It’s time to have a discussion about the current state of the metaverse.
Let's discuss the current state of the metaverse.
If you sit down and chat with a fervent supporter of the metaverse, it won’t be long before they paint a beautiful picture of how the virtual world will change our lives.
The proponents of the metaverse insist that within a few years, we will be shopping, socializing, learning, and working with Oculus Rift (a head-mounted display designed for video games). Our virtual characters will be just as important as our physical selves. We just need to wait a little longer.
This conviction is not limited to the star-studded founders of the metaverse, but also includes those with millions of tags in their X (formerly Twitter) resumes, as well as those who firmly believe that metaverse technology is the future of the internet. In 2022, Pew Research surveyed over 600 “technology innovators, developers, business and policy leaders, researchers, and activists,” asking them if they thought the metaverse would become part of our daily lives by 2040. 54%, more than half, answered “yes”.
A recent consumer survey commissioned by KPMG showed that consumers have a similar view that the metaverse will eventually enter their daily lives, although to a slightly lesser extent.
The problem with optimism is that its shelf life is relatively short. People cannot always be filled with hope and enthusiasm. If you cannot fulfill promises, or at least make some progress, you will soon find yourself engulfed by a rising tide of cynicism and shattered illusions.
Therefore, it is now time for us to have a frank discussion about the current state of the metaverse, its current capabilities, and why it takes so long to fully realize the potential promised by evangelists and enthusiasts.
01. The Current State of the Metaverse
In many ways, the metaverse (as of the end of 2023) resembles early-stage technology products, although it is still in a completely conceptual form, with dozens of competitors vying for dominance.
In comparison, look at the home computer market in the 1980s, when Apple, Commodore, IBM, and countless other manufacturers were constantly battling for dominance. Each manufacturer had their own interpretation of what a home computer should be. This war was not only about market share, but also about winning over consumers’ minds.
The core of any metaverse experience is the platform, and there are currently several platforms, but each one has some fundamental differences. Roblox and Fortnite are primarily games. Decentraland and Sandbox revolve around crypto, using the concept of “ownership” on the blockchain to design their own virtual economies. Meta’s Horizon Worlds takes a fusion approach, combining gaming and social elements, and explicitly stating its intention to expand into other use cases.
In addition to these “giants,” there are also some smaller independent “experiences” that are not associated with any major platform and are usually operated by a brand. Although they contain the core components that distinguish the metaverse from video games (inherent multiplayer experience, virtual representation of users, and typical functional goals), they lack the scale and versatility of large platforms. These experiences are utilitarian, existing to solve specific problems or focus on specific IPs.
A good example of a metaverse experience launched by Celebrity Cruises in 2022 is “Celebrity Wonderverse,” where potential customers can create a virtual avatar and explore their ships and destinations.
Finally, there are B2B metaverse products that are often overlooked by more flashy and consumer-centric platforms. The most well-known of these products is Microsoft Teams’ Mesh.
Although these B2B products are also in the early stages of technology and have not reached a similar level of maturity, they have already proven their value. According to a recent survey by Ernst & Young and Nokia, 80% of companies that have implemented metaverse technology say that it will have a “significant or transformative impact” on their business, while only 2% of companies consider the technology to be a “fad.”
02. Existing Metaverse Cases
In many ways, the current use of the metaverse aligns closely with the goals envisioned by enthusiastic metaverse enthusiasts, at least in a very similar way. People socialize and work in virtual worlds. Goods and services from the digital and real world have economic benefits. It’s just a matter of scale and proportion.
So far, we have seen large-scale concerts in “Fortnite,” featuring artists such as Ariana Grande, Travis Scott, and Marshmello. Brands have started to build portfolios of metaverse real estate, with early adopters including Burberry, Lucid Motors, and Hyundai. Although the economic scale of digital goods and services (including virtual land) is small, it is growing steadily.
In addition, even in the business field, enterprise metaverse users are reaping some of the benefits advocated by metaverse advocates. As mentioned earlier, a survey by Ernst & Young and Nokia showed that 51% of enterprise metaverse users reported benefits in terms of sustainability. Another 39% and 29% of companies reported improvements in CAPEX (capital expenditures) and OPEX (operating expenses), respectively. This is because they use virtual worlds to replace other more expensive (in terms of both environment and money) solutions, such as remote conferences.
