A dead ‘metaverse’? Even AI went through winters of pessimism too
The metaverse dream hasn’t quite been fulfilled, with several voices declaring its obituary. But believers still abound, proclaiming a coming revival (powered by AI).
“Wait, was it ever alive?” That was Michael Meiss’ response to me in a LinkedIn poll that questioned if the metaverse was really dead four months ago. Meiss, information security leader and founder at Kelevra, went on to say he “never met anyone who was excited about the metaverse or had a real-world problem it would solve outside of billionaire row,” and that it “reminded me [him] a lot of the early blockchain hype.” There are many who share Meiss’ sentiment.
For example, this article on Business Insider describes the metaverse as “the latest fad to join the tech graveyard”— a most brutal description for a concept that has pulled over $177 billion in investment since the start of 2021, according to global research firm McKinsey. John Naughton, professor of the public understanding of technology at the Open University and columnist for The Observer, wrote an article that can best be described as a scathing satire of the metaverse’s demise.
For context, Naughton’s article began like this: “Dearly beloved, we are gathered here today to remember the metaverse, which was quietly laid to rest a few weeks ago by its grieving adoptive parent, one Mark Zuckerberg.”
If you are asking “Where is the metaverse now?,” you are not alone. I have followed and written copiously about the promise of this new immersive world since Meta (formerly Facebook) CEO Mark Zuckerberg popularized the metaverse concept with his rebranding announcement in October 2021.
In fact, I wrote that the metaverse will be buzzing in 2022— and it did. But just like you, I, too, am curious about the metaverse. Has it truly fizzled into Death Valley, as many futurists and tech enthusiasts claim?
To answer that question, we have to quickly go back 30 years in time.
In the beginning was a novel…
It’s the first day of June 1992, and just as summer’s warmth starts to course through winter’s chill, someone, somewhere in the United States publishes a science fiction novel about an immersive virtual world. His name? Neal Stephenson; the man who coined and first used the word ‘metaverse’ in his science fiction novel Snow Crash.
Metaverse was a word Stephenson used to portray a virtual realm where users could interact with each other and digital objects in a shared online space.
Going further back in time, one would quickly realize the metaverse concept actually has roots dating back to the 1950s. The first real attempt at simulating virtual reality (VR) came in 1962 with “Sensorama,” a machine that provided the experience of riding a motorbike through New York City using a 3D movie, a vibrating chair, fans, and even smell.
“Hiro’s view of Reality. By drawing a slightly different image in front of each eye, the image can be made three-dimensional. By changing the image seventy-two times a second, it can be made to move. By drawing the moving three-dimensional image at a resolution of 2K pixels on a side, it can be as sharp as the eye can perceive, and by pumping stereo digital sound through the little earphones, the moving 3-D pictures can have a perfectly realistic soundtrack. So Hiro’s not actually here at all. He’s in a computer-generated universe that his computer is drawing onto his goggles and pumping into his earphones. In the lingo, this imaginary place is known as the Metaverse. Hiro spends a lot of time in the Metaverse.”
― Neal Stephenson, Snow Crash
What Zuckerberg latched onto in 2021 was essentially the dream of a world more interconnected than it currently is. By merging virtual and physical experiences in a way we have never seen, Zuckerberg said “Meta will bring the metaverse to life and help people connect, find communities, and grow businesses.” This appealed to gamers, technophiles, investors, and early adopters of emerging technologies, who saw the metaverse as a step towards an augmented reality (AR) future.
Facebook’s rebranding to Meta was a show of its commitment to championing this new world of possibilities in the metaverse. As the concept gained traction, it was seen as the next frontier of the internet, with opportunities for social interactions, gaming, virtual commerce, and more.
However, despite the initial hype surrounding the metaverse concept, its reality today has been quite underwhelming. Zirch Hirsch, co-founder and CMO at the blockchain infrastructure and technology platform Mozverse, notes that “there was a misconception that some virtual world projects were ‘The Metaverse’ and with Facebook changing their name to Meta and some highly promoted tokenized projects like Sandbox and Decentraland, the term was overused in conversations. People didn’t realize we haven’t even seen the development of the metaverse yet. Probably the closest thing is the immersive gaming environments.”
