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Going by the flurry of corporate announcements, conference presentations and articles in the business media, you would think companies were tripping over themselves to embrace the metaverse. But there’s a more accurate and data-driven way of scratching beneath the surface to assess whether organizations are thinking seriously about this or any business investment area: by deeply analyzing what a wide range of companies are saying in their earnings-call presentations.

As it turns out, fewer than three in 100 are talking about the metaverse to analysts and investors during these calls. This reality check reveals a widespread lack of planning and strategizing for this area—and that is a dangerous mistake.

Getting a read on how often and how much thousands of company leaders are discussing a topic with investors and analysts in their earnings calls provides a window into the extent to which executives believe it is impacting or will impact the business environment. It also reveals the extent to which they are preparing to address it or have already done so.

This is why we have created our engagement gauge and intensity of engagement index. Both tools apply text mining technology to identify terms associated with various business investment areas during earnings-call presentations. With the results of this analysis, we can gauge both the share of companies discussing a particular topic (in this case, the metaverse) and the depth of this engagement. (Click here for a full explanation of our methodology).

Metaverse engagement levels low but rising

As seen in our extent of engagement gauge, there’s been a marked increase in the overall share of businesses globally and across all industries discussing the metaverse, its applications and technologies in earnings-call presentations (see Figure 1).

Business extent of engagement gauge.

Share of companies with leaders mentioning metaverse-related terms in their earnings-call presentations.

Figure 1

Source: Cognizant Research calculations using AlphaSense data. Data reflects four-quarter running averages.

However, actual engagement remains at extremely low levels, with just over 2.5% of all companies studied mentioning metaverse-related terms in their earnings-call presentations in the average of the last four quarters.

There is, therefore, substantial room for further growth. Whether more companies will choose to discuss the metaverse in their earnings calls will probably depend on their ability to derive value from it.

While a likely economic downturn may well put companies in a more conservative stance when it comes to spending and more likely to focus on measures that preserve capital, profits and margins, we believe that investing in metaverse-based applications now could place them to be in pole-position when the economy picks up.

As discussed in our report “A pragmatist’s guide to the metaverse,” the technology for doing so is available, and early adopters, from banking to healthcare, are already exploring ways to generate value.

Intensity levels reflect a lack of plans

However, in our research, even those that have discussed the metaverse with investors have largely failed to move from signaling their awareness of its potential to being able to discuss specific plans for it.

This dynamic is seen in our intensity of engagement index. If businesses were at a point of presenting their plans, they would devote more time to the metaverse in their earning calls. Instead, in recent quarters we’ve seen a leveling off in our business metaverse engagement intensity index, which measures how often the terms associated with the topic are mentioned in these presentations. After a surge last year, enthusiasm has recently cooled.

Business intensity of engagement index.

Indexed average mentions of metaverse-related terms by engaged companies. (Engaged companies are those whose leaders mention at least one metaverse-related term in their earnings-call presentations.)

Figure 2

Source: Cognizant Research calculation using AlphaSense data. Data reflect four-quarter running averages. Average Q2 2019 – Q1 2020 = 100.

In fact, there’s a possibility that even the share of companies that mention the metaverse in their earning-call presentations may level off or even decline if they fail to translate their initial understanding into practical business applications. This would leave the percentage of listed companies that do not discuss the metaverse with their investors at over 95%.

Beyond metaverse hype

So, what’s next? Companies must get real about the metaverse. The sooner they overcome the hype and begin considering how the metaverse can improve their operations and engage with customers and employees, the better.

Until more companies understand that metaverse applications are not limited to token branding exercises, both the extent and the intensity of business engagement with it will remain at relatively low levels—and significant opportunities will be missed.

Get a full description of our methodology and how our engagement gauge and intensity index work.

This article was written by Eduardo Plastino, Director at Cognizant Research; Duncan Roberts, Senior Manager at Cognizant Research, and Rajeshwer Chigullapalli, Associate Director at Cognizant Research.