Zepeto accelerates global expansion plan to compete with big tech giants in the metaverse sector

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The metaverse industry is gaining rapid momentum as emerging technology continues to attract consumers and investors around the world. In the United States, several leading firms across industry verticals are investing billions of dollars in the development of the metaverse. From Meta Platforms (formerly known as Facebook) to Roblox, the online gaming platform, the metaverse continues to attract more and more players in the United States. To compete with these global giants, the South Korean metaverse platform Zepeto, which is also the largest in the Asian region, has stepped up to accelerate its global expansion plan. For instance,

• Zepeto, an avatar-centric social network, is currently working on the Arab and Turkish language versions of its platforms, as part of the firm’s strategy to make a bigger push in the Middle East markets. The metaverse platform is also widely popular in South Korea, Japan, and China. In Asia, the firm has about 15 to 20 million users, most of which are from South Korea, Japan, and China. The platform is also having a strong foothold in Brazil.

Since its inception in 2018, and owned by South Korean tech giant Naver, the firm has attracted 340 million users. However, most of its users are young generation consumers, especially females. In South Korea, China, and Japan, where the firm has about 15 to 20 million users, 70% are female, most of which are aged 13 to 21.

One of the leading factors that have allowed the firm to record strong growth in South Korea is its partnership with K-pop companies. This along with a favorable environment and support from the government is driving industry growth in South Korea. For instance,

• In 2021, the South Korean government announced the Metaverse Alliance of over 200 firms and institutions. In 2022, the government has earmarked US$8 billion from its budget for digital transformation.

From the short to medium-term perspective, the firm is aiming to expand its geographical presence in the North American and European regions. In France, the platform is already achieving strong growth and aims to replicate its success across Europe. While Zepeto is the leading metaverse platform in the Asia-Pacific region, the firm still has a long way to catch up with its United States-based rival, Roblox. Notably, the 200 million strongly monthly user base of Roblox means that the US-based firm is leading the charge in the global metaverse sector. Furthermore, compared to Zepeto, which is valued at US$1 billion, Roblox is valued at US$50 billion.

Zepeto earns revenue by monetizing its user base. It offers them the ability to customize their avatars. Furthermore, they can also design and trade millions of items on the social network platform. From clothing to accessories and hairstyles, users can trade several different items. Appliances and furnishings are among the other things that can be traded on the Zepeto metaverse marketplace.

Over the last few years, the firm had also forged strategic alliances with leading brands in the athletic and luxury category. These brands include Ralph Lauren, Adidas, Nike, Gucci, and Bulgari. Users can also drive Hyundai cars on the metaverse platform using their avatars.

While the firm is recording strong growth in the region, its popularity is largely driven by young generation consumers, thereby citing concerns about the sustainability of its popularity. Notably, the enthusiasm of teenagers is short-lived. Furthermore, they do not have the same purchasing power as that of the millennials and other demographic consumers. Consequently, TechInsight360 believes that the firm needs to expand its user base beyond teenagers to drive more sustainable and long-term growth.