Several companies, including Meta, invested billions to do the Metaverse work, but these investments didn’t pay off and Titans in the industry went ahead. Was it the case of a failed incentive, or is it too early to cancel it?
Do you remember Metaverse? Even if we fail, we will
The promise of an interconnected virtual world where our alternative selves work, play and live with others in a doppelganger-like way was once at the forefront of investment and innovation. The concept of metaverse, first described in 1992, took shape after the Covid-19 pandemic.
One of the companies that won the Metaverse banner was Meta, pushing hard to bring these technologies to mainstream audiences, putting billions behind the two pillars of the proposal.
Companies such as Sony, Disney and even Microsoft have chased Meta’s leads, began to put out products that cater to the Metaverse Interested crowd, and have invested millions in these initiatives. For example, Sony acquired technology to broadcast the sport to virtual reality venues, and Disney called it “the next great storytelling frontier,” creating a division to spin-off those experiences.
The world of decentralized finance was also behind the trend. In 2022, Dappradar estimated that $7.6 billion was invested in Metaverse proposals, with related names such as the Animoca brand investing billions in Metaverse-centric funds.
Nevertheless, this novelty began to wear out quickly, with investments reaching under $707 million from the start of 2023 until July of the same year.
Companies also began to feel the heat of a trend that could not recover as Meta’s reality lab, the metaverse division, lost money after the quarter. Microsoft has abandoned its major metaverse divisions and the group focusing on integrating virtual reality technologies for industrial applications. Disney also ended Metaverse Group amid a wave of cost-cutting layoffs.
At the same time, new trends will increase with much more attractive results. The surge in ChatGpt, one of the most innovative artificial intelligence products to date, shows that investments in artificial intelligence (AI) rather than metaverse can have far more rewarding results.
Giants like Microsoft and Meta have switched to AI and announced pivots to these new technologies. In March 2023, Meta founder and CEO Mark Zuckerberg said Metaverse remains “center” for them (and not), but their “bigest investment” focuses on AI advancement and integrating it into their products.
Billions of billions flowed into AI, providing these agents with the infrastructure they needed to strengthen, and there was an opportunity to monetize immediately. Microsoft co-founder Bill Gates promoted AI vs. Metaverse directly, calling the latter “not as revolutionary” as the former.
By 2024, the future of this trend was sealed, even if some initiatives were aggressively aggressive in a reduced form. Most companies abandon the trends and chase the AI bubble.
So, what happened to Metaverse? Analysts seem to agree that the industry is overestimating the impact of its proposal, and the technology that opens the door to this experience is expensive and clunky. Nevertheless, the digital side world experience with the benefits of alternative social contacts argues that there is still an opportunity to grow as long as the technology behind it evolves and becomes less invasive and consumer-friendly.
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