The metaverse, once hailed as the future of virtual reality, may not be living up to its initial promise. Two years after Mark Zuckerberg rebranded Facebook as Meta and announced the metaverse, it has become clear that these virtual worlds are facing challenges. The population in these virtual spaces is relatively small, and the virtual property market is collapsing. The non-fungible tokens (NFTs) that were expected to be the main consumer goods of the metaverse are now essentially worthless, raising doubts about the viability of brands in this niche market.
A prime example of the current state of the metaverse is Meta’s recent MetaConnect conference, which was dedicated to announcements and discussions related to this virtual world. While a large crowd gathered at Meta’s headquarters to hear Mark Zuckerberg speak, only about twenty avatars joined virtually in Horizon Worlds. This lackluster turnout indicates that even Zuckerberg himself has shifted his focus away from the metaverse and towards the development of artificial intelligence.
Disney, another major player in the industry, has also abandoned its metaverse projects. Initially, fashion brands and luxury houses showed great enthusiasm for the metaverse, as they feared missing out on the digital transformation. They participated in events like the Metaverse Fashion Week and invested in virtual initiatives. However, the metaverse has not experienced the anticipated growth, and virtual property prices have plummeted. The number of active users in these virtual worlds remains low, casting doubt on the future of the metaverse.
The NFT market, which was expected to drive the metaverse’s success, has also suffered a significant blow. Many NFTs that were once highly valued have now become worthless, leaving investors at a loss. The lack of demand for NFTs has resulted in an oversupply of unsold goods, further decreasing their value. Additionally, the environmental impact of NFTs cannot be ignored, as their production consumes a substantial amount of energy and contributes to carbon emissions.
Several factors have contributed to the current state of the metaverse. Its premature commoditization and the lack of clear use cases have hindered its progress. Tech companies are now allocating less of their innovation budget to the metaverse due to the limited commercial and marketing opportunities. Service providers that initially supported companies in the virtual world are also becoming more cautious. Even Meta, which had ambitious plans for avatars and virtual reality, has scaled back its efforts due to the complexity and limited potential of these technologies.
Despite these challenges, some professionals still believe in the potential of the metaverse, particularly with the integration of artificial intelligence. Late adoption by users and advancements in AI could enhance virtual experiences and lead to new uses and practices. The future of NFTs may lie in their utility rather than their artistic value. They can serve as certification tools for supply chains, authentication in the second-hand market, and personalized marketing for fashion and luxury goods.
However, brands that have already heavily invested in the metaverse may not see a satisfactory return on their investments. The digital wardrobe and virtual flagships designed in 2021 may fall short of future expectations. While the metaverse may not be completely fading away, brands’ past investments are likely to be consigned to the digital abyss.
Useful links:
– What is the Metaverse?
– The Challenges of the Metaverse
