Source: Heart of the Metaverse

If you sit down with an avid Metaverse supporter, it won’t take long before he paints a rosy picture of how virtual worlds will change our lives.

Advocates of the Metaverse insist that in just a few years we’ll be shopping, socializing, studying and working while wearing an Oculus Rift, a head-mounted display designed for video games. Our fictional characters will be just as important as our flesh-and-blood ones. We just have to wait a little longer.

This belief is not limited to the star-studded founders of the Metaverse, but also those who have millions of tags on X (formerly Twitter) resumes, and those who deeply believe that Metaverse technology is the future of the Internet. In 2022, Pew Research surveyed more than 600 “tech innovators, developers, business and policy leaders, researchers, and activists” asking them whether they thought the Metaverse would be a part of our daily lives. 54%, more than half said “yes”.

A recent consumer survey commissioned by KPMG revealed similar, albeit to a lesser extent, perceptions that the Metaverse will eventually make its way into daily life.

The problem with optimism is that it has a relatively short shelf life. People cannot always be full of hope and enthusiasm. If you fail to deliver on your promises, or at least make some progress, you will soon find yourself swallowed up by a rising tide of cynicism and disillusionment.

So it’s time for us to have an honest discussion about the current state of the Metaverse, its current capabilities, and why it’s taking so long to reach its full potential as promised by evangelists and enthusiasts alike.

01. Current status of the Metaverse

In many ways, the Metaverse (as of late 2023) looks a lot like an early-stage technology product, with dozens of competitors already vying for dominance, even though it’s still in fully conceptual form.

By contrast, look at the home computer market in the 1980s, when Apple, Commodore, IBM and countless others were in a constant battle for supremacy. Each manufacturer has its own understanding of home computers. The war is not just about market share, but also about consumer psychology.

At the heart of any metaverse experience is the platform, and there are several of them, but each has some essential differences. Roblox and Fortnite are primarily games. Decentraland and Sandbox mainly revolve around Crypto, using the concept of “ownership” of the blockchain to design their own virtual economies. Meta’s Horizon Worlds takes a convergent approach, bringing together gaming and social elements with a clear intention to expand to other use cases.

In addition to these “giants”, there are also smaller independent “experiences” that are not affiliated with any one major platform and are usually operated by a brand. While they contain the core components that distinguish the Metaverse from video games (inherent multiplayer experience, virtual representation of users, and typical functional goals), they lack the scale and versatility of larger platforms. These experiences are utilitarian and exist to solve a specific problem or focus on a specific IP.

A good example of this is Celebrity Cruises’ 2022 metaverse experience “Celebrity Wonderverse,” where potential customers can create an avatar, board and explore its ships and destinations.

Finally, there are B2B Metaverse products, which are often overlooked by the flashier, more consumer-focused platforms. The most widely known of these products is Mesh for Microsoft Teams.

Although these B2B products are also early-stage technologies that have not yet reached a similar level of maturity, they have already proven their worth. According to a recent survey by Ernst & Young and Nokia, 80% of companies that have implemented Metaverse technology said that Metaverse technology will have a “significant or transformative impact” on their business, with only 2% Businesses view the technology as a “fad.”

02.Existing metaverse cases

In many ways, our current model of using the Metaverse aligns with, or is at least very similar to, what avid Metaverse enthusiasts would desire. People socialize and work in virtual worlds. There are economic benefits to both digital and real-world goods and services. But it’s just a matter of scale and proportion.

So far, we’ve seen massive concerts in Fortnite starring Ariana Grande, Travis Scott, and Marshmello. Brands have already begun building out their Metaverse real estate portfolios, with early adopters including Burberry, Lucid Motors and Hyundai Motors. The economy in digital goods and services, including virtual land, is small but growing.

Additionally, even within the commercial realm, enterprise Metaverse users are gaining some advantages that Metaverse advocates say. As shown in the aforementioned Ernst & Young and Nokia survey, 51% of Enterprise Metaverse users reported that they have experienced sustainability benefits. Another 39% and 29% of companies have improved in CAPEX (capital expenditure) and OPEX (operating expenditure) respectively. This is because they use virtual worlds to replace other, more expensive (both environmentally and financially) options, such as remote meeting participation.

