In the fast-paced realm of crypto, trends come and go with astonishing speed, and the digital landscape is constantly abuzz with new opportunities. One such phenomenon that emerged with great fanfare was the concept of the metaverse — an immersive virtual space where individuals interact, trade, and build their digital existence. Initially hailed as the future of online experiences, it now appears that the once-thriving hype surrounding the metaverse is dwindling.
In this article, we will examine the factors contributing to the decline of the metaverse hype and explore the potential reasons behind its diminishing appeal.
What is The Metaverse?
The concept of the “metaverse” traces its origins back to the pages of Neal Stephenson’s science fiction novel “Snow Crash” in 1992. In this visionary work, Stephenson depicts a future where individuals engage with each other through avatars in a three-dimensional space reminiscent of today’s internet. Remarkably, Stephenson’s portrayal of the metaverse remains somewhat close to its modern interpretation: a vast virtual world within the internet that offers immersive experiences facilitated by virtual reality devices and augmented reality headsets.
The modern-day vision of the metaverse refers to a virtual universe comprising interconnected digital worlds and experiences. It goes beyond traditional VR and AR technologies, offering immersive, shared environments where users can interact with each other and digital content. Enabled by technologies like blockchain, AI, and Web 3.0, the metaverse blurs the lines between physical and digital realities. It has the potential to revolutionize industries such as gaming, entertainment, and education, opening up new avenues for communication, creativity, and commerce.
As already mentioned, the metaverse is closely intertwined with the concept of Web 3.0, often referred to as the next phase in the evolution of the internet. Web 3.0 aims to create a decentralized and more equitable online environment characterized by open-source development and enhanced personal privacy. It is within this context that the metaverse finds its footing — a virtual realm where blockchain technology and cryptocurrencies form the backbone. Cryptocurrencies enable the seamless purchase and ownership of digital assets within the metaverse, while blockchain technology underpins the development of applications for activities such as shopping and gaming.
How Has the Recent Metaverse Hype Started?
Perhaps Decentraland, a virtual reality platform built on the Ethereum blockchain, is one of the most vivid examples of the metaverse known today. Decentraland was founded in 2015, and it was (and still is) one of the pioneers of the metaverse projects that interconnected cryptocurrencies, elements of Web 3.0 and Virtual Reality. It aims to create a decentralized virtual world where users can own, create, and monetize digital content and experiences.
According to CoinDesk, Decentraland’s market cap was equal to almost $10 billion at its peak in 2021. And yes, as you might’ve guessed, 2021 was the year when the metaverse hype began.
In recent years, several major technology companies have been actively involved in promoting and developing their own metaverses.
Facebook, now known as Meta, has been particularly influential in driving the current wave of metaverse hype. Mark Zuckerberg, the CEO of Meta, has been vocal about his vision for the metaverse and the company’s commitment to building it.
In October 2021, Mark Zuckerberg rebranded the company as Meta with the vision of bringing the metaverse to life. Meta pledged to invest over $10 billion into its metaverse project, known as “Horizon Worlds.” Alongside this announcement, Meta introduced the Presence Platform, enabling mixed reality experiences on its Oculus Quest 2 VR headsets, and allocated $150 million to support the growth of the next generation of creators.
Other companies, such as Epic Games, the creator of Fortnite, have also contributed to the metaverse hype. Epic Games has been actively investing in building a virtual platform and has emphasized the metaverse as a future direction for its products.
Brands like Nike and Burberry have ventured into third-party metaverses, launching NFT projects and digital goods. Some brands, including Walmart and Disney, have taken it a step further by announcing the creation of their own metaverse platforms.
Other brands have chosen to integrate with existing metaverses. Coca-Cola introduced NFT collectibles and its signature drinks in Decentraland, while Hyundai showcased its vision of how robots and flying cars can be brought to life in Roblox. Balenciaga made waves by entering the Fortnite game, offering virtual clothing and accessories alongside real-world merchandise.
