The metaverse is quiet, not weak 

“I’m feeling nervous.” I’ve heard this phrase a few times over the last few months. The most recent was in a London meetup, as one director sipped her drink. “There’s been a lot of layoffs recently, hasn’t there?” she commented, with a slight shuffle of her feet. One person to her left politely nodded, though they shifted slightly as well.

I don’t blame them. The business jitters radiated across the metaverse and spatial computing companies, as investments dried up for most companies, and lines of work turned cold. Investment appetite flipped in 2023 towards generative AI, as VCs read the tea leaves and diverted funds. The most recent was when Snap shuttered a unit dedicated to business AR, a month after Disney’s metaverse lead departed the magic mouse’s firm.

That period of quiet has led to nervous murmurs. “Where is the activity?” remarks pundits on Forbes. “Where are the users, or the hardware devices?” That sentiment carries over to Google Trends, where people have been searching for the term less. Dom Tait from Omdia calls it the doldrums, with many that are “disenamored by the gulf between promise and actuality.” I agree with the sentiment; it feels like we are in a cold snap, as companies plod through the ice fields cold and somewhat alone.

But I think there are some nuances to this. Does a quiet period mean we have no activity? Not at all; we are seeing a whole lot of activities happening in the background as people work on their secret projects. They’re not loud, yes, but they exist. But what’s unclear is its longer viability in the area.

I’ve dug a little deeper, tapping the shoulders of experts within (and outside) the industry to try and paint a vivid picture of what is actually going on. And what do we see? Well, the picture is a little cold; but there is a hopeful sunset on its horizon.

Executive summary

• Short-term thinking: I am reasonably confident that the Vision Pro will cause a flurry of new investments and interest in the area, making today’s interest seem myopic.

• Asian growth: Our Western lens obscures high growth in other parts of the world.

• AI over metaverse: There is a stark jump in people interested in AI over the metaverse, proven through Google searches and VC appetite.

• What metaverse? Many companies prefer to stay away from the M word.

A change in investment

Is the metaverse itself a weaker market today? Companies are still building products and services, even if the attention itself has shifted with time. VC investments in 2021 manifested some results in 2022, with even more cropping out of the woodwork in 2023. Yes, AI investments are outstripping the likes of AR and VR; recent data from Pitchbook (and featured in the FT) attest to the gap. But millions still flow into the comparatively nascent area each month.

We have also seen some interesting investments which are smaller but are not necessarily representative of the market health. GEEIQ raised $8.2m in funding recently to offer insights for metaverse platforms — at a time when analytics is very important. Small compared to the likes of Improbable several years ago, but still shows a market in continued maturity.

So is it a case where we are treating spatial computing too harshly? That’s what Adam Samson at FutureDeluxe implies, saying that we are in the process of maturing. But I am unsure of its validity. Accenture and PwC have been working with immersive technologies for many years, and I am sure Jaron Lanier would raise an eyebrow if he heard that immersive technologies were a recent thing. What’s more likely is that the actual focus has changed, rather than its actual maturity.

But even then, I look at what’s happening in Asia and take a step back.

The growth of Asia

In July 2022, the Spanish Government announced that it would invest €3.8m into companies working on metaverse and web3 technologies. In the same month, Shanghai allocated $1.5bn into its Metaverse Development Fund – over 365 times more than Spain.

It’s a stark investment difference, a hill of Euros compared to a mountain of Yuan. Cities within China have consistently out-invested other countries; Shanghai, Nanjing, Hangzhou, Zhengzhou and others have unveiled metaverse strategies, with the former focusing on tourism. Not all countries trail behind; South Korea invested $51m into metaverse projects in March 2023. Still, the gulf remains wide.

That investment gap will likely mean China has a head start in immersive technologies for many years to come. The strategies laid out by its cities eye billions in revenue by 2025 or 2030, while other countries unveil comparatively meagre budgets. China is likely to be well-positioned to regain its lead in metaverse-related technologies, which may gain prominence this decade.

One more example. China Mobile is actively contributing to metaverse advancements – with huge clout too as it has over 940m members. The telecom company formed a large industry alliance with HTC, Huawei and Xiaomi among many others, to form “the world’s strongest metaverse circle of friends.” Two months later, China Mobile also announced a 5G “super network” designed to help with the requirements of metaverse-related applications.

We tend to have a Western lens. But it’s clear that other countries are putting heaps of research and data into the area, hoping for sprouts of growth to bloom. But even with this activity, the actual label we use is up for debate. So let’s hop into that.

A shift in conversation

First, I should show my hand a little here: I think tech literacy on the metaverse is abysmal, and part of this is our own fault. We’ve cluttered the scene with so many words and by-words with a muddle of definitions, none of which are clear or concise. One expert approached me with the idea of an MR metaverse, which is like mixing two types of cola together to see if it improves the taste. It doesn’t, and it further clutters the external positioning of the term.

