Defending the metaverse in the new age of AI

Tech trends come and go as swift as fads in school playgrounds – if anything, tech moves faster. If the metaverse was the momentary fixation on Neopets, then generative AI has the colossal staying power of Pokémon. One year, kids leap on the new coolest toy – one which was in development for many years, but seemed to come out of nowhere. The year after the toy seems to go back into the toybox, as a new one rises from the horizon and lands in people’s hands. “This is what I want,” the chorus of children cheer. “How did I not want this before?”

Weeks turn into years, and the winds of change blew across Silicon Valley. Last year the metaverse saw a large influx in funding, propelled by a rise in interest since 2021. The script switched in the first quarter of 2023, where AI received $2.3bn in funding; metaverse-related companies received $586.7m in the same period. Funding rounds mirrored companies stepping further away from metaverse commitments, or shuttering divisions focused on it. Microsoft cut its industrial metaverse team, while Disney shuttered its metaverse-related division in March (though with nuances across both). The same scepticism blew in Meta’s halls too. Brad Gerstner, whose fund Altimeter Capital owns a sizable chunk of Meta’s shares, ran an open letter to ask for fewer investments into its Reality Labs division.

Compare this to the rise of generative AI, sparked by OpenAI and turning into a new age of innovation. Companies are integrating new AI tools into their products and services, from travel planning to website creation. We’ve not seen anything like it for some time, and we rarely see a new tech trend embed itself into business so quickly or profoundly. Satya Nadella, CEO of Microsoft, donned boxing gloves as he entered the ring against Google. “I hope that, with our innovation, [Google] will definitely want to come out and show that they can dance,” he said in an interview with The Verge. “And I want people to know that we made them dance, and I think that’ll be a great day.” Bold words, yet it matches the bright horizon that we see in the new age of AI.

Executive summary

• Less hype, more sense: XR companies have been focusing on spatial technologies for many years, and will continue to do so. Smaller companies who hopped onto the bandwagon are finding that their runways are now deteriorating, while stronger players remain. Even larger companies that announced reorganisations, such as Disney or Microsoft, still have major plays with metaverse-related activities.

• AI is a part of the wider metaverse: AI and the metaverse can be seen as separate and parallel threads. But I also see the two interacting with one another, as we move towards more spatial uses of AI. We will see more and more platforms use them.

• Speeding up adoption: The implementation of generative AI into web-based metaverse worlds (which are indexed well for searchability) will drastically increase the growth of social spaces online.

Newfound cynicism on the metaverse

Is the cynicism for the metaverse justified? It is tempting to say yes, and the wider media landscape would agree. The Wall Street Journal discussed the “meh-taverse” as a transitory trend, while The Times talks about “harsh reality” crashing into it. Funding is falling alongside stock values. We are seeing companies who previously labelled themselves as XR companies slap a metaverse sticker on their slide decks – and now AI is slapped on top of that sticker, too. The lights of the metaverse dim darker as virtual streets lose their bustle.

I do not share the same views. I believe the fundamental promise of the metaverse remains strong, as we continue the development of spatial technologies. I believe that the internet will become more immersive, collaborative, and impactful over time, and that AI plays a role in shaping its future too. I also believe that the fixation on AI does not detract one from the other; they pair together, and the more established player will continue their hard work to develop the digital future.

Justifying this can be difficult, or perhaps “uncool” in Silicon Valley. With the change of optics, I have seen an influx of people who have suddenly become AI experts within a span of a few weeks. “I’ve always known AI will do this,” says a flurry of LinkedIn peddlers – the very same who said the metaverse will bring about a new age of the internet. My own views have changed slightly from 2016, tempered by what is possible with technology. But I really don’t mind saying that I never expected the rise of AI to come so drastically, nor in the form it came. I never predicted it because, quite simply, I had no idea it was possible.