These brand initiatives show how interest in leveraging metaverses for marketing and consumer engagement was buzzing in 2021 and the first half of 2022. By blending virtual and physical experiences, brands hoped to extend their reach, foster loyalty, and create immersive connections with their target audience.
It seemed like in a very short period of time we would all be living in metaverses, and our “old-fashioned” way of life is done once and for all. But something went off.
Is the Metaverse Hype Dead Now?
By the end of 2022, it started to look like the once-sky-high hype surrounding the metaverse had begun to fade, revealing the challenges and uncertainties that accompanied this ambitious concept.
In October 2022, it was revealed that Decentraland, the most well-funded and well-known decentralized, crypto-based Metaverse product, only had around 38 daily active users in its “$1.3 billion ecosystem.” By that time, it was also found out that Meta’s ambitious plans were also falling apart. In internal memos, obtained by The Wall Street Journal, it was revealed that Horizon Worlds has faced challenges. Originally aiming to acquire 500,000 users by the end of 2022, Meta fell short with a total user count of under 200,000. As a result, Meta revised its year-end user goal to 280,000, indicating the need for a revised approach to attract users. By the end of 2022, Meta will have already spent more than $36 billion on its metaverse project. However, Horizon Worlds was so bad and buggy that even Meta’s employees didn’t want to use it.
Seeing all that, Microsoft decided not to push their luck and closed their mixed-reality project known as AltSpaceVR in January 2023, which resulted in laying off 100 employees who were assigned to that project. Moreover, Microsoft decided to pull resources from their whole mixed-reality division in order to focus on other projects.
At the end of March, 2023, it was revealed that Disney, once enthusiastic about the metaverse’s potential, also decided to wind down its metaverse operations, as did Walmart.
Thousands of people lost their jobs due to this swift change in corporate sentiment.
The metaverse, once touted as the future of human interaction and a revolutionary concept, is now facing skepticism and dwindling investor interest.
However, horrible implementation and a lack of common users’ interest were not the only reasons for the metaverse hype withering. Another key reason lies in the rapid rise of generative AI.
While AI has shown tangible benefits and immediate financial prospects (e.g, think of the ChatPGT success alone), the metaverse still remains a concept that has yet to reach critical mass and demonstrate clear profitability, which it struggles with. Investors are drawn to the promising and practical applications of AI, leaving the metaverse to appear as a potential but uncertain avenue for future returns. Even Meta has stopped pitching advertisers in its Metaverse, and after spending dozens of billions of dollars, Zuckerberg decided to focus on AI products and Meta’s short-form video product, Reels.
The recent actions of industry giants highlight this shift in sentiment. So what do experts think about the metaverse’s hype withering?
Harman Singh, Director at the cybersecurity services company Cyphere, believes that “The initial hype around the metaverse concept is fading due to various factors, including the lack of clear definition and understanding of what the metaverse is and how it will work. Additionally, the hype around virtual reality and augmented reality has dwindled due to the high cost of entry and lack of practical applications in everyday life.”
Sudhir Khatwani, founder of a fintech media company The Money Mongers, also thinks that “The craze and hype around Metaverse are definitely dying out. The whole metaverse thing was mostly hyped by tech companies. We have seen Facebook changing its name to Meta, Microsoft’s push into the metaverse world, and so on. But since ChatGPT launched, Big Tech companies seem more interested in launching their AI tools than working on the metaverse.”
However, maybe we are just not prepared for the metaverse yet?
Misha Anwar, research partner and marketing analyst at CureMD, thinks that way. In his opinion, there are several reasons for metaverse hype withering: “Firstly, there were unrealistic expectations surrounding the metaverse, with some portraying it as a complete replacement for the physical world. As people grasp the challenges and limitations associated with building a fully realized metaverse, the initial hype diminishes.
Additionally, the lack of tangible applications showcasing the metaverse practical benefits has also played a role. While the metaverse holds immense potential, the absence of compelling use cases beyond gaming and entertainment may have caused people to lose interest.
