UAE Metaverse Market Research Report: Forecast (2023-2028)

Market Definition

A collective virtual shared space created by the fusion of physical & virtual reality, where users can interact with each other & with virtual objects in a three-dimensional environment, is referred to as the metaverse. It includes tools, platforms, and systems technologies that allow for the creation, simulation, and integration of a fully immersive & interactive virtual world. The concept of the metaverse is still evolving, but it has significant implications for a wide range of industries & has the potential to transform the way we live, work, and interact with each other.

Market Insights & Analysis: The UAE Metaverse Market (2023-28)

The UAE Metaverse market is projected to grow at a CAGR of around 28% during the forecast period, i.e., 2023-28. There is a vibrant gaming culture in the UAE, which has the highest number of adult gamers in the world, which contributes to the market expansion. The gaming industry has a large & growing audience who are interested in immersive, interactive experiences that allow them to connect with others & explore new virtual environments. The growth of the gaming industry in the country has led to the development of new technologies & platforms that support the metaverse ecosystem.

Furthermore, in 2022 Abu Dhabi government launched the AD Gaming platform for transforming the emirate into a global hub for gaming & e-sports. Similarly, in 2022, the Dubai government conducted Dubai E-sports Festival, which brought together gamers, industry professionals, and fans to celebrate the latest trends & advancements in gaming. Owing to this, the surging popularity of e-sports due to these technologies, including virtual & augmented reality, immersive audio, and social interaction platforms, is expected to grow during the forecast period. 

Moreover, the COVID-19 pandemic compelled individuals to stay at home & limit their physical interactions, which hastened the move towards virtual experiences, as a result, the demand for virtual platforms rose. In addition, the UAE has a large & growing population of tech-savvy young people eager to explore new technologies. Furthermore, the country has a supportive regulatory framework for startups & newly emerging technologies, providing opportunities for metaverse-related startups to develop new platforms & technologies. As a result, the market's growth would be supported by the country's strong digital infrastructure & the government's interest in virtual ecosystems.

Market Dynamics

Key Driver: Government Strategy to Make the UAE Global Hub for the Metaverse to Support the Market

The UAE's vision of becoming a global hub for the metaverse community and one of the world's top metaverse economies contribute to the market's growth. Initiatives like Dubai 10X 2.0, launched at the World Government Summit 2018, provide support & funding to innovative startups & companies, enabling them to develop new solutions & services using metaverse technology. The launch of the national Artificial Intelligence (AI) program BRAIN (Building a Responsive Artificial Intelligence Nation) in late 2017, which highlighted advancements in AI & Robotics, has also significantly supported sales growth during 2018-22.

AI and robotics are closely related to the metaverse as they offer the technological infrastructure for the creation & simulation of virtual environments. Moreover, government support for AI & robotics has attracted talented professionals & entrepreneurs to the country, who have helped foster the growth of the country's market. Furthermore, the government's National Artificial Intelligence Strategy 2031 aims at positioning the UAE as a global leader in artificial intelligence by 2031, contributing in enhancing the market size during the forecast period.

Possible Restraint: Challenges Arising from Threats associated with Cyber Attacks

The potential threats from phishing, malware, viruses, virtual asset thefts, DDoS attacks, etc., are considerably high in a virtual ecosystem. In the technological universe, malware & viruses can be used to gain unauthorized access to a user's device, steal sensitive information, or disrupt the experience. Similarly, distributed denial of service (DDoS) attacks can flood a metaverse platform with traffic that can cause it to slow down or crash & disrupt the user experience or even make the platform inaccessible. These threats & attacks could lead to a loss of user confidence, ultimately hampering its reputation & market growth.

Growth Opportunity: Dubai’s Metaverse Strategy to Open New Doors

The Dubai government’s Metaverse Strategy, launched in 2022, aims to attract more than 1,000 companies in the fields of blockchain & metaverse & to generate more than 40,000 virtual jobs by 2030. In line with this policy, the government would provide the necessary support to developers, content creators, and users of digital platforms in the metaverse community. Thus, this strategy would create a favorable environment for innovation & investment, which would provide new opportunities for the market players to grow & expand in the country during the forecast period.

