The Metaverse concept has been a topic of extraordinary interest among tech giants in recent years. However, it seems that Mark Zuckerberg has shifted his attention away from his ambitious project of Meta and towards artificial intelligence (AI), leading some to speculate that the Metaverse is dead.
At first, Zuckerberg had positioned the Metaverse as the next big thing and even renamed his company, formerly known as Facebook, Instagram, and WhatsApp, to Meta Platforms in 2021 to reflect this new focus.
In a grandiose tone, he declared: "I believe that the Metaverse is the next chapter of the internet. Just like we had the mobile internet; I think this is going to be the successor to that." Yet, some recent developments suggest that plans will not turn out as expected.
While Mark Zuckerberg declared the Metaverse as the next big thing, Meta's market capitalization has halved, and it has experienced significant financial losses.
Meta has experienced a significant loss of $24 billion in both 2021 and 2022 and has halved its market capitalization during this period. While in August 2021, its value was 1 trillion dollars, it now has a market capitalization of $525.89 billion.
In November 2022, this financial downturn led Meta to a massive layoff for the first time since the company's foundation, of approximately 11,000 employees.
Its internal dissent resulted from significant employee turnover and restructuring of teams based on Zuckerberg's priorities. Again, in a post dated March 14, in which Zuckerberg shared updates on their Year of Efficiency with Meta employees, he announced: "We plan to reduce the size of our team by about 10,000 people and close about 5,000 open roles that we have not yet hired… It's going to be tough, and there's no way around it."
However, the financial losses and mass layoffs were not a reason for the failure but a consequence of poor strategic planning and communication.
One of the project's blind decisions was Meta's choice to make the Metaverse dependent on VR. The VR technology market has yet to reach mass adoption, with hardware and software limitations and high costs that exclude many potential users. It is not an accessible technology for most people, making it hard for Meta to reach the ambitious goal of 1 billion users.
Already at the very beginning of its Metaverse journey, Meta has lost employees' trust and support as they express their doubts about the project's potential to reach 1 billion users within the next decade.
From the beginning, the project faced challenges in convincing its team and created an atmosphere of anxiety and expectation. In a survey conducted in December 2022 by Blind, the popular anonymous messaging app for company staff, when it asked Meta's staff if its platform would reach 1 billion users within the next decade, only 42% answered Yes. In November 2021, it was 67%.
Also, when asked around about who can still clearly explain what the Metaverse is, 64% of Meta staff say their colleagues can do so. However, what is most surprising is that 56% of them answer that their CEO has not clearly explained it.
Meta CEO's poor communication regarding the Metaverse, blind race to justify a large acquisition of Oculus, mass layoffs, and team restructuring have created internal dissent, resulting in significant employee turnover and investor doubts.
The project's challenges have led to speculation that the Metaverse is dead, with the company shifting its focus towards AI technology.
Now what? Generative AI?
Meta has announced its intention to create a new top-level product group focused on generative AI to accelerate its work in this area. According to Zuckerberg's Facebook post on February 27, the company is consolidating teams working on generative AI to develop new experiences around this technology.
The company's short-term focus will be on creating innovative and expressive tools, while its long-term plan is to develop AI personas that can assist people in various ways.
The rise of AI has shifted the focus away from the Metaverse, starting last year with the introduction of Microsoft-backed OpenAI's ChatGPT and following with the launch of other tech giants' AI services to stay ahead in the race.
We shouldn't underestimate how significantly Meta's recent focus on generative AI can impact on the Metaverse's future. AI can enable the creation of more immersive and personalized experiences, as well as provide solutions to some of the Metaverse's biggest challenges, such as moderation and content creation. It can also facilitate the creation of AI personas that can assist people in various ways, making it an essential tool for the development of the Metaverse.
Despite this shift, the Metaverse is not necessarily facing its demise. In Switzerland, for example, representatives from various sectors have come together to establish the Swiss Metaverse Association, with the aim of positioning the country as a global leader in the Metaverse.
Therefore, companies should keep track of Metaverse developments and experiment with new business models, products, and customer communities. Even if the Metaverse does not achieve mass adoption, the innovations and technologies that are being developed can still have an impact on other areas, such as entertainment, e-commerce, and customer experience.
In conclusion, while Meta's Metaverse project may not have gone as planned, the Metaverse concept still holds significant potential. The rise of generative AI can facilitate its development. Companies should keep track of Metaverse developments and experiment with new business models and products to stay ahead of the curve.