Technical and infrastructure challenges present another hurdle, as creating a seamless and interconnected metaverse involves overcoming complex technological requirements.”
At a first glance, it might seem like we should stop trying and let the concept of metaverse go, since apparently there is no way to revive the interest for it and make it work properly. Or maybe there is a way?
Is There Any Hope Left For the Metaverse?
As the initial wave of metaverse hype gradually recedes, it is natural to question whether this concept still holds promise or if it will fade into obscurity. However, amidst the flow of skepticism, there persists a glimmer of hope — a belief that the metaverse may yet fulfill its true potential. Let’s see what experts think about perspectives on the future of the metaverse.
Rahul Vij, CEO of a digital marketing agency WebSpero Solutions, believes that “The idea of a shared, immersive digital space has immense potential for entertainment, education, commerce, and social interaction. However, for the metaverse to regain momentum and attract renewed interest, certain key factors need to be addressed.
Firstly, technological advancements are vital. We need more robust and scalable infrastructure, better user interfaces, and seamless interoperability across platforms. Secondly, clear monetization strategies are essential. Companies and content creators must identify sustainable revenue streams within the metaverse ecosystem. This could involve virtual goods, digital advertising, subscription models, or innovative partnerships with real-world brands. By addressing these factors, the metaverse concept can continue to evolve and thrive, offering exciting opportunities for businesses and users alike.”
Adam Garcia, CEO of The Stock Dork, also thinks that we will witness the rebirth of the metaverse trend in the future, however some issues must be dealt with first: “Technological advancements and innovations are crucial. As VR, AR, and related technologies continue to improve, they offer more immersive experiences, better connectivity, and accessibility, making the metaverse more attractive. Advancements in graphics, haptics, natural language processing, and artificial intelligence can significantly enhance the metaverse’s capabilities and user experience.
It is vital to address concerns about privacy, security, and ethics when it comes to the metaverse.
Inclusivity and accessibility should be a top priority to avoid worsening societal inequalities.
It’s important to showcase the tangible benefits and unique experiences the metaverse can offer through effective storytelling, content creation, and compelling use cases. Demonstrating how the metaverse can enhance entertainment, education, collaboration, business, and social interactions will help shift the narrative from hype to practicality and attract renewed interest.”
Final Thoughts. Long Live the Metaverse?
Despite the massive investments and resources poured into metaverse projects, user adoption remains disappointingly low. The metaverse, as a concept, failed to deliver on its grand promises of seamless virtual worlds and immersive experiences. The technical limitations, cumbersome hardware requirements, and lack of compelling use cases have hindered its widespread appeal.
As the metaverse hype fades, the tech industry and investors must reflect on the lessons learned. The overzealous rush to embrace the metaverse, driven by ambitious projections and vague promises, has led to significant financial losses and job cuts. The focus on AI, with its tangible applications and immediate value, serves as a stark reminder of the importance of grounded innovation and realistic expectations.While the metaverse may continue to exist in some form right now, it is clear that the initial frenzy surrounding it was overblown. The downfall of metaverse hype is a reminder of the need for caution, critical analysis, and a more measured approach when embracing emerging technologies. The tech industry must learn from this historic failure and channel its efforts into areas that offer concrete value and a clearer path to success.
And when most of the modern-day issues are resolved, we can expect the metaverse hype train to gain momentum once again, but not before.
FAQ
Is the hype around the metaverse dying?
While the initial hype around the metaverse has cooled down, this does not mean that the concept is no longer relevant or promising. The metaverse continues to evolve and capture the attention of various industries, with ongoing developments and investments in virtual reality, augmented reality, blockchain, and other technologies.
What does the cooling hype mean for the metaverse?
The cooling hype signifies a shift from unrealistic expectations to a more grounded understanding of the challenges and complexities involved in building a fully functional metaverse. It prompts a focus on addressing issues such as interoperability, scalability, privacy, and user experience. It also allows for a more measured and thoughtful approach to the development and adoption of metaverse-related technologies and platforms.