The Metaverse is Growing, Albeit Silently

The metaverse has been a hot topic in the tech world for the past few years, with companies considering it to be the future of computing. The metaverse is based on Virtual Reality that allows users to interact with each other in the virtual world using the internet and spatial computing, creating an immersive web experience.

However, the buzz around the metaverse seems to have recently subsided. Google Trends, which tracks search terms over time, reveals that interest in the term ‘Metaverse’ – which peaked when Mark Zuckerberg presented Facebook’s future and adopted Meta as the company’s new identity – has tumbled down to almost where it was before the event. This is because people do not fully understand the concept and real-world applications of the metaverse, further constrained by limited consensus on its definition. Some believe it is a virtual world for meetings and concerts, while others see it as Web 3.0 with digital currencies and NFTs.

Despite the apparent collapse of the hype, the metaverse is still growing. The tech industry is known for going through multiple “winters” when the market is pessimistic, and the same is likely to be true for the metaverse as well. While there are several reasons why the buzz around it has dwindled, most of them are related to the fact that the concept is still in its infancy.

One factor that has contributed to the decline in this interest is Meta (erstwhile Facebook) itself. During 2021-2022, Facebook’s metaverse division ‘Reality Labs’, recorded a cumulative loss of almost $24b, which led Meta to shut the division and divert the teams’ efforts towards AI to compete with ChatGPT. Further, the challenge of having multi-app interoperability, the use of 3D (immersive) glasses and devices, coupled with operational challenges like battery life have kept both interest and adoption at bay. Another dampener was the over-hype and overselling by big corporations such as Meta and Microsoft that the metaverse will likely become the single largest platform for all sorts of human activities – almost like a panacea of sorts. The virtual world euphoria was simply a branding exercise rather than a meaningful life-changing experience. In recent months, generative AI has also taken most of the buzz away from the metaverse and AI Chatbots seem to have charmed the world and flooded the global media.

Despite these pitfalls, the metaverse is still growing. There are currently around 150 platforms using metaverse, either live or in development, with 520 million monthly active users (MAUs). Most of these platforms are browser-based, and they do not include mobile-based platforms like ‘Garena Free Fire’, which has around 700 million MAUs. More than 100 companies are working on technologies like Digital Twin and ‘Internet of Things’ data integration, avatars, and identity, interface hardware such as haptics, holography, spatial audio, and augmented reality. Thousands of related jobs get listed by these companies, indicating that the metaverse is growing slowly, but steadily.

By 2030, the largest revenue segments for the metaverse are projected to be e-commerce ($201b), gaming ($163b) and industrial metaverse ($100b). By the end of the decade, the metaverse is projected to reach 700 million people, worldwide, with the highest penetration rate forecast for South Korea.

The true value of Metaverse lies in the ability to bring people together for meaningful experiences. To enhance engagement, it needs to be more accessible to creators and developers, out of the ‘nerd’ tech domain. Large companies like Microsoft and Siemens are also exploring commercial and industrial applications for the metaverse. Microsoft is innovating its Teams collaboration tool to have integrated metaverse capabilities using Azure-platform Mesh, while Siemens and Nvidia are working on the latter’s Omniverse platform to build a virtual factory to train autonomous robots.

The metaverse is dismissed by many as a marketing fad and a temporary phase, but investment in decentralized computing and infrastructure is a long-term evolution, and firms with a test-and-learn long-term mindset will be better positioned to work in and around the metaverse.

Authors: Manish Mishra, Head – Strategy Consulting

Shivam Agarwal, Assistant Consultant – Strategy Consulting

Image courtesy: Riki32 from Pixabay