The metaverse, a virtual world that Mark Zuckerberg has high hopes for, is struggling to gain traction. While tech giants like Disney and Microsoft are moving away from the metaverse, user interest is also declining. The value of metaverse land has even plummeted by 90%.
In the past two years, the metaverse has lost its luster. According to the Wall Street Journal, Walt Disney has closed its metaverse strategy division. Microsoft also recently shut down a social virtual reality platform it acquired in 2017.
In response, Mark Zuckerberg has changed Facebook’s name to Meta Platforms and announced a shift in focus to artificial intelligence.
Metaverse plots have lost 90 percent of their value
The price of virtual real estate in some online worlds where users can hang out as avatars has also dropped sharply. According to WeMeta, a metaverse land sales tracker, the average selling price of land in Decentraland has fallen by nearly 90% compared to a year ago.
Meta’s name change in October 2021 reflected the excitement for the metaverse at the time. Mark Zuckerberg believed in the potential of the metaverse and spoke extensively about metaverse experiences, products, and platforms.
However, the metaverse has not developed as quickly as expected. Slow user adoption and worsening economic conditions, driven in part by expensive hardware requirements and buggy technology, have dampened expectations that the metaverse will generate significant revenue anytime soon.
Metaverse’s time has not come yet
The metaverse, a virtual world that tech companies are betting on as the next big computing platform, is facing setbacks as companies lay off staff and abandon projects.
“What many people realize is that this transformation is further away,” said Matthew Ball, a venture capitalist and author of a book on the metaverse.
Tech companies are making layoffs and abandoning projects deemed unnecessary. Just 18 months ago, Mark Zuckerberg, who championed the metaverse as the next iteration of the mobile internet, called 2023 the “year of productivity.” However, the company laid off 11,000 employees in the fall and said it would cut 10,000 positions this month and several projects, including its metaverse division.
“Many companies and businesses understandably think this type of category would seem like a pretty easy target if they need to cut headcount or spend overall,” said Scott Kessler, a technology industry analyst at research firm Third Bridge Group. Kessler added that investments in artificial intelligence promise returns in the near term.
“All this stuff about AI now seems to be usable and exploitable,” he said. “No one can speak clearly for the metaverse, its time is uncertain.”
There were also those who were wary at the peak of the Metaverse
The metaverse, a virtual world that tech companies are betting on as the next big computing platform, is facing setbacks as companies lay off staff and abandon projects, and users hesitate to adopt the new technology.
“Want to work on technologies that lift people’s heads up — I want them to enjoy the real world,” said David Limp, senior vice president of devices and services at Amazon.com at the WSJ’s Future of Everything Festival last year.
Meta had to cut the price of Quest glasses by 33 percent in early March due to low sales, which was disappointing against its high expectations.
Meta has spent billions of dollars building the metaverse since it changed its name in October 2021. But according to internal documents viewed by the WSJ, its flagship app Horizon Worlds struggled to gain and retain users in the first year after it was renamed. The company said sales of Quest 2 virtual reality headsets, which are used to access Horizon Worlds and other virtual reality apps, also fell in the last quarter.
Metaverse is losing its popularity
Mark Zuckerberg remains committed to the metaverse, but his focus has shifted to artificial intelligence in the short term. In a statement last month, Zuckerberg said, “The two big technological waves driving our roadmap are artificial intelligence today and the metaverse in the longer term.” While he mentioned artificial intelligence 28 times in the speech, he only used the word “metaverse” 7 times.
Disney wants to cut costs by $5.5 billion
Walt Disney has shut down its division for developing metaverse strategies, as part of a broader restructuring that is expected to lead to 7,000 job losses in the next two months.
The move comes amid a recent leadership change and cost-cutting efforts at the company. Chief Executive Officer Robert Iger returned to the company in November and announced last month that Disney plans to cut 7,000 jobs and cut costs by $5.5 billion.
Metaverse land sales have plummeted in recent months, as interest in the virtual world has waned. Many buyers who purchased land in the hope that it would become valuable in the future have now seen their investments lose significant value.
This decline in interest has been exacerbated by a number of factors, including the rising cost of living, the ongoing war in Ukraine, and the general uncertainty surrounding the global economy. As a result, many people are now reluctant to spend money on what is still a relatively speculative investment.
Despite the current downturn, there are still some believers in the metaverse’s long-term potential. However, it remains to be seen whether the metaverse will ever live up to the hype.
Iger took over as CEO from Bob Chapek. At the time, Chapek told employees that the goal was to “create an entirely new paradigm for how audiences will experience and interact with our stories.”
Microsoft also moved away from the metaverse
Tech giants like Meta and Microsoft have invested heavily in the metaverse, but they are now scaling back their investments as interest in the virtual world wanes.
Meta has been forced to cut the price of its Quest VR headsets and lay off employees in its metaverse division. Microsoft has also shut down its AltSpaceVR social VR platform and restructured its HoloLens team.
Smaller metaverse companies like Decentraland and Sandbox have also seen a decline in land sales. According to data from WeMeta, the average price per square foot in Decentraland has dropped from about $45 a year ago to $5.
Metaverse Fashion Week sparked the meta universe
Despite the widespread decline in metaverse engagement, online events can still gain significant attention. Metaverse Fashion Week, an event attended by brands like Dolce & Gabbana and Tommy Hilfiger, saw an increase in attendance this week, even as Decentraland, the platform where the event was held, has seen a 25% drop in active users from November to January, according to DCL Metrics, a site that tracks users in the digital realm.
While admitting that interest in the metaverse has waned, venture capitalist and metaverse expert Matthew Ball believes that this does not mean that progress is not being made. “It’s clear that the excitement around the metaverse is waning,” he said. “But we shouldn’t take this as a lack of progress. It’s just that the change isn’t that fast.”
Ball’s comments suggest that the metaverse is still in its early stages of development, and that it may take some time before it reaches mainstream adoption. However, the success of events like Metaverse Fashion Week shows that there is still strong interest in the metaverse, and that it has the potential to become a major platform for social interaction, entertainment, and commerce in the future.