While some virtual worlds have experienced some degree of success in terms of providing immersive experiences and real-time interactivity, the metaverse as a whole has not lived up to its promise of being a full-fledged alternate reality. Now skepticism has crept in, followed by criticisms, and a fierce verdict of failure.
Billions down the drain
While several players racing for leadership in the metaverse have received their fair share of the metaverse’s downturn, Meta arguably tops the losers’ charts. If you search “loss from the metaverse” on Google today, Meta dominates the news headlines. Don’t believe it? See the picture below.
It’s not hard to see why that’s the case. Others like dating company Tinder, which reported a $10 million loss last year, have been hit severely by the metaverse downturn but no one comes close to Meta. Its Reality Labs, focused on the metaverse, recorded a $4. billion operating loss in Q4, totaling $13.72 billion for 2022.
Whereas revenue for the division in the final months of 2022 was only $727 million, down 17% from the same period last year. Meta also laid off over 11,000 employees in November 2022, and another 10,000 in March 2023 — a move that many industry analysts saw as the beginning of the end for the metaverse.
The metaverse faces challenges such as confusion about its meaning, privacy and security concerns, expensive hardware costs, and fluctuations in the cryptocurrency market. Another reason for the metaverse fade could be the rise of generative AI tools like OpenAI’s ChatGPT, Google’s Bard, Microsoft’s Bing, DALL-E, Stable Diffusion, Meta’s LLaMa, and Midjourney, as generative AI continues to grab headlines across the media. These challenges have raised questions about the future prospects of the metaverse.
Still, belief in the metaverse abides
While the erstwhile metaverse noise has fast become a shadow of itself, there are some who still believe in the metaverse— and my LinkedIn poll bears witness. Although the poll only had a small sample of 59 persons, it’s proof that the metaverse— though badly brutalized— isn’t dead yet. While 41% of respondents said they believed the metaverse was dead, 59% said it was still alive.
Zuckerberg’s Meta seemed like the poster boy for the metaverse, but the promise of immersive realms doesn’t revolve around Meta. Despite the fading buzz, IT giants like NTT Corporation, the global IT and telecommunications giant, still believe in the potential of the metaverse and are building out the tech stack that would power virtual realms.
For example, NTT’s artificial intelligence (AI) innovation team recently introduced AI-driven digital humans that use AI to create human-like avatars in the metaverse for real-time interaction. These digital humans are trained to “offer extraordinary customer experience services,” acting as assistants, car dealers, receptionists, and more. Customers can have authentic life experiences and self-service options with these digital humans, who operate like chatbots in human form.
The technology has already been successfully deployed in various use cases, such as a sports promoter at the Tour de France, a help person for a children's helpline, a customer greeter at a car showroom, and a tutor for young children learning to read English. Also, an avatar named Victoria is working in tourist information in the Danish city of Vejle, providing visitors with information on destinations and sightseeing tours.
“These digital humans essentially have the knowledge that ChatGPT has. It’s limited, but they can provide answers to questions like “Who was the 32nd President of the United States?” So, if you want to have them as your retail assistant for your metaverse store, you can provide them with your retail inventory," Corey Green, an analyst at NTT Data Services, told me in an interview.
“What is dead may never die…”
If you’re a fan of the multiple award-winning TV series Game of Thrones (GOT), just like me, the phrase above shouldn’t be strange to you. It’s a proverb that emphasizes the importance of not discarding things too soon.
Like many other tech innovations before it, the metaverse is experiencing its share of boom-and-bust cycles, commonly referred to as “technology winters.” Even the field of AI went through multiple “winters of pessimism” before seeing this wild run of generative AI.
While the tech industry seems to be all about generative AI right now, the rise of AI could result in a boisterous resurgence of the metaverse. This is because the metaverse isn’t a standalone technology; rather, it’s a concept that would be powered by the convergence of several technologies— including blockchain, 5G, VR, AR, and AI— as Gary Grossman, senior vice president of technology practice at Edelman and global lead of the Edelman AI Center of Excellence, wrote in this article on VentureBeat.
