The metaverse in 2023: Sliding towards reality

If 2021 was a new tide, and 2022 was a cresting wave, then the metaverse in 2023 was a crashing torrent of news and updates. Thousands of companies arose from the ground, all offering a spectrum of services that contribute to spatial computing. Augmented reality (AR) companies pull an overlay over reality, while virtual reality (VR) companies construct new worlds for people to visit. Others integrated the metaverse with other emerging trends, such as web3 and blockchain technologies.

Not all companies from 2021 to 2022 will survive next year. The hype cycle will no doubt fizzle out, and the companies who cannot prove their worth will steadily shut down their services. but out of the ashes will come stronger, more robust companies that can bear out scrutiny, and continue to build out the future of the metaverse.

The article will make predictions on what's to come, based on the most prevalent trends of the year. It will also be a deep dive, so feel free to skip to the parts you wish via the contents page below. Finally, if you wish to learn more about the metaverse, consider checking out my newsletter as well.

Differentiating between two metaverses

First, we need to make some important distinctions. We must differentiate between two types of metaverses. The former encompasses most of what we are seeing today; small, private worlds where players can socialise, create, and sell their services. The latter is much more expansive, encompassing the future of the internet:

• Micro-metaverses: Private virtual locations where players can engage with one another, likely within the rigid confines of a particular system. While micro-metaverses will act like separate realities, their scope and roles will be minor and dedicated to focused tasks or areas. Examples include Fortnite, Horizon Worlds, The Sandbox, Roblox, and Decentraland.

• Macro-metaverse: A successor of sorts to the internet which will drastically restructure the digital infrastructure of our world. Think of it as a new type of economy, in line with Matthew Ball's rendition in his book.

The metaverse in 2023 will see both types evolve, but one will get more attention than the other. Micro-metaverses such as Fortnite will continue their dominance, while Roblox continues its steady and strong pace. We will also see many other brand experiences dip into it as well, over time. The macro-metaverse will see less attention or interest, as its power lies in the very infrastructure of spatial computing. But it is no less important, and we will touch on some important innovations later in the article.

The value of the metaverse in 2023 and beyond

With that, we can dive into the metaverse. While it is likely a huge economic opportunity, it is difficult to pinpoint an exact figure. The metaverse encompasses new types of work, reinvented industries, and brand-new economic opportunities – all in one indistinct ball of potential. Pinning a number on it is like shooting a dart from space, to hit a small target on Earth.

Still, we had some organisations have a go at valuing the metaverse:

• Frost & Sullivan: $750bn by 2030.

• McKinsey & Company: $5trn by 2030.

• Citi Bank: $13trn by 2030.

No numbers exist for 2023, nor is there an indication of how rapidly it will grow. But based on the above, we can be confident that there will be a multi-trillion dollar opportunity for the metaverse in 2023.

The evolution of web3 and blockchain technologies

Blockchain technologies have been attached to metaverse conversations like limpets to the underside of sailing boats. Some professionals see both concepts as intertwined, with one being the necessary foundation of its development. One example is LAMINA1, a layer 1 blockchain designed for an open metaverse. It's an important question to answer because it builds on the very foundations of the metaverse. Will it be a decentralised system where people identify themselves on the chain, or a more centralised model? And will web3 be a dominant force in the market, or even metaverse-related cryptocurrencies?

I do not think the question will be answered in 2023. We will see more companies enter the fray with their own products and services, and continue to provide compelling web3 solutions that show the potential of the metaverse. Organisations such as the Open Metaverse Alliance (OMA3), pioneered by Animoca Brands, will continue to pioneer an open metaverse. In contrast, the Metaverse Standards Forum (MSF) comprises of Meta, IKEA, and Samsung – all companies from the web 2.0 era who also wish to build an open metaverse. Both will grow in tangent with one another, but the debate will not be settled anytime soon.

Metaverse regulation and competition

While companies are competing in a rapidly-growing market, regulatory bodies are keeping a close eye on its development. We are already seeing multiple national and international bodies make moves to regulate the metaverse and its contingent technologies, such as blockchain and cryptocurrencies.

