Meh-taverse: has industry lost interest in the virtual world?

CEO Mark Zuckerberg once touted the Metaverse as being the future of his company. Yet he’s since laid-off 11,000 staff, and when outlining the company’s next steps in March, said the company’s "single largest investment is advancing AI and building it into every one of our products." 

But is this perceived pivot prompted by Zuckerberg trying to take the reigns of runaway costs the project has been hit with? Or is it a reaction to wider industry losing interest in the sphere?

Metaverse history 

The term itself goes back to the 90s, but its use as an interactive platform is more recent. Currently, there are two main platforms: Decentraland, a browser-based platform that runs off of the Blockchain debuted in 2020, and Zuckerberg’s eponymous Meta. The company’s name change from Facebook to Meta in 2021 reflected his changing focus to the new platform in the beliefs that the Metaverse would be ‘the future of the internet’.

Decentraland is governance free, directly opposite to Meta’s which will be managed by the company centrally, and although other companies like Microsoft, and Epic Games worked on their own versions of the virtual world, they are/were less developed than those two. Yet, despite Meta’s massive $36 billion and counting investment into its virtual world, Decentraland is the only major Metaverse up and running in ‘full’ form. Being the premiere has thus seen the platform gain interest from major companies, with Samsung having ‘property’ within the platform, singer and ex of Elon Musk, Grimes, having performed a virtual concert there, and Barbados opening an embassy there.

So with all these steps forward into the new sphere, why is industry seemingly deciding to take a step back?

Issues in the Metaverse

Most new technology has a teething stage where it slowly builds a userbase (minus ChatGPT), but for a platform that is meant to be revolutionary, it sure hasn’t seemed like it. Despite much buzz and investment into the idea, Decentraland said by their own metrics the platform was used by an average of 8,000 people per day in 2022. To put that in perspective, a 2009-released PC game Left 4 Dead 2, had 18,000 active users playing the game at one point during the same month. More stark estimations put the number of ‘daily active users' in the $1.3 billion platform at 38.

Additionally, when Samsung tried to host a launch event for its new Galaxy smartphones in a Metaverse replica of its New York experience centre, users struggled to gain access as they encountered technical difficulties. 

Low user numbers, reports of an empty and glitchy world plus the reported cost of real estate in Decentraland being sold for $2.89 million, may be having companies examine their ROI for their presence in the platform.

The future of the Metaverse

Economic headwinds have hit companies hard: Mark Zuckerberg has stated Meta will begin refocusing on its core offerings like its family of apps in likely efforts to balance revenue as its VR division Reality Labs posted a $3.99 billion loss in the first quarter of 2023.

Yet for some, issues of constricted cash flow, lack of Metaverse adoption on Decentraland and Meta’s prototype Horizon Worlds, and now a potential slowdown in its development from one of the main companies spearheading it, may have proved too much. 

Disney last month announced the closure of its entire Metaverse department, Microsoft shut down its AltspaceVR in March this year and the median price per square meter in Decentraland dropped from about $45 a year ago to roughly $5 now.

Equally, the new buzzword that seems to have taken the Metaverse out of the limelight is ChatGPT and AI. Microsoft’s laying off of 100 team members in its metaverse division coincided closely with its announcing of a $10 billion investment in OpenAI. 

But even one company can push through something revolutionary if it has the vision and will - think Apple’s first iPhone making touchscreen phones the norm. But if the company that changed its whole branding to usher in the Metaverse, is now shifting focus to AI and has even reportedly stopped pitching the Metaverse to advertisers, how can industry be expected to remain engaged?