Then there is the role of the media, too. Articles on immersive technologies turned from a stream to a drip, while articles on AI picked up. And honestly, I don’t blame them for the change. The reasons are complex, but misinformation on its health online is a contributing factor highlighted by Gabriella Stanely of vrisch and Rosie Copland of UNIT9.

Also, generative AI has an immediacy of potential which is more evident than many metaverse experiences I have seen. Some require you to go to a particular site, don a VR headset, and experience solitary confinement. Powerful, yes, but easy to access? Easy to share, or talk about? Not as well as hopping into ChatGPT and asking for advice. The industry has been poor at communicating its value, hampered by the very nature of its immersive technologies and the vagueness of its potential. It needs a better story.

This matters because a lack of reporting implies a lack of value or interest. Publishers tend to focus on what is trending online, and capture the interest by writing on what their readers want. But another part comes down to genuine value. I don’t blame them, but an unintended consequence is the perceived lack of activity. Silence is misconstrued as inactivity, when the opposite may well be true.

A shift in meaning

“The metaverse has died not with a bang, but a wimper”, said Catherine D. Henry, a VP at Media.Monks. Bold words, but I don’t disagree with the sentiment; not as many people like to use the M word anymore.

Part of it is its ties to a somewhat negative connotation with Meta, interpreted as a failure of a project pushed by the hubris of one man. The narrative is especially strong on YouTube, where people pile onto the metaverse as a whole while focusing on a singular platform. “I went into the metaverse” says one, as they explore a couple of platforms and give an entertainment video with light analysis.

What’s problematic about this is that YouTube is incredibly important for the metaverse and spatial computing. When I engage in Google advertising for words on “metaverse analysis” and “spatial computing analysis,” I notice that the majority of my clicks come from people who are browsing YouTube, hopping from relevant video to video. It certainly showcases the power of stars like Nathie and others, with a clear link between VR gaming and sales. (The same may be the same for Gorilla Tag, which became viral on TikTok, though I need to experiment with it further before I can judge). It’s important because it has a soft effect on how an area is seen – and I have worked in PR long enough to know that media manifestation can be real.

But it also tells me that the M word may not be right; the principles of great immersive content are still there, just with a different label. So let’s pivot the question slightly; are companies using contingent technologies in any reasonable way? Here, the answer is yes. David Whelan, CEO of ENGAGE XR, sees the metaverse and spatial computing as one and the same. Meanwhile, Wagner James Au suspects that the two terms can grow together, as flowers from the same pot. I agree with both, as it all collapses into one fruitful umbrella. I can also cite the studies of numerous agencies, consultancies, analysts, and whoever else works in the nitty-gritty of the tech who are doing great work.

I’ve previously argued that the metaverse and spatial computing are interrelated. But with the formless and flexible market right now, I heavily suspect that we will see a new word creep up the ranks in 2024 and beyond. I don’t mind either way – we have a slew of experts who have been grappling with the tech long before it had the media’s eyes.

A market upswing

My views on this match Janko Roettgers, who runs the excellent Lowpass newsletter: “I think we're at the beginning of another market upswing. Apple's Vision Pro may not move large numbers when it comes out early next year, but it is definitely capturing mindshare, and getting companies to revisit spatial computing.”

This comes the closest to matching my own views. I find it strange that there was an upsurge in interest that filtered down to a low hum, which will likely spike up again as the Apple Vision Pro comes to the market. There is an element of short-term thinking, where the absence of a loud strategy is misinterpreted as a weak one. I am happy to eat my virtual hat if I am proven wrong. But consider this: Meta’s name change prompted the late 2021 investment spree which may draw parallels with Apple’s launch. Never dismiss the weight of a larger company making a move.

Whatever its shape, it needs to be done well. Accessibility and inclusivity need to be a focus, as said by Kelly Vero of METACRUN.CH. “My fear is that spatial computing will once again elude the digital and poverty gaps preferring to focus on the 1%.” The same goes for Dominic Collins from Darabase, who focuses on permissions and brand safety in new spaces. These are important additions as the market grows. But it’s reliant on the market actually growing to begin with.

Despite all of this, I know that I am seeing it through the lens of an optimist. I see experiences at London Film Festival and Raindance Film Festival, and marvel at the creativity of some people. I also judge the works through the likes of the XR Awards, and see how people portray the work that they do. I see the strength of a smaller yet active area where people do great work, so I see great work on a daily basis. Then again, that’s perhaps a weakness that I have; I am so trenched into the area that I struggle to peek above the mound and into the greener hills on the other side.

I’m self-aware of my weakness, but it’s one I mitigate by observing the market with a cool lens where I can. And from what I can see, we’re in for an interesting 2024.

Note: The Immersive Wire is run by Tom Ffiske, who also works within Accenture’s metaverse group. The contents of the newsletter should not be regarded as Accenture’s views.