China's metaverse is on track to grow into more than a $50 billion market by 2025 but there’s also an increased prospect of the industry getting ensnared in the country’s regulatory dragnet.
What Happened: The boom is defined by the successes of applications like Jelly and Honnverse, according to a report by Nikkei Asia.
Honnverse allows people to purchase real estate on the Metaverse, while Jelly allows them to create 3D avatars and interact with friends.
Some of the properties on Honnverse were flipped for more than $15,000, Nikkei reported, citing local Chinese media.
Jelly, developed by Beijing-based news aggregator Yidian Shuyu, replaced Tencent Holdings Limited’s (OTC: TCEHY) WeChat as the top-ranked free iOS app in February, as per Nikkei.
ByteDance, the owner of the short-form video app TikTok, and Tencent are likely to become the first movers in China’s metaverse industry, according to Essence Securities, as per Nikkei. Notably, Tencent has a stake in Epic Games — the maker of “Fortnite.”
Tech and e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA) has also jumped into the metaverse fray.
The Jack Ma-founded conglomerate registered a new company called Yuanjing Shengsheng in Beijing to test the gaming potential of the metaverse.
Why It Matters: More than 16,000 applications for metaverse-related trademarks have been filed through February this year in China, reported Nikkei.
The Chinese metaverse market is reportedly expected to grow to at least RMB 340 billion or $53 billion by 2025, as per Everbright Securities.
The sector, however, is in the crosshairs of Chinese regulators. In February, the China Banking and Insurance Regulatory Commission issued a warning on illegal fundraising through the use of the term metaverse, reported Nikkei.
The Chinese agency also warned on speculative real estate investments — a likely reference to Honnverse.
Jelly’s developers removed the app for implementing large-scale upgrades, and the app has yet to make a comeback.
Concerns are mounting on crackdowns yet to come by the authorities, as per Nikkei. China doubled down on a ban on cryptocurrencies last year, which led to a major exodus of miners from the country.
