South Korea is leading the innovation in the global metaverse industry

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Even though the metaverse has struggled to gain widespread adoption among consumers, it remains a lucrative growth industry for government authorities and private organizations. With billions of dollars being invested into the development of metaverse infrastructure, many nations around the world are banking on the future growth potential of the metaverse market. Leading the innovation in the sector, South Korea has emerged as one of the most prominent hubs for the metaverse industry globally.

In 2022, many of the leading corporations in the country announced various metaverse projects, while the national government also earmarked US$177.1 million for the development of the sector. With the rising interest from the public and private entities in the development of the metaverse, South Korea is leading the innovation in the global metaverse industry. For instance,

• After the United States, South Korea has filled the highest number of patent applications related to the metaverse, according to a report from Nikkei Asia. Since 2016, South Korea filed 19% of the total patent applications. LG Electronics is leading the metaverse industry innovation in South Korea and has filed the highest number of patents since 2016.

Among the other private institutions that are leading the market growth in South Korea include Naver Z and SK Telecom. Both firms are expanding the reach of their metaverse platforms by launching the services in the global markets. For instance,

• In November 2022, SK Telecom, the leading telecommunications firm in South Korea, announced that it is launching Ifland metaverse in 49 countries globally. In collaboration with various global partners, the firm is seeking to turn Ifland into a global social metaverse.
• In November 2022, the firm also entered into a strategic collaboration with NTT DoCoMo in Japan, to produce metaverse content, technology, and services for their respective metaverse platform. At the end of Q3 2022, Ifland had a total of 12.8 million users.
• Naver Z, the operator of the South Korea-based Zepeto metaverse platform, has over 300 million downloads globally. In Thailand, the firm entered into a strategic collaboration with True Corporations, a telecommunications and digital service provider, to drive the metaverse ecosystem in the country.

In South Korea, even retailers are foraying into the metaverse market amid the rising interest in the space. These retailers, in partnership with the metaverse platforms, are further driving innovation in the sector. For instance,

• In November 2022, Korea Seven, the South Korean operator of the global convenience store franchise 7-Eleven, announced that the firm had launched a virtual store where consumers can attend virtual concerts and events. Notably, the firm launched the virtual store in partnership with Ifland, the metaverse platform created by SK Telecom. The two firms recreated food products such as ramen noodles and beer into chairs, thereby allowing the consumers to sit and consume various content inside the virtual store.

The metaverse startup ecosystem is also growing in South Korea, as the country sees the market as a multi-billion growth opportunity. With their innovative projects, these startups are raking in millions of dollars in investment to further drive product development and innovation. For instance,

• In July 2022, Anipen, the South Korean metaverse startup, announced that the firm had raised US$8.3 million in a Series C funding round. Notably, the investment was led by Medici Investment, Korea Development Bank, and Ulmus Investment. The firm is planning to use the capital for expanding its metaverse content services, while also strengthening its position in the global markets through collaborations. Anipen also plans to launch a public offering in 2023.

Amid the growing innovation and competitive landscape in the South Korean metaverse industry, authorities are also planning to regulate the industry for protecting consumer rights in the metaverse. For instance,

• In September 2022, the Ministry of Science and ICT announced new regulations governing the metaverse market in the country. Notably, the Ministry of Science and ICT announced that the government will not impose traditional video gaming laws on the metaverse.  Consequently, the new regulations are expected to encourage and drive widespread adoption of the metaverse in South Korea over the next three to four years.

The favorable regulatory environment, along with the increasing investment from the South Korean government, will further support the growth of the metaverse market in South Korea from the short to medium-term perspective. Notably, the innovation in the South Korean metaverse industry is also expected to serve as the blueprint for other nations who are seeking to leverage the growing opportunity presented by the market.