Regulatory bodies always keep a cautious hand, observing the development of new areas. Regulation is necessary to ensure users are protected – but a heavy-handed approach can stifle innovation. In any case, the talks and debates will likely become action next year, and the metaverse in 2023 will morph slightly to, at the very least, protect users by law.

Examples of metaverse regulation

• The European Commission: The EU is keeping a cautious eye on the metaverse, watching its development while pinpointing areas of concern. Margrethe Vestager, the European Commissioner for Competition, added the metaverse as a key priority as part of the 'digital age' of Europe. The international body has already made papers outlying potential risks, and we should expect more debates in 2023.

• The Law Commission (United Kingdom): The body explored whether the new range of assets in the market, such as cryptocurrencies and NFTs, should be regulated. The discussion will continue, and 2023 may see new developments as the UK government legislates the country to be competitive in the emerging space.

• World Economic Forum: The organisation is seeking to build an open and inclusive metaverse, talking with experts to give recommendations on its future. More work will be done in 2023.

• Standards bodies: The XR Safety initiative (XRSI) is one of many organisations that are exploring how the space should be regulated, to what extent, and how far. These bodies will continue their research, feeding into wider groups such as the Metaverse Standards Forum, or directly with key partners such as Meta. Firm recommendations will likely be outlined in 2023.

New VR and AR experiences

In the Venn diagram of the metaverse, VR and AR are both intertwined in their growth. Previously standing on their own legs, both technologies have been roped into the spatial narrative – even if they may not be relevant to the conversation. For example, VR is a core part of Horizon Worlds because it is used within a micro-metaverse, and therefore plays a part in the conversation. On the other side, using AR to make images pop out of the page is not part of the metaverse conversation (though companies try to spanner their narrative in).

Even then, we are entering difficult market conditions. VR is already a price-elastic market, so consumer-end companies like Pico and Meta need to adapt fast to move their hardware.

The way I see both technologies is that they form the components for immersive experiences. At times, these projects will tie into the metaverse conversation. The metaverse in 2023 will include both, but in different ways.

The use cases of VR and AR

• The metaverse in marketing: 2022 already saw a span of experiences that tapped into the conversation, such as Wunderman Thompson creating its own beach for Cannes. 2023 will see more experiences, perhaps using VR or AR to liven the experiences up. WebAR services from the likes of Blippar, Zappar, and 8th Wall will continue to grow.

• The enterprise metaverse: Already a strong area of development, the enterprise metaverse will continue to use VR to help build out its work. Headset manufacturers such as Meta, Pico, HTC, and Vrgineers will continue to make major upgrades to their hardware, while companies such as Immerse and Make Real (alongside consultancies like PwC and Accenture) will service their clients with training solutions. The area will grow healthily in 2023.

• VR games and experiences: Top-tier titles such as Beat Saber will inevitably draw more people into consumer VR, despite its release many years ago. New and innovative titles, such as Finger Gun (which I love) will draw more people towards the hardware supplied by Pico and Meta. Costs will remain higher in the inflationary environment, but may dip lower in 2023 as external factors subside.

The metaverse in 2023: Hope for the future

2022 was an exciting year, with rapid developments from Meta coinciding with a tide of innovation from smaller companies. While the definition is still somewhat messy, companies will continue to pioneer new services that will service a new cohort of users. Proponents argue that web3 and blockchain technologies are a necessity for the metaverse in 2023 and beyond. I am less certain, but I still recognise the huge potential of decentralised systems.

Taken together, I am more certain that the metaverse will continue its swift growth. Regulatory bodies will likely introduce new policies, but innovation will continue head-on. Larger headset manufacturers will continue to innovate on its enterprise and consumer hardware, while others like RP1 are quietly tinkering with the very infrastructure of the metaverse.

Finally, I am hopeful that the metaverse becomes clearer. Definitions of the same word crisscrossed into multiple directions, fogging the area and making it opaque. I hope the roots shrivel down to a core stem, and we can all lean towards a singular definition that we can agree upon.