GlobalData predicts a metaverse winter in 2023. The metaverse has been promoted as a revolution in how humans socialize, consume media, and work. This will not happen until the metaverse is regulated, interoperable, and has a common definition, which will not occur in 2023. However, the metaverse winter will be a major opportunity, not a threat, for companies racing to strengthen their position in the theme.
Metaverse is an ill-defined, over-hyped concept
The metaverse is still largely conceptual, but the growing volumes of investment in it derive from the belief that it is the future of the internet. Bold claims made by companies like Meta, Microsoft, and Epic Games have inflated market expectations. In addition, Web3 enthusiasts have taken this opportunity to initiate a so-called revolution against Big Tech by promising users ownership of their data and content. However, with no standard definition it means different things to different people depending on the nature of their business.
Companies building versions of the metaverse are focusing on their core competencies. For instance, Microsoft’s Mesh is based on its competencies in cloud computing, artificial intelligence (AI), and augmented reality (AR). Similarly, Meta is focusing on AI and virtual reality (VR). In brief, the metaverse is a convergence of several tech themes, and companies are adopting those that suit their capabilities and objectives.
Enabling technologies are still in the maturing stages
It is worth noting that the idea of the metaverse has been around for nearly three decades. However, it failed to gain mainstream attention due to the immaturity of the underlying technologies. While some metaverse-enabling technologies, such as AI, have matured substantially over the years, others (e.g., blockchain, AR, and VR) are still developing.
While the aforementioned technologies have seen success in specific use cases (e.g., VR in enterprise training, AR in gaming and collaboration, and blockchain with cryptocurrencies), none have gained wide-scale acceptance. In fact, awareness of the metaverse and the underlying technologies remain low, and many consumers perceive the metaverse as purely marketing hype.
The metaverse winter: A reality check for early entrants and an opportunity for others
The recent layoffs in the metaverse divisions of Meta and Microsoft, and rumors of Apple shelving its anticipated smart glasses, are indications of the metaverse winter. The tech companies have been bullish on the metaverse and pushed the idea that the enabling technologies are mature enough to bridge the digital and physical worlds seamlessly, however, that is still some years away. Moreover, the crypto crash at the end of 2022 is also a reality check for Web3 companies.
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Niche use cases, work-in-progress devices, lack of intuitive content, and concerns with privacy and security are hindering the metaverse’s commercial ambitions. As the winter sets in, companies taking measured steps toward the metaverse are well-positioned to bring practical offerings to the market. Collaboration tools providers (e.g., Zoom), avatar creators (e.g., Ready Player Me), virtual world platforms (e.g., Spatial), and smartphone-based metaverse use case developers (e.g., Tencent) are likely to lead the pack, provided they live up to the promises they make.
Re-evaluating their strategy and commercial plans is a must
The metaverse winter is a time for companies to re-strategize their commercial plans. Tech companies must develop user interfaces that can be easily accessible, synchronize the real and virtual environments, and provide safety and comfort during prolonged use. In addition, they must emphasize content that users would like to experience repeatedly.
Web3 and crypto companies must collaborate with regulators and financial services to standardize digital assets in banking. Metaverse platform providers must support a variety of experiences to expand their appeal among target users. Those that stick to one will either fall out of the race or limit their revenue opportunities in the long run.