The problem isn’t the functionality of existing Metaverse platforms, it’s the scale. Delivering these benefits to large numbers of consumers and business users requires time, money and investment. Additionally, there is a need to quickly drive go-to-market, channel management and human resources.

While I will be the first to admit that the underlying technology is not yet fully mature, this issue is secondary to the inadequacy of the overall ecosystem within the Metaverse realm.

03. The biggest obstacle and solution to the metaverse

It’s a little-known fact that most Metaverse platforms don’t expect to see the level of adoption that industry evangelists expect. Because they are not ready yet.

Unlike the traditional Internet, the Metaverse inherently requires a large amount of computing costs to operate. Rendering virtual worlds and providing a consistent, seamless user experience requires massive amounts of computing power. While some platforms attempt to offload these needs to users, this is not a reasonable option for those looking to achieve mass adoption, as it inherently limits the potential user base to only those with strong, Users of expensive and well-resourced computers.

This has long been the toughest challenge facing Metaverse platforms seeking to expand. Fortunately, this challenge is not insurmountable. Even without any outside intervention or new innovation, some relief is beginning to emerge.

After several years of price surges, GPU prices have begun to fall, in part due to improvements in the semiconductor supply chain and continued declines in Crypto prices. Even if the platform does not plan to operate its own infrastructure, it will see cost improvements for the cloud service provider because the cost savings will be passed on to the platform.

In addition, the Metaverse platform can take steps to invest in a multi-cloud infrastructure strategy on its own to increase capacity and serve more users. This approach, combined with new advances in streaming technology, will greatly expand the reach of the Metaverse and deliver a smooth, consistent, and seamless experience.

Again, as I’ve discussed before - content is another major barrier to Metaverse adoption, perhaps the biggest one. Without content, consumers will not accept the Metaverse; without an audience, content creators (including brands) will not invest capital in the Metaverse. This is a chicken or egg dilemma.

With Metaverse experiences costing millions of dollars to develop and maintain over their expected lifespan, brands are understandably still skeptical. Fortunately, this problem will be solved over time, in part due to the maturation of developer tools and the adoption of generative AI, which promises to reduce or eliminate many of the costs associated with developing and updating content.

Another reason for hope is the continued decline in VR headset prices. While not all Metaverse experiences require a VR headset, many do. Therefore, in the minds of consumers, the concept of the Metaverse is inseparable from VR. Prices for certain models, especially Meta’s Quest and Quest Pro series, have been slashed to attract potential users, and analysts expect average prices to fall between 2023 and 2028.

So that, coupled with the adoption of streaming and greater infrastructure investments by platforms, will help reduce upfront costs for consumers and inevitably play a role in making the Metaverse a mainstream, widely accepted technology.

04. Stay optimistic and patient

Despite some pessimistic claims that “the Metaverse hype bubble has burst,” I still believe the Metaverse has a bright future.

I firmly believe that Metaverse has value to brands, consumers and businesses. I really believe it will be widely used soon. But I also know that before it can reach its peak, the Metaverse must first mature.

For the past few years, Metaverse has been living up to the Silicon Valley motto of “building planes as they fly”. This approach inevitably limits its scope to a core group of early adopters and idealistic believers. These people, unlike the rest of society, accept a certain amount of “bumpiness” as the price of being first.

These early adopters will be critical in proving the value proposition of the Metaverse. They prove that the Metaverse can be both fun and useful. Armed with this knowledge, the Metaverse ecosystem should feel more confident as it begins to refine and expand. We have a Minimum Viable Product (MVP). Now it’s time to build the real product.

The future of the Internet is 3D. But this obviously takes time. Likewise, building the infrastructure to handle hundreds of millions of users takes time (and money). We need better and more sophisticated developer tools to allow brands to bring Metaverse products to market faster.

Here, optimism, while welcome, needs to give way to patience and planning.