For Hirsch, “AI is an important technology in building Web3, which is ultimately the new more decentralized, open, immersive version of the internet that will spur the growth of the creator economy and eventually the metaverse.”
Advancements in AI, as evidenced by the increasing use cases of large language models (LLMs) like GPT-4, as well as new strides in VR and AR, are therefore welcome developments in the quest for the metaverse.
Several talks of the metaverse’s demise often overlook the fact that the immersive world and Meta, though related, are not synonymous. While Meta may be making the most noise, the metaverse is not dependent on any single organization. Many of the world’s largest companies like Apple, which has often distanced itself from the metaverse, are now vying to bring VR and AR products to mainstream markets.
COVID-19 also accelerated the creation and normalization of virtual worlds and economies. Online gaming, for example, has become one of the fastest-growing industries, with estimated revenues exceeding $196 billion. Gartner projects that by 2026, one in four persons will spend at least an hour daily working, studying, shopping, and socializing within shared virtual environments.
Furthermore, the global metaverse market is expected to surge to a staggering $936.6 billion by 2030, up from the $82 billion estimated value for 2023.
The seed of the metaverse is alive in technology’s soil, breathing, taking shape, and growing through the current darkness.
The metaverse needs more time
Innovation takes time and even Zuckerberg acknowledged during Meta’s earnings call in April 2022 that the transition to living in virtual worlds would take years, if not generations, for mainstream adoption. Inflection points and technological advancement take time to unfold. Just like many initially dismissed the internet as a passing fad, years of technological advancements have made it an integral part of our lives today. The metaverse or the concept of immersive realms is poised to follow the same path.
Perhaps the next iteration of virtual worlds will not be called “the metaverse”. But one thing is certain: Virtual worlds have come to stay. Stakeholders must acknowledge that it’s rapidly evolving and waning interest should not be seen as an indication of total failure.
Sebastien Borget, co-founder and CEO at Sandbox, once explained that “the metaverse will take time to become a mainstream platform for various activities like entertainment, work, education, and socializing, possibly taking 5, 10, or even 20 years to fully materialize.”
As companies continue to work with building blocks such as VR and AR, which form the foundation of the metaverse, these technologies are expected to play a pivotal role in shaping how people interact within the metaverse.
Borget also suggests that the true metaverse, which will truly transform our lives, will be rooted in AR, allowing us to seamlessly experience the real world blended with immersive virtual content. This natural integration of the digital world into our daily lives makes the metaverse inevitable. So, it’s encouraging to see companies investing time and effort in developing mixed reality (XR), immersive, and collaborative technologies that will be the backbone of the metaverse.
Answering the question of whether the metaverse is dead, Hirsch says, “If your expectation was that there would be a vast collection of interoperable, connected virtual worlds in 2023, then it certainly failed that mark. I’m a huge believer in Web3 and the future of a highly immersive, more decentralized internet. Five years ago, they were writing off AI in certain circles— so you can’t overreact to every trend.”
He adds that he sees the future metaverse making virtual education and virtual work much more immersive and interactive. “Gen Alpha are being raised on immersive, gamified experiences and I think that they will be motivated to learn better that way. Also, Web3 virtual assets will start to be more integrated into e-commerce and retail promotions as barriers to entry are lowered.”
With all these factors in mind, mocking talks of the metaverse’s death must give way to a critical and holistic analysis of the true potential that the metaverse offers. This winter season is a period of growth that only presents an opportunity for investors to get into the space before it fully materializes. Remember, “What is dead may never die, but rises again harder and stronger.”
“What is dead may never die…” We hope to witness its Spring to come, soon. Thanks for writing this.
Lovely read. Glad you shared this. Been a while with the metaverse buzz on social media, as even Mark himself (like we've all noticed) seems a bit hesitant with its publicity. Hoping to see what unfolds subsequently on that space. Again, thanks for writing this. Beautiful read!