Metaverse could drive up profits — but most businesses may not be ready to invest yet
70% of companies are investing less than 5% of their technology budgets in 2023 into metaverse, while 27% have not invested into metaverse at all, a KPMG report showed.
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The metaverse has a great potential to drive up business profits but there’s a lack of proven success for companies to pour big money into it now, showed a survey by KPMG.
“For [tech, media and telecom] companies, this poses the classic investment dilemma: where and how much to invest, to avoid being blindsided by a metaverse pioneer, but also to help minimize the chance of ploughing funds into projects that become redundant,” said Mark Gibson, TMT leader for KPMG U.S., in the report.
The metaverse refers broadly to the concept of a digital world where people live, work and play, and interact with one another as avatars through virtual reality platforms.
The KPMG survey showed that 60% of TMT executives think metaverse can drive revenue and profits and lower operating expenses as transactions shift from physical to virtual. They believe it can also improve customer satisfaction through interactive experiences, the survey showed.
But a similar proportion acknowledged that, despite the metaverse’s potential, it still needs further refinement and development, said KPMG.
“The majority of TMT executives taking part in our survey feel that the metaverse is several years from becoming a thriving commercial ecosystem,” said the report.
Most of the global companies polled — or 70% — are investing less than 5% of their technology budgets in 2023 into the metaverse, and 27% have not allocated any funds to metaverse.
The report took into account responses from 767 tech, media, and telecom executives at companies that earn more than $250 million revenue annually. The firms were from 13 different countries and five continents.
Yet to see success
Many in the tech, media and telecom sector want to see evidence of greater metaverse usage before making significant investments, the KPMG report said.
According to 40% of respondents surveyed, there is a lack of successful use cases to show a return on investment for the metaverse.
TMT executives surveyed remained skeptical about the viability of metaverse, with 27% saying it is “an unattainable pipe dream” and 20% describing it as “a fad that will never live up to its hype.”
Close to 50% of the respondents revealed their companies are either “watching and waiting” or assessing long-term business value before making major investments, said the report.
In fact, Meta executives have previously admitted that “many products for the metaverse may only be fully realized in the next 10 to 15 years.”
Meanwhile, Disney reportedly cut its metaverse division as part of layoffs announced last week. The company had never explicitly outlined its metaverse plans.
“Suffice it to say our efforts to date are merely a prologue to a time when we’ll be able to connect the physical and digital worlds even more closely, allowing for storytelling without boundaries in our own Disney metaverse,” Disney’s former CEO Bob Chapek said during its 2021 earnings call.
Not ready
Many of KPMG’s survey respondents say their companies are underprepared for the metaverse.
“The biggest barriers to investing in and embracing the metaverse are lack of technology to support experiences, high cost of development, and a dearth of appropriate employee skills,” said KPMG.
About half the respondents said there is lack of proper technology to support the metaverse, while 50% said the high cost to develop metaverse is preventing their companies from fully investing in and embracing a strategy.
Less than half, or 49%, noted that their companies lack employee skills to run the metaverse.
“There’s also a high potential upside in terms of ROI on outcomes such as higher employee retention — which has become a critical strategic objective for many companies — and other similar enterprise applications,” the KPMG report said.
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CyberArk’s stock jumps on report Palo Alto Networks in talks to buy company for over $20 billion
Nikesh Arora, CEO of Palo Alto Networks, looks on during the closing bell at the Nasdaq Market in New York City, U.S., March 25, 2025.
Jeenah Moon | Reuters
CyberArk shares soared as much as 18% on Tuesday after The Wall Street Journal reported that cybersecurity provider Palo Alto Networks has held discussions to buy the identity management software maker for over $20 billion.
Cloud security is becoming an increasingly critical piece of the enterprise tech stack, especially as rapid advancements in artificial intelligence bring with them a whole new set of threats, and as ransomware attacks become more commonplace.
Founded in 2005, Palo Alto Networks has emerged in recent years as a consolidator in the cybersecurity industry and has grown into the biggest player in the space by market cap, with a valuation of over $130 billion. CEO Nikesh Arora, who was appointed to the job in 2018, has been on a spending spree, snapping up Protect AI in a deal that closed in July, and in 2023 buying Talon Cyber Security, Dig Security and Zycada Networks.
But CyberArk would represent by far Arora’s biggest bet yet. The Israeli company, which went public in 2014, provides technology that helps companies streamline the process of logging on to applications for employees.
CyberArk faces competition from Microsoft, Okta and IBM‘s HashiCorp. Another rival, SailPoint, returned to the public markets in February.
With Tuesday’s rally, CyberArk shares climbed to a record, surpassing their prior all-time high reached in February. The stock is up 29% this year, pushing the company’s market cap to almost $21 billion, after jumping 52% in 2024. Palo Alto shares, meanwhile, slid 3.5% on the report and are now up about 9% for the year.
Representatives from Palo Alto Networks and CyberArk declined to comment.
During the first quarter, CyberArk generated around $11.5 million in net income on around $318 million in revenue, which was up 43% from a year earlier.
It’s been an active stretch for big deals in the cyber market. Google said in March that it was spending $32 billion on Wiz, its largest acquisition on record by far, and a purchase intended to bolster its cloud business with greater AI security technology.
Networking giant Cisco also made its biggest deal ever in the security space, buying Splunk in 2023 for $28 billion. Splunk’s technology helps businesses monitor and analyze their data to minimize the risk of hacks and resolve technical issues faster.
— CNBC’s Ari Levy contributed to this report
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