What happened to the metaverse? Is it dead?
In late 2022, about the time ChatGPT captured the world's attention, the metaverse bubble popped. Financial losses ensued, notably Meta's $13.7 billion operational loss in its Reality Labs division for 2022 as a whole. Microsoft laid off employees from its Mixed Reality Toolkit and HoloLens teams, cryptocurrency collapsed and consumers, eager to return to their pre-COVID lives, were not clamoring for extended reality devices.
The losses at Meta's Reality Labs unit increased to $16.1 billion in 2023, and Disney cut its metaverse division. Media reports proclaimed the metaverse was dead. The backlash to metaverse overmarketing included industry repudiation of the term itself. In its 2024 debut of the Apple Vision Pro headset, Apple, for example, took pains to disassociate the device from the metaverse, calling it instead an entrée to spatial computing.
The Metaverse Bubble Bursts
The metaverse, once hailed as the next big thing, experienced a significant setback in late 2022. The bubble burst, and the hype surrounding the metaverse began to fade. Financial losses mounted, with Meta's Reality Labs division reporting a $13.7 billion operational loss in 2022. Microsoft laid off employees from its Mixed Reality Toolkit and HoloLens teams, and the cryptocurrency market collapsed.
The losses continued to grow, with Meta's Reality Labs unit reporting a $16.1 billion loss in 2023. Disney also cut its metaverse division, and media reports proclaimed the metaverse dead. The backlash against the metaverse was so severe that the term itself became toxic, with companies like Apple distancing themselves from it. Apple's debut of the Apple Vision Pro headset in 2024 was notable for its avoidance of the metaverse label, instead focusing on the concept of spatial computing.
The metaverse's demise can be attributed to a combination of factors, including overmarketing, unrealistic expectations, and a lack of consumer demand. The COVID-19 pandemic, which had driven interest in remote work and socializing, began to recede, and consumers were no longer clamoring for extended reality devices.
While the metaverse may not be dead, it is certainly not the revolutionary concept it was once touted to be. The industry has taken a step back, and companies are reevaluating their approach to immersive technologies. The focus has shifted from the metaverse to more practical and tangible applications of technologies like AR, VR, and spatial computing.
Note: The metaverse's bubble bursting serves as a reminder that technological innovation is often subject to hype cycles, and that even the most promising concepts can fall victim to overmarketing and unrealistic expectations.
Why metaverse technology is still important for businesses
Although the vision of a rapid gestation of fully-realized virtual worlds where humans work, shop and socialize from the comfort of their couches has dimmed, the metaverse isn't dead. Components of it are gaining traction as graphics and capabilities for virtual and augmented reality, bolstered by AI, rapidly improve. The development of new technology such as eye tracking, which uses sensors to monitor and record eye movements, promises to make visual experiences more engaging.
In the area known as the industrial metaverse, epitomized by the Nvidia Omniverse platform, companies are building digital twins to design and monitor physical objects. Businesses are also using virtual reality (VR) to train employees and applying augmented reality (AR) to overlay information on real-world objects, helping their employees work better.
The Enduring Importance of Metaverse Technology
While the metaverse may not have lived up to its initial hype, the technology behind it is still gaining traction and has significant importance for businesses. The development of virtual and augmented reality, fueled by advancements in graphics and AI, is improving rapidly. New technologies like eye tracking are enhancing visual experiences, making them more engaging and immersive.
The industrial metaverse, exemplified by platforms like Nvidia Omniverse, is a prime example of how metaverse technology is being applied in practical and meaningful ways. Companies are using digital twins to design and monitor physical objects, streamlining processes and improving efficiency. Virtual reality is being used to train employees, reducing costs and improving knowledge retention. Augmented reality is being applied to overlay information on real-world objects, enhancing employee productivity and decision-making.
These applications of metaverse technology demonstrate its potential to drive business value and improve operations. As the technology continues to evolve, we can expect to see even more innovative uses of metaverse technology in various industries.
Note: The metaverse may not have become the fully-realized virtual world that was initially envisioned, but its underlying technology is still having a significant impact on businesses and industries. By focusing on practical applications and use cases, companies can harness the power of metaverse technology to drive innovation and improvement.
In e-commerce, customers are clamoring for virtual products that "tie back to the physical world," according to a June 2023 McKinsey report, which stated that the market for metaverse commerce alone -- "from home and food to fitness and apparel" -- could drive "$5 trillion in value creation by 2030." A report from data-gathering company Statista pegs the metaverse market at $74.4 billion in 2024 and predicts that by 2030, at an annual growth of rate of 38%, it will reach $507.8 billion with over 2.6 billion users.
The Metaverse Commerce Opportunity
The metaverse is expected to have a significant impact on e-commerce, with customers increasingly seeking virtual products that are connected to the physical world. According to a McKinsey report, the market for metaverse commerce could drive $5 trillion in value creation by 2030, spanning categories such as home, food, fitness, and apparel.
The metaverse market is already substantial, with a projected value of $74.4 billion in 2024, according to Statista. Moreover, the market is expected to experience rapid growth, with a predicted annual growth rate of 38% leading to a value of $507.8 billion by 2030. This growth will be accompanied by an increase in user base, with over 2.6 billion users expected by 2030.
The opportunity for businesses to capitalize on the metaverse commerce trend is significant, with potential applications in areas such as virtual try-on, immersive product experiences, and social commerce. As the metaverse continues to evolve, it will be essential for companies to develop strategies that leverage this technology to enhance customer engagement, drive sales, and create new revenue streams.
Note: The metaverse commerce market is poised for rapid growth, driven by increasing demand for virtual products and experiences that tie back to the physical world. Businesses that invest in metaverse technology and develop innovative commerce strategies will be well-positioned to capitalize on this trend and drive long-term growth.
A metaverse guide for the enterprise
What are companies to make of a technology phenomenon that's hot one day, cold the next and in the throes of rebranding itself? TechTarget's guide to the metaverse breaks down where this rapidly evolving set of technologies stands today and where it's headed.
Topics covered include the various technologies and platforms that support the metaverse, ongoing challenges, real-world use cases and the metaverse's impact on the future of work. Readers can follow the hyperlinks to other TechTarget articles for deeper dives into these and other topics, as well as to our in-depth definitions of key metaverse terms and novel techniques such as digital threads and Gaussian splatting.
Navigating the Metaverse for Enterprises
The metaverse is a rapidly evolving technology phenomenon that can be challenging for companies to navigate. TechTarget's guide to the metaverse provides a comprehensive overview of the current state of the technology, its challenges, and its potential impact on the future of work.
The guide covers various topics, including:
Readers can use the guide as a starting point to learn more about the metaverse and its potential applications for their organization. The hyperlinks to other TechTarget articles provide additional resources for those who want to dive deeper into specific topics, such as digital threads and Gaussian splatting.
Note: The metaverse is a complex and rapidly evolving technology, and companies need to stay informed about its developments and potential applications. TechTarget's guide provides a valuable resource for enterprises looking to navigate the metaverse and understand its potential impact on their business.