The issue is not the functionality of existing metaverse platforms, but the scale. Providing these advantages to a large number of consumers and business users takes time, money, and investment. In addition, it requires rapid go-to-market strategies, channel management, and human resources.
While I first admit that the underlying technology is not yet fully mature, this issue is secondary compared to the shortcomings of the overall ecosystem in the metaverse field.
03. The Biggest Obstacles and Solutions in the Metaverse
A little-known fact is that most metaverse platforms do not want to see the level of applications that industry evangelists expect. Because they are not yet fully prepared.
Unlike the traditional internet, the metaverse fundamentally requires a large amount of computational cost in operation. Rendering the virtual world and providing a consistent, seamless user experience requires a significant amount of computing power. While some platforms attempt to pass these requirements onto users, it is not a reasonable choice for platforms that hope to achieve mass adoption, as it inherently limits the potential user base – only those users who possess powerful, expensive, and resourceful computers.
For a long time, this has been the most challenging obstacle faced by metaverse platforms seeking expansion. Fortunately, this challenge is not insurmountable. Even without any external intervention or new innovation, it has begun to be alleviated.
After experiencing continuous price surges for several years, the price of GPUs has started to decline, partly due to improvements in the semiconductor supply chain and the continuous decline in crypto prices. Even if platforms do not intend to operate their own infrastructure, cost improvements from cloud service providers will be seen, as the saved costs are transferred to the platforms.
In addition, metaverse platforms can take measures to invest in multi-cloud infrastructure strategies to increase capacity and serve more users. This approach, combined with the new advances in streaming technology, will greatly expand the impact of the metaverse and provide a smooth, consistent, and seamless experience.
Similarly, as I discussed before – content is another major obstacle to metaverse applications, perhaps the biggest obstacle. Without content, consumers will not accept the metaverse; and without an audience, content creators (including brands) will not invest capital in the metaverse. It is a dilemma of which comes first, the chicken or the egg.
The development and maintenance costs of the metaverse experience can reach millions of dollars, and it is understandable that brands remain skeptical during its expected lifecycle. Fortunately, over time, this issue will be resolved, partly due to the increasing maturity of developer tools and the adoption of generative artificial intelligence, which is expected to reduce or eliminate many of the costs associated with developing and updating content.
Another hopeful reason is the continuous decline in the price of VR headsets. While not all metaverse experiences require VR headsets, many experiences do. Therefore, in the minds of consumers, the concept of the metaverse is closely linked with VR. To attract potential users, certain models, especially Meta’s Quest and Quest Pro series, have significantly reduced prices, and analysts expect the average price to decline between 2023 and 2028.
Therefore, along with the adoption of streaming media and larger infrastructure investments, it will help reduce consumers’ upfront costs and inevitably play a role in making the “metaverse” a mainstream and widely accepted technology.
04. Stay Optimistic and Patient
Although some people pessimistically declare that “the metaverse hype bubble has burst,” I still believe that the metaverse has a bright future.
I firmly believe that the metaverse has value for brands, consumers, and businesses. I truly believe that it will be widely applied soon. But I also know that before it reaches its peak, the metaverse must mature first.
In the past few years, the metaverse has followed the Silicon Valley motto of “building the plane while flying.” This approach inevitably limits its scope to early adopters and idealistic believers. These people, unlike others in society, accept a certain degree of “bumps” as the cost of being the first.
These early adopters are crucial in proving the value proposition of the metaverse. They have demonstrated that the metaverse is both fun and useful. With this knowledge, the metaverse ecosystem should feel more confident as it begins to refine and expand. We have the Minimum Viable Product (MVP). Now is the time to build real products.
The future of the internet is 3D. But obviously, this will take time. Similarly, building infrastructure to handle hundreds of millions of users also takes time (and money). We need better and more sophisticated developer tools to accelerate the launch of metaverse products for brands.
In this regard, while optimism is popular, it needs to give way to patience and planning.
Original article written by JOSH RUSH, translated into Chinese by the MetaverseHub team. For reprinting, please contact us.