The metaverse is a failure. The games are stupid. I’ve tried Decentraland
In the mid-2000s, I watched Caprica on the SyFy channel. It was the prequel to the re-imagined Battlestar Galactica, which took artificial intelligence and cyborgs to a whole other level. In Caprica, teens lived in virtual worlds, donning these headsets that looked like what Oculus headsets might look like 20 years from now. Only, their avatars looked more like themselves than some block character from Minecraft wearing a silly face mask. It looked appealing, if not scary and a bit dystopian. Our metaverse looks nothing like that. It’s still the early stages. There are going to be a lot of projects that fail in the meantime. At the moment, there is nothing you can do in the metaverse that isn’t easier to do in the real world.
Roughly one year after billionaire Mark Zuckerberg renamed Facebook “Meta Platforms,” hoping Covid lockdowns would open us all to the dystopian sci-fi lifestyle depicted in Caprica, the WSJ reported on October 15 that, by Meta’s own standards, the metaverse has not caught on with its user base. And no one knows what will get them there.
Zuckerberg warned investors early on that the transition to living in virtual worlds would take years, if not a couple of generations. Even Gen Y, hooked on Instagram and TikTok since they were tweens, prefer to be in each other’s presence rather than in virtual worlds. The gamer world, and the whole gamer experience, is still one of friends playing each other over broadband on a PlayStation or Xbox console.
The WSJ reported that meta’s flagship product, known as Horizon Worlds, is falling short of expectations. But while most projects are rather blasé and often only have cool, sexy trailers that entice gamers to get involved early, there is still the belief that virtual worlds like those portrayed in science fiction will become a reality.
Facebook describes the metaverse as the successor to the mobile internet. Where does it stand today? For present-day investors, owning metaverse securities has been a money loser.
Metaverse: Bull or Bear?
If the future is sci-fi virtual reality, at least to some extent, then the metaverse investment theme is a long-term play. Companies will come and go, but the concept of the metaverse will remain a story for both traditional companies like Facebook, and those in the cryptocurrency universe.
Meta says they hope a billion people will be plugged into different metaverse platforms, including their own, within the next 10 years.
Predictions like these have helped the metaverse projects attract over $177 billion in investment since the beginning of 2021.
“It’s beyond any doubt that Metaverse is a sky-rocketing trend today, a decades-long dream for many,” says Alexei Kulevets, co-founder & CEO of Walken, a play-to-earn mobile fitness app built by a Lisbon-based team with over 50 million app store downloads to their name.
There are a number of reasons to believe that the metaverse will take off, such as the rise of some virtual reality games, cheaper VR headsets to access immersive experiences, and traceable blockchain technology that allows for secure transactions. Younger generations are used to buying items within a video game universe, and are used to collaborating with other people worldwide in these universes already through headphones and gaming consoles.
The hype has run far ahead of reality. And now bitcoin is crashing, so the market looks dour all around. Meta’s market capitalization, which topped $900 billion when the company changed its name from Facebook, now sits at around $344 billion.
Despite over $200 billion in investments over the years, there isn’t really a metaverse product anyone can buy. There is no Xbox Metaverse console that transports you and your friends into a virtual nightclub.
“The mission here for metaverse companies is to truly get individuals to immerse themselves in a whole new world,” says Joel Dietz, the Palo Alto-based CEO of MetaMetaverse, a platform for metaverse developers. “I feel that bulky VR headsets are not ideal, but it’s no surprise that while the software part of the immersive experience is being built and is readily available for individuals, it’s the hardware which is facing a barrier right now for individuals that cannot fully immerse themselves in these virtual spaces.”
Other than a few amazing Hollywood-looking trailers, the graphics in these platforms are no better than a 1990s Nintendo, even in Meta’s Horizon Worlds. When Meta announced the launch of Horizon Worlds in France and Spain, it was greeted with widespread mockery. Some say the tech is “too buggy.”
In the cryptocurrency investing space, patience lasts maybe six months. This market is going to take a while to develop and look appealing, says Simon Vieira, CEO of Mixmob, a metaverse game on “remix music culture” based in Singapore.
“About 50 years ago, we had only a few pixels moving in ‘pong.’ Imagine what will happen in the next 50 years with cheaper tools, more talent, and an even faster internet,” Vieira says.
Desktop-based interfaces could eventually overcome the graphics issues, too. New technologies like Pixel Streaming from Unreal Engine, where developers can run complex 3D applications on the web that are streamed and rendered on the cloud, are seen as taking the metaverse out of its childish, block-character world.
“This ultimately means your computer just acts as an empty bridge between the virtual world and super powerful machines somewhere else,” Vieira says. That will make for better virtual worlds, and better virtual worlds, one that will eventually incorporate a virtual you, in hologram-form, is the metaverse most of these developers are trying to build.
Some believe it’s good that Zuckerburg’s vision of the metaverse is falling apart. Big Tech already controls most of our data and influences our lives. With Meta’s Horizon Worlds, Zuckerberg is trying to create a proprietary version of the Internet, similar to his Internet.org initiative, where he controls everything a consumer can and can’t access. That’s concerning, given Facebook’s track record with user privacy.
“People get more and more concerned by the increasing potential for spying and user data collection among the metaverse platforms, and both spying and data collection seem inevitable,” says Kulevets. But that’s not stopping him from being bullish on the metaverse.
Meta’s Oculus Quest 2 headset sales have surpassed the number of Microsoft Xbox Series X and S sales, and it’s catching up with PlayStation5. The milestone makes Meta’s best VR headset the most successful virtual reality product ever, with a 97% jump in headset sales since 2021. Everyone knows about the privacy issue and data collection, but they are not too worried about it or understand why they should be.
“In practice, user behavior has demonstrated that a good product outweighs concerns around privacy,” says Julia Schwartz, Chief Strategy Officer at Everyrealm Inc, an investor in virtual real estate and developer of metaverse real estate projects based in New York.
Despite Meta Platforms losing half its market cap since changing its name and its focus to becoming a virtual worlds powerhouse, there remains a consensus that the metaverse will be a multi-trillion industry one day. Meanwhile, it’s growing pains for all involved.
For those with the patience of a saint, JP Morgan analysts estimate that some $54 billion is spent annually on virtual goods, and McKinsey & Company says that the metaverse has the potential to generate up to $5 trillion in value by 2030.
“Facebook has a tremendous advantage in becoming a leader in the industry through its user base as well as its capital firepower,” says Schwartz. “Zuckerberg was ahead of his time in recognizing the metaverse opportunity and others are now trying to catch up.”
There is still work to do to make this interesting to users. Investors will likely cut their losses and just repurchase the same tokens that have fallen by 50% or more this year.
“We are social animals. Metaverses should first and foremost tackle this issue. Will it be Horizon Worlds or an anonymous decentralized metaverse that wins the race? We don’t know this today, but we know that they all drive the progress the whole metaverse world is longing for. It’s definitely the most exciting time to watch this play out and to be a part of it,” Kulevets says.
*The writer of this article owns Decentraland.