“The King is dead, long live the King!”, neatly sums up the way the hype cycle in the tech world has moved from the metaverse to generative AI in recent months. Late 2021 and most of 2022 were dominated by tech evangelists and investors enthusiastically proclaiming the imminent dawn of a new age; in which humanity has one leg in the physical world and one in parallel virtual and augmented realities.

Facebook, one of the world’s biggest tech companies, even changed its name to Meta Platforms in late 2021. Its co-founder and CEO Mark Zuckerberg put pretty much all of its eggs in the meta basket, hitching the future of the company firmly to the metaverse bandwagon.

The keen observer, however, may have noted that neither Zuckerberg nor any of the other metaverse evangelists were able to crystalise a clear picture of what the future metaverse would consist of beyond “virtual worlds”.

Is anybody (apart from Mark Zuckerberg) still interested in the metaverse?

In the time it has taken for a consensus on what the metaverse actually is to not be reached, nor any commercially viable metaverse product to be brought to market, the technology’s hype has faded at an alarming rate.

It’s just over a year since Meta graced the Super Bowl with an ad promoting its VR headsets imagining the joy of an old group of friends from an earlier stage in life that had drifted apart until being reunited in a virtual world. But by late 2022, especially following the release of a beta version of Microsoft-backed OpenAI’s predictive AI tool ChatGTP-4, the buzz around the “metaverse” has largely evaporated. It has been replaced in the affections of the tech-savvy public and investors by generative AI tech as quickly as it appeared.

Google search traffic for the term ‘metaverse’

Source: Google Trends

Mainstream VC investment in startups in the metaverse space reportedly collapsed between Q1 and Q4 2022. A more conservative investment environment due to fears over an impending global recession, high inflation and rising interest rates had a major influence on that but was far from the only, or even primary, factor. VC investment in generative AI startups soared 425% between 2020 and 2022, demonstrating the money is there if those who hold the purse strings decide to spend it.

Stock market investors have also tangibly expressed their scepticism of Facebook’s planned metamorphosis into a metaverse company. The Meta Platforms valuation plunged over 75% between autumn 2021, when the name and strategy change from Facebook was announced, and a recent low in late 2022.

Zuckerberg recently told investors, pivoting from the ‘metaverse-first instead of Facebook-first’ inspiration for the company name change just over a year earlier, that the metaverse was “not the majority of what we’re doing”.

That’s probably just as well as the company’s Reality Labs unit, which makes the Meta Quest VR headsets, recorded an operating loss of $13.7 billion in 2022. The publicly announced plan to hire 10,000 specialists based in the EU to work on Meta Platforms’ metaverse products also hasn’t been mentioned again recently. When asked about progress on the planned recruitment drive by Financial Times columnist Jemima Kelly, the company responded the European expansion was always long term and planned over “a number of years”.

Kelly also notes Microsoft issued redundancy notifications to 100 members of staff recruited just 4 months earlier as the founding members of the tech giant’s “industrial metaverse team”.

Will the metaverse make a comeback and if so….when?

None of this means the metaverse, or virtual and augmented reality technology,  will not become increasingly prevalent in the coming years. It is likely to become a familiar part of many of our professional and professional lives. However, it appears increasingly likely that this will be a longer and more gradual process than the metaverse hype of the past couple of years suggested.

Among the significant issues that the metaverse has to overcome if it is to realise Zuckerberg’s vision as the future of digital engagement and tempt flows of investment capital back is the lack of a clear consensus on what it is. And is not.

Is metaverse simply VR and the environments in which we will hold professional and social meetings, or play games, as virtual avatars in virtual worlds? How does it overlap with Web3, the vision for a decentralised internet powered by blockchain technology? For some investors, including Robby Yung, chief executive of Animoca Brands, a company launching a metaverse investment fund of up to $1 billion (scaled back from an original planned value of $2 billion due to “market circumstances”), the metaverse is essentially Web3.

Web3, however, does not intrinsically involve either VR, AR or any other kind of reality, virtual or otherwise. It is focused on moving the internet onto the blockchain and the utopia of everything we love about today’s internet without the big corporations helping themselves to all our personal data and monetising it.

More people seem to see the metaverse more like Zuckerberg does as centred on VR and AR. However, the rate of adoption and general enthusiasm for VR experiences is sluggish, to say the least. It has become clear that simply developing and launching iteratively improving VR hardware and software will not be enough to trigger a tipping point that will be reached anytime soon.

Consumers are intrigued but are not being hooked by early encounters with the VR worlds currently available to them. Companies are also not rushing to invest in $1000+ headsets to transform remote meetings into virtual avatar interactions.

CNBC reports that sales of virtual reality headsets in the U.S. declined 2% year over year to $1.1 billion as of early December 2022. Globally, worldwide shipments of VR headsets and AR hardware dropped more than 12% to 9.6 million units in 2022.

If the metaverse, as increasingly appears to be the case, is just a more immersive online world that introduces VR headsets, AR glasses and other hardware into the mix, it already exists. And we’re yet to be convinced we want to spend much time there.

Digital experience will certainly become more immersive as technology continues to evolve. But the journey to the metaverse, if the term even endures, will, it is becoming increasingly clear, be a much longer, winding and fractured one than early hype suggested.

The internet began as an academic project in 1969 and was not widely used until the 90s. The pace of technological development has increased since then but fundamental changes to how we live and work take time. We’re creatures of habit and won’t give up our attachment to non-virtual reality, even if we enjoy playing with new technology, quickly or easily.

Even if Mark Zuckerberg is proven entirely right in his vision for the metaverse, his enthusiasm may have seen him jump the gun with the timing. Meta Platforms and other big tech companies and VC funds backing startups have poured hundreds of billions of dollars into chasing the promised virtual land of the metaverse. It looks like they will have to be more patient than investors are known for when it comes to waiting for a return.