Remember when the metaverse and non-fungible tokens (NFTs) were the latest hype in town? At the time, bitcoin (BTC) traded above $60,000 and altcoin prices kept rising regardless of their purpose and utility. Facebook had just rebranded to call itself ‘Meta’. 2021 was such a wonderful time.
In contrast, 2023 has been grim. The crypto winter shows no signs of thawing. The sheer cold has frozen everything from NFT markets to blockchain gaming. What about the metaverse? The public opinion says that the metaverse is dead.
Let’s not jump to hasty conclusions and uncover the truth.
Is the Metaverse Dead?
Before we start writing Metaverse’s obituary, let’s talk about what the metaverse is.
Metaverse refers to the three-dimensional digital space that uses virtual reality (VR), augmented reality (AR) and other technologies that connect the digital world with real-life experiences. There are several reiterations of the definition of metaverse. Most of them depict the metaverse with an immersive digital experience, digital items and digital ownership.
Here are some reasons why people have called the death of the Metaverse:
Disney Gives Up on Metaverse
The Walt Disney Company and the metaverse were a match made in heaven. A legendary entertainment company with an incomparable list of cartoon characters (Mickey Mouse), superhero universes (Marvel, Star Wars) and sports channels (ESPN) under its belt — it was the perfect company to spearhead the development of the metaverse.
Disney worked throughout 2022 to set up a team to build its metaverse. Mike White, a company veteran, was appointed as Disney’s first “metaverse executive.” White had Disney’s vast content library and captivating storytelling ability to create an immersive, next-generation experience for fans.
Unfortunately, the world will see none of that come to life. At least not for the time being. According to a Wall Street Journal report from March 2023, Disney laid off its entire Metaverse division just over a year after its formation. The layoffs were a part of the company’s restructuring under returning chief executive Bob Chapek.
Disney has eliminated its metaverse division, a 50-employee unit, as part of a broader restructuring https://t.co/wrDXE6ZhvV
— The Wall Street Journal (@WSJ) March 28, 2023
Instagram Disables NFT Features
Meta is widely regarded as a pro-NFT company. So when Meta-owned Instagram disabled its NFT features on its image-sharing application, the bleak outlook for NFTs and metaverse became dire.
The reason why NFTs are closely associated with the metaverse is because these crypto tokens form the building blocks of the metaverse. In the digital world, objects can be represented by NFTs. These NFTs are more than just digital objects as they verify user ownership and can be traded and transferred between users.
The move to disable NFT features on Instagram was a major blow to the community. Digital art creators who had hoped that NFTs and the metaverse would finally be accepted and understood by the mainstream were left disappointed. Meta’s decision to discontinue NFT sharing on Instagram less than a year after its introduction was a major blow.
Some product news: across the company, we're looking closely at what we prioritize to increase our focus. We’re winding down digital collectibles (NFTs) for now to focus on other ways to support creators, people, and businesses. 🧵[1/5]
— Stephane Kasriel (@skasriel) March 13, 2023
NFT Trading Volume Plummets
A big reason why many metaverse-sceptics have proclaimed its death is due to the sharp fall in public interest in NFTs and metaverse-related crypto projects. Nothing sums this scenario like the struggle of the NFT market.
Blockchain data compiled by The Block showed weekly NFT trade volume was on a bottomless slide from a 2023 peak of about $357 million in mid-February to about $67 million by the last week of August. That’s a drop of over 81% in six months.
If you look at decentralized metaverse projects such as Decentraland and The Sandbox, the stats tell a similar story.
Unique active wallets (UAW) on Decentraland have dropped over 60% since the end of 2021, from about 1380 UAW to 472 UAW, at the time of writing. Meanwhile, The Sandbox has seen its UAW fall nearly 86% in the same time period, data on DappRadar showed.
Clearly, the hype has died since its peak when luxury fashion house Gucci bought virtual land to set up shop on the Decentraland metaverse.
The Hype is Dead, not the Metaverse
At the Fortune Brainstorm Tech conference in July 2023, Vishal Shah, Meta’s vice president of Metaverse, said that metaverse was in a “hype cycle” and now that hype is dead.
“I’m actually pretty happy that there was both a hype and a trough of disillusionment last year; it was tough to live through that … But now we have our heads down and build, because that’s what it takes to build something difficult — to iterate and do it,” said Shah, as reported by Fortune.
People may have been too quick to write off the metaverse. Its just getting started.
Apple Enters the Metaverse
Apple made headlines in 2023 when the company revealed its first VR headgear called the Vision Pro. The Vision Pro seamlessly blends the digital world with the user’s physical space. Users will get the chance to interact with their mobile and desktop applications in an immersive way.
The early adopters see the metaverse as “the next chapter of the internet.” The prophecy may well come to life in the next decade as the world’s most revered technology company perfects its VR hardware.
Welcome to the era of spatial computing with Apple Vision Pro. You’ve never seen anything like this before! pic.twitter.com/PEIxKNpXBs
— Tim Cook (@tim_cook) June 5, 2023
Metaverse Moves Away from NFTs and Cryptocurrency
This will be a difficult pill to swallow for the crypto faithful. The future of the metaverse probably lies away from the cryptocurrency industry. The metaverse will exist as thousands of digital worlds, most of which will be controlled and managed by centralized corporations.
For starters, the public doesn’t seem to care about decentralization as much as the crypto industry advocates its benefits. If Disney reverts its metaverse strategy and comes back to create a Marvel or Star Wars-themed metaverse, fans will jump head first without caring about data privacy and decentralization.
A 2023 KPMG survey (PDF) of 767 executives from various technology, media and telecommunications (TMT) companies points to this narrative. Over 50% of the survey participants voted that their companies are “not planning to use” NFTs and cryptocurrencies in their metaverse strategy. 48% of the 767 TMT executives ruled out the use of blockchain technology.
Unsurprisingly, over 97% of the participant said their companies were “currently using” or “planning to use” AR technology while 87% said the same for VR technology.
As the metaverse industry matures we will see the technology used for activities beyond entertainment. Employee training, infrastructure planning, remote collaboration, sales and marketing are some of the use cases coming out of the metaverse.
The metaverse is not dead, it is evolving. The quiet mood can be likened to a caterpillar resting in its cocoon.
With time, the metaverse could well be as ubiquitous as the web2 internet today. We should watch for the entry of big-name gaming companies like Nintendo, Sony and Activision Blizzard from entering the metaverse. These gaming companies have the ability and the fan base to help take the concept of metaverse mainstream.
Clarity on cryptocurrency regulation will also give decentralized metaverse and NFTs a much-needed boost.