The Metaverse Is Down But May Not Be Out

The main reason for the disappointment is Facebook, which in 2021 was so bullish about the metaverse that it changed its name to Meta. It still dominates the AR/VR headset market. However, Reality Labs, the home of the company’s VR technologies and projects, continues to lose money with no significant increase in revenue.

Meanwhile, Meta’s focus has turned to generative artificial intelligence in response to OpenAI’s ChatGPT. Meta chief Mark Zuckerberg and chief technology officer Andrew Bosworth, who are also the brains behind its Metaverse initiative, are said to spend almost all of their time on AI. For many industry watchers, this means that Meta has quietly buried the Metaverse.

While the metaverse hype has been put to rest by AI, it is too early to write off the technology itself. There are concerns around this, but the technology is developing, and money is still flowing into it. While consumer adoption has been slow, its proponents see a business case in the long run.

cautious optimism

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According to a survey of venture capital funders and institutional investors that KPMG conducted last year, 90% of respondents felt that the metaverse was the next phase of the Internet and saw increased usage. Furthermore, 63% plan to increase their Metaverse investments over the next five years. Those who planned to cut down on their investments cited lack of understanding of the technology and not being mature enough as the primary reasons. Even otherwise, nearly 70% of all investors expressed concerns, including the increased likelihood of regulation, privacy issues, and questions about its widespread adoption. As the unintended consequences of social media become more visible, the Metaverse must prepare for tougher restrictions. However, as the technology matures with more computing power, wider cloud adoption, the rise of 5G, and better cyber security, some concerns will abate. Lower production costs will make the devices more affordable, increasing adoption.

money investment

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These improvements will be the result of investments in this area, even if they are not well spent. VC firms have invested more than $22 billion in start-ups belonging to the metaverse since 2017. An Insider analysis shows that Meta has invested over $36 billion in the Metaverse since 2019.

In addition, core technology players are investing in core infrastructure, such as NVIDIA’s Omniverse Enterprise, a metaverse platform designed for collaboration and real-time simulation across various industries, and in graphics processing units (GPUs). Improves rendering of images and videos. better. There are also innovations that push what the tools can do. For example, earlier this year at CES, an influential technology event in Las Vegas, OVR Technology demonstrated a wearable device that adds scent to a virtual reality experience. The product is scheduled to hit the market later this year.

beyond hype

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While Meta’s new focus on generative AI has triggered debate surrounding the death of the Metaverse, Meta itself hasn’t shut it down. It plans to continue investing billions in AI as well as technology. It recently commissioned a study by Deloitte which said the metaverse could contribute around $760 billion to the US economy and $538 billion to the EU GDP by 2035.

Similarly, although shipments of AR/VR headsets declined last year, IDC expects an average annual growth of 32.6% in 2023-2027. Such optimism stems from the idea that AI could eventually help create a better metaverse. But it could take longer than its loyalists believe because too many factors have to align—hardware, software, regulations, business preferences and consumer behavior. The metaverse isn’t dead, but the hype of the past two years is bringing much-needed rest.

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