COVER STORY: Where did all the metaverse hype go?

Over the last few years, the metaverse hype has been astronomical and talk about this futuristic technology was everywhere.

Leaders and technologists predicted that it would disrupt the way people interacted online, how we worked, played and even consumed content.

Popular brands like Samsung, Nike and Coca-Cola jumped onto the hype and entered the metaverse.

Meta, née Facebook, changed its name in honour of the metaverse at the end of 2021. The social media giant sunk also close to US$36 billion into the metaverse throughout 2022.

Other tech giants like Microsoft created a team focusing solely on the industrial metaverse. 

But then something switched.

In October 2022, Meta’s quarterly results showed losses from its metaverse investments. It then announced that the metaverse is “not the majority of what we’re doing” but it has a “long-term vision” for the metaverse.

It also lost billions of dollars from its metaverse and Reality Labs investment. 

Microsoft closed its industrial metaverse team in February this year, letting go of all 100 workers four months after the creation of the team.

So, what happened?

Anushree Verma, director analyst at Gartner said the hype was larger than it should’ve been.

“Last year, if you plot merely on the hype and the value that Metaverse can deliver, the hype was greater than what the products and services could deliver last year,” she explained.

“Which is why when the hype has faded down, the entire cycle seems to have fallen because the hype was much higher or much greater.”

The metaverse is currently going through the “trough of disillusionment” in the Gartner Hype Cycle.

Gartner explained in this phase interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.

Verma said Gartner advises that companies should have a clear ROI when investing in the metaverse.

“[ROI] should be seen as implementations for metaverse and not just giving into that hype. Right now, that the hype is fading out, we need to have clear ROI that is mapped for every implementation that takes place.”

Patricia Haueiss, metaverse, Web3, AI consultant and advisor said while the hype has dropped doesn’t mean the metaverse is losing its relevance or significance.

“Instead, it's a natural part of the lifecycle of new technologies as they move from hype and speculation towards practical use and widespread adoption,” she said.

“With any new technology, there is a period of excitement followed by a dip as we adjust our expectations to what is actually achievable.”

Behren Schulz, innovation lead, growth markets APAC, Accenture said this trough gives leaders the opportunity to focus on how to implement this technology in the future.

“Maybe metaverse isn't something right now that we expect to see people walking around the streets like you may have seen in Back to the Future,” he said.

“But, we'll see elements of metaverse starting to pepper into our everyday lives, whether it's as a customer, whether it's across enterprise, or whether it's the way that we industrialise our business.”

Why did the hype disappear?

One of the main reasons the hype has seemed to go up in a puff of smoke is the lack of understanding around the technology

“Different people and organisations use the term to describe various things, from virtual worlds and augmented reality to blockchain technology and more, leading to confusion and inconsistent expectations,” Haueiss said.

She also noted, the advent of Web3 has also played a part in this hype deflation.

“Web3 is considered to be the third generation of internet, underpinned by blockchain technology, which promises to give users more control over their data and digital assets,” she said.

“Unfortunately, some early Web3 projects were a few scams and others failed to achieve sustainable business models. This has led to scepticism and a normalisation of the hype around web3 and, by extension, the metaverse.”

Sarah Klain, CEO at the Responsible Metaverse Alliance explained that AI has soaked up all the attention.

“What we have seen recently with Meta and Apple’s announcements and their movements in the Metaverse and development of new technologies means we are gearing up for the next six months to have some very big steps in the metaverse,” she said.

“These technologies are all related and the growth continues, it would be naive to think it has gone away.”

Some metaverse experiences that happen with a VR headset like the virtual office aren’t that appealing, Nick Abrahams, global co-leader digital transformation practice at Norton Rose Fulbright explained.

“That idea of we're all going to come into work by putting our VR goggles on that's never been a proposition I think would ever work. For anyone who's ever worn VR goggles, everyone knows it's an uncomfortable experience,” he said.

Industrial metaverse shows potential

The chatter around the metaverse might be quiet, but meaningful use cases are still being developed, especially within the industrial metaverse.

Verma at Gartner said digital twins are being tested for spatial computing and digital humans are being tested for conversational assistance and customer experience.

“These are some of the more meaningful interactions that have started taking place in the metaverse, and that's how it is going to evolve as well,” she said.

“I know it is a slowdown this year, but in the next maybe two years, it's going to stay in momentum as well. But in the second half of the decade, we'll see because these experimentations will either fail or will subside or some of them will be successful.”

Abrahams said the metaverse still provides an immersive environment that provides “tremendous opportunities”.

“Particularly for business-to-consumer brands and you just have to look at what Tennis Australia announced only recently that with their Roblox collaboration, they hit 10 million users,” he explained.

“Now, that is an awesome number of users to hit if you are talking about traditional Web2, URL-based technology.”

Investment interest

Abrahams at Norton Rose Fulbright said while speculative engagement has slowed down, brands are still interested and finding opportunities in the metaverse.

“I did a number of transactions for global banks buying property in the metaverse and we are seeing less of that now. There's less of an interest in ‘we should jump on this as an idea and that will sort of show a degree of innovation’,” he said.

“There's less of that sort of highly speculative engagement with the metaverse. But I think for brands that truly understand the metaverse and can see an opportunity. For example, the Tennis Australia and the Australian Open and Nike, made US$185 million selling virtual shoes.”

Schulz at Accenture said there is still a strong interest in the Metaverse.

“Whether that's through the way that we enable employees or that we engage customers, whether that's an approach for a digital twin or how to identify somebody perhaps with a digital identity,” he said.

“There's a broad range of technologies as we define, metaverse, and that will be persistent over the next five to 10 years.”

Klain at the Responsible Metaverse Alliance said while the metaverse is similar to the internet, it is not a fad at all.

“It is a new platform that is similar to when the Internet came. That’s how we should be treating and viewing it. Within three to five years, it will be a most standard way in which we interact with each other much as how we use the internet today.”