Key Trend: Surging Use of Non-Fungible Tokens (NFTs) Waving New Tides

The use of NFTs is a relatively new trend in the metaverse world, but they are gaining momentum as investors & developers have recognized the potentiality of monetization through them. The UAE is becoming a global hub in the field of NFTs due to a surge in their buying, selling, and creation of them. They are now increasingly used to establish ownership, monetize digital creations, and enable interoperability in the technological ecosystem.

Furthermore, the year 2022 has witnessed the emergence of several NFT marketplaces in the country due to the entrance of startups, cryptocurrency exchanges, etc. Thus, this market is currently undergoing considerable investment growth, which is projected to persist as they become more widely used in applications ranging from virtual real estate to unique virtual assets.               

Market Segmentation

Based on Component:

• Hardware
  • Displays
  • Extended Reality (XR) Hardware
• Software
  • Asset Creation Tool
  • Programming Engines
  • Others (Virtual Platforms, Avatar Development)
• Services

Among them, Extended Reality Hardware has showcased considerable growth during the historical period due to its significant use in areas like gaming & entertainment, education & training, and business applications. The country has a well-established gaming industry, owing to which virtual reality (VR), augmented reality (AR), and mixed reality (MR) devices have exhibited high sales.

Businesses in the country have also adopted VR & AR technology for a variety of purposes, such as virtual training, product demonstrations, and marketing which supported the sales of these devices in the country. The UAE government is actively investing in AR & VR technology, especially in sectors such as healthcare, education, and retail. This thereon would boost the demand for these devices from these sectors during the forecast period.

Based on Technology:

• Augmented Reality (AR)
• Virtual Reality (VR)
• Mixed Reality (MR)
• Blockchain

Of them all, Blockchain technology has showcased significant growth due to support from various government strategies like Emirates Blockchain Strategy 2021, Dubai Blockchain Strategy, etc. Owing to this, in 2021, Dubai became home to more than 100 blockchain businesses & also witnessed a 24% spike in the use of blockchain compared to the global average of 19%.

Moreover, the establishment of the Global Blockchain Council by Dubai Future Foundation in 2017, which encouraged transactions through this platform, has also played a significant role in the increased adoption of this technology in the country.               

Regulatory Landscape in the UAE Metaverse Market

In 2022, the Emirate of Dubai enacted Law No. 4, which created the Virtual Assets Regulatory Authority (VARA). The role of VARA is to oversee & regulate all aspects of the virtual assets industry in Dubai, including those within special development zones & free zones, but not including the Dubai International Financial Centre (DIFC). Furthermore, in 2023, Virtual Assets Regulatory Authority (VARA) also released a set of regulations called the Virtual Assets and Related Activities Regulations 2023 (the "Regulations"). These apply to all providers of virtual asset services. The new regulations aim at enhancing investor confidence & promoting market growth in the virtual asset sector. These new regulations include:

• Seven licensed virtual asset activities are covered under the Regulations released by the Virtual Assets Regulatory Authority (VARA). These activities include advisory services, broker-dealer services, custody services, exchange services, lending and borrowing services, payments and remittance services, as well as virtual assets management and investment services.
• As per the new regulations, in Dubai, all Virtual Asset Service Providers (VASPs) are required to obtain a license from the Virtual Assets Regulatory Authority (VARA), and to obtain a license from VARA, VASPs must satisfy various requirements.
• Moreover, according to new regulations, the creation of anonymity-enhanced cryptocurrencies and any virtual asset activities associated with them are not allowed in Dubai.

Recent Developments in the Global Market

• 2022: The Sandbox during the 62nd edition of the ‘True Global Ventures Conference’ announced to develop Metaverse City in Dubai named ‘Dubaiverse’. Local partnerships, involving companies in various industries such as film, music, entertainment, acting, finance, real estate, and gaming, would be utilized to construct Dubaiverse.

Gain a Competitive Edge with Our UAE Metaverse Market Report

1. The UAE Metaverse Market Report by Markntel Advisors provides a detailed & thorough analysis of market size & share, growth rate, competitive landscape, and key players. This comprehensive analysis helps businesses gain a holistic understanding of the market dynamics & make informed decisions.
2. This report also highlights current market trends & future projections, allowing businesses to identify emerging opportunities & potential challenges. By understanding market forecasts, companies can align their strategies & stay ahead of the competition.
3. The UAE Metaverse Market Report aids in assessing & mitigating risks associated with entering or operating in the market. By understanding market dynamics, regulatory frameworks, and potential challenges, businesses can develop strategies to minimize risks & optimize their operations.