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25 Aug 2023

What happened to the Metaverse?

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This article is not intended to be financial, investment or trading advice. This article is for information and solely for education purposes. It does not protect against any financial loss, risk or fraud.

What happened to the Metaverse? 

Written by Lydia Rose Pallot

October 2021 saw Facebook rebrand to Meta, sending a message that the social media giant saw its future embedded in the Metaverse. Following the move to remote work in the wake of Covid and the resulting view of how our lives can be increasingly virtualised, Facebook’s announcement seemed like the start of a new virtual era.

But it hasn’t materialised. So, what happened to the Metaverse dream?  

The blockchain version of the Metaverse

‘NFT’, ‘decentraland’ and ‘metaverse real estate’ appear alongside ‘Mark Zuckerberg’ as terms that Google users were searching to put the term ‘metaverse’ into context.

So, let’s break down these topics.

Decentraland is an open virtual experience you can explore as a floating Avatar. There are plots of land that can be bought as non-fungible tokens (NFTs) and landowners can build whatever they want on their virtual land, which Avatars can explore and interact with.

Unfortunately, when the crypto market crashed in May 2022, Metaverse-focused projects crashed with it. MANA, Decantraland’s token, is 92% down at the time of writing from its November 2021 peak.

However, there are other good reasons why the blockchain-inspired Metaverse hype may have been premature.

A glitchy vision of the Metaverse

For anyone who ventured into Decentraland, the experience was likened to the early days of PC gaming: slow and buggy. And that’s without a VR headset, as the experience isn’t yet immersive.

The hype around blockchain-based Metaverse experiences was an extension of the promise of web3. The trouble is that the technology simply isn’t ready, but that didn’t stop a speculative frenzy that saw plots of land exchanged for eye-watering sums.

The 'Field of Dreams Fallacy'

Some analysts described Meta’s move into VR as suffering from the Field of Dreams Fallacy; the expectation that if they build it, users will come.  

Facebook launched their Oculus Quest VR headset in 2019, featuring built-in audio and controllers, supported by 50 game titles. To date, Meta has sold 20 million headsets, but revenue from Reality Labs accounts for just 1% of the parent company’s overall revenue.

Many headlines have suggested Zuckerberg is quietly shutting down his Metaverse experiment, pivoting instead to AI, where Meta is investing heavily on the back of ChatGPTs success.

"We're creating a new top-level product group at Meta focused on generative AI to turbocharge our work in this area,"

Mark Zuckerberg, in a Facebook post

Augmented Reality before Virtual Reality

Details from an internal Meta presentation, as reported by the Verge in March 2023, suggest that they have a four-year roadmap. The roadmap includes significant product development to improve user experience, but prioritises VR over AR.

Quest 3.0, available Autumn 2023, will have a more powerful and slimmed-down headset – but will retail for around £400.  

Meta plans further headset updates along with an updated pair of AR glasses and a neural interface smartwatch that will integrate with its social media apps.

The gradual move to the Metaverse

There are several reasons why we haven’t made huge strides into the Metaverse.

Firstly, no-one knows what it really means. For some, it is a decentralised virtual anarchy, for others a virtual office and maybe 3D extension of social media.

Games like Roblox and Minecraft could be described as meta, both of which are hugely successful and have engaged and growing audiences. Yet neither are currently immersive, which is one key characteristic commonly attached to the Metaverse.

The web3 visions are interesting, but mostly driven by speculation and curiosity. So far, users aren't engaged because of an absence of narrative combined with the more practical technical challenges that restrict adoption.

For Blockchain-style metaverse experiences, the same technical challenges need addressing. On their own, the principles of web3, like owning your own content and identity, aren’t enough to drive adoption and pull gamers away from much slicker centralised 2D rivals; whatever the grand vision, users still want a great gaming experience.

We are still technically a long way from the Ready Player One vision of the Metaverse, but mixed reality might provide a more realistic steppingstone toward the fully-fledged VR experience.

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