But now it is here, it does integrate well with a belief that I have held since started Virtual Perceptions (the precursor to the Immersive Wire) in 2016. In short, I believe the internet will become more spatial over time – and I now believe that AI is a fundamental tool to help with its dramatic growth. Let’s argue how.

Immersive technologies remain strong

Work on the metaverse happened long before Meta changed its name. Tim Sweeney, CEO of Epic Games, has been building out his vision for some time, working on the components and speculating on its economy. XR companies had been grappling with spatial technologies for some time, though rarely used the “metaverse” to describe their work. PwC ran a report in 2019, saying that VR and AR have the potential to add $1.5trn to the global economy by 2030. All of these components remained strong within the immersive tech space, just under a different name.

The fundamentals have not changed. Immersive technologies are still useful for cases like immersive training, and will continue to get support as it evolves over time. Sound principles mean a consistent and persistent growth trajectory for the area – perhaps not as flashy as AI, but robust and stable all the same.

Plus, we are already seeing platforms integrate AI as part of their soft skills training. VirtualSpeech added chat functionalities to its interview experience, so people can learn how to handle people in differing situations. I see similar uses across the enterprise space, using sophisticated bots based on LLMs to improve the experience.

AI and the metaverse coming together

If anything, I see AI and the metaverse joining hands for the growth of both. We will see a trajectory where AI will help to create virtual worlds and spaces, generating assets to populate locations over time. We will speak life into new spaces, and craft them as we like. I don’t see AI replacing the metaverse; I see both working together to build a spatial internet.

I expect the ease of creation to speed up the growth of metaverse platforms, alongside the integration of web-based services. We have seen how the easy-to-use tools of TikTok are a part of its stratospheric rise to power – its editing software, CapCut, is also one of the most downloaded tools in app stores. If spatial computing shows promise, then this will be a key part of its development.

The point was hammered home by Evan Helda in an excellent post on the same topic. Evan argues that 3D content should be the focus in the short-term: “Even if we had the ultimate pair of AR/VR glasses today, they wouldn’t be terribly useful. Outside of games, most brands/companies suck at 3D content creation. But that’s starting to change. Brands and companies are starting to think/operate ‘3D first’, arming themselves with the right talent, 3D services, and 3D workflows to crank out immersive experiences, repeatedly and affordably. When done right, 3D content won’t come in a slow trickle. It will be explosive, like striking a rich oilfield of 3D data.”

Think of the timeline like this:

1. Generative AI tools support the development of 3D assets and worlds;

2. These assets and worlds lower the barrier of entry for more people to access the metaverse, and show off their creations;

3. The right type of indexing for metaverse-related worlds will create a network effect for the collective ecosystem to grow further and faster;

4. The metaverse itself will grow in popularity, as a competitive scene invigorates innovation and enjoyment among the web-based community.

Not getting caught up in the hype

I love AI, and it has supported my own work in the Immersive Wire. Midjourney has helped to make the right images for my stories, and Bing Chat has been exemplary for research. I understand why it is changing how we see business, and it’s one of the most exciting times to work in technology – I share the same enthusiasm.

What I do not understand is the short-termism of changing optics. The metaverse itself is not weakening because AI has come – instead, the media optics have changed. Joking articles that say Meta may change its name (again) to MetAI belies the fast nature of internet discourse. These trends have been developing for years, and will continue for many years to come. AI did not come suddenly – it came after years of hard work within OpenAI which then exploded into a sudden shock of knowledge-sharing.

I expect the same with the metaverse. The fundamentals of the spatial internet remain strong, though with large technical challenges that companies are addressing behind closed R&D doors. I expect AI to be integrated into web-based metaverse platforms to help support the creation of worlds, and for that to help spread its development further. Billions of dollars flowed into metaverse-related start-ups between 2021 and 2022, as the floodgates of investments opened wide. I expect the fruits of these investments to keep coming over time.

If you enjoyed the piece, consider subscribing to the Immersive Wire for weekly insights: