought of.
Of late, mega-cap US tech stocks have hogged much of the limelight. Google and Microsoft (through its OpenAI partnership) have invested heavily in the infrastructure needed to operate these models at massive scale and the tools to make the technology broadly accessible.
The Invesco Metaverse and AI Fund continues to have a tilt towards key AI enablers and early adapters, with plenty more examples of how these companies are driving change.
Shape the future. Invest in undervalued companies that help facilitate, create, or benefit from, immersive virtual worlds for both consumers and enterprises.
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Data as at 09/05/2024 unless stated otherwise. Views and opinions are based on current market conditions and are subject to change.
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