The last measure of progress towards simulated reality is the money people spent. Driven by globalization, liberalization and technological innovation, the global Gross Domestic Product also known as GDP grew from 84 trillion in 2009 to 142 trillion dollars in 2019 (69% growth). This astromonical figure is the accumulated value of all economic offerings of all countries and all sectors.
The internet sector accounted for $2,1 trillion in the US economy in 2018 or about 10% of the US GDP. Between 2007 and 2018 the US GDP grew by 41.8% from $14.5 trillion to $20.5 trillion. The Internet sector grew about 372 percent, from about $438.8 billion to about $2.1 trillion, so 9 times faster. This figure of $2.1 trillion is the direct impact (value added by Internet related activities) to the US economy. The impact is much higher if we look at the dynamic impact that the Internet may have on all industries and the rate of productivity growth. This is the contribution of the Internet to the net growth of the economy as measured by official statistics. Finally, we can consider indirect impact, as the consumer surplus and welfare gains generated by the Internet activities. Indirect impact is not captured by official statistics.
The growth and size of the internet sector shows we are both accelerating into an artificial reality and that this artificial reality increasingly shapes and impact reality as we know it. This trend is also reflected in the world’s most valued companies. In 2009, energy (oil & gas) companies dominated in top 10 of most valued companies. In 2019, the top 10 is dominated by tech companies and data has become the oil. In January 2020, Apple, Microsoft, Alphabet (parent company of Google), Amazon and Facebook make up the top 5 and had a valuation of over $5 trillion.
Let us revist the US digital screen study of 2018 but now look at the money spent in online retail, social media, gaming and streaming video and music.
Consumers worldwide spent nearly $3.46 trillion online in 2019, up from $2.93 trillion in 2018 (17.9% increase), according to the forecast from Internet Retailer. While the year-on-year growth in global web sales is slowing down, the global web sales are still growing faster than the more satured retail market (3.4%). Indirectly the Internet also contributed to the overall growth of the retail market. Many of the more successful retailers have integrated their online and offline stores to accomodate for changes in the way we shop.
The business model of social media platforms is built around advertising. If we look closer at advertisement spending on social media platforms, it is expect to grow from $105,9 billion in 2020 to a market value of $133,8 billion by 2024 (CAGR of 6,0%).
In 2018, the worldwide video games market was worth more than $130 billion . According to GlobalData the compound annual growth rate (CAGR) will be 13% between 2018 and 2025. As we saw earlier in the section on time spent, mobile platforms are leading ahead of the console and PC market.. The majority of online games are now shifting to the free-to-play model with the sale of in-game items. For example, out of Fortnite’s $2.4 billion revenue, one billion was generated through the sale of in-game items. The trend is towards subscription cloud services (e.g. Google Stadia and Microsoft xCloud) where players pay per use and do not require to have the latest hardware at home.
The global video streaming market size is expected to reach $184.3 billion by 2027 according to Grand View Research, a CAGR of 20.4% between 2020 and 2027. Netflix, Amazon, Google, Tencent are the leading players in 2020. Streaming services is not only large in TV movies and series but also accounts for nearly 80% of all music revenue in 2019.
If we sum up the numbers it becomes clear that spending in simulated reality with less than $4 trillion amounts to just 2,8% of the global GDP in 2019. We are still far away from an virtual economy where most money is created and spent in this new reality, but not everything is as it seems because most of the real economy can run through the artificial reality and more importantly, the way we live, play and work may see profound changes in the upcoming decades.
