Trends that metaverse professionals should look out for in 2023

If I were to summarise 2022, it would be noisy. Professionals postulated about the future of spatial technologies, debating terms and definitions as the public grew more confused. The cacophony bled into talks, trade shows, and trade papers, obfuscating the true value behind it. It can mean virtual reality (VR), augmented reality (AR), web3, blockchain, digital twins, NFTs, and many other technologies—all coalescing under one large and vague umbrella. Confusing conversations stemmed from one core issue: a lack of agreement on simple foundations. So when we look at metaverse trends in 2023, my hope is that stand on firmer ground over time.

Beyond this, we should see a huge swathe of new developments across the metaverse space. The topic is large, with a suite of tools for professionals to dip into. Well-established trends will continue, from using digital twins across supply chains, right up to VR for training. But we will see new blockchain-based technologies rise up, setting the framework for new communities and interactions.

The article will cover the views of many professionals in the space, all proposing predictions on what 2023 will bring. We will touch on some of the fundamental technologies, and then examples of industries that will be impacted over the year. As web3 is a huge area, it will have its own section as well. With some light analysis, we should have a better picture of what's to come—and how companies can prepare for it. It's also a chunky piece, so feel free to bounce around based on what you would like to find.

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The fundamental technologies behind the metaverse

We'll start with the fundamental tech behind the metaverse. VR, AR, and digital twins will all meld into the conversation over the year, brimming with innovation as companies drive into it. The overall trend is that economic conditions will slow consumer adoption—but the fundamentals remain strong, and innovation will continue.

As AI will play an evolved part in 2023, I opted to add a section on it here. And technically, blockchain technologies should fit into this section as well. As web3 is such a big area, it warranted its own section in the piece.

Let's dive in.

Virtual reality: A slow rise in adoption

VR adoption grew healthily in 2022, as new competitors rose in the market. Pico, a subsidiary of Bytedance, continued its long-term strategy to build a presence in Asia and Europe, rolling out new headsets like the Pico Neo3 Link, Pico 4 and the enterprise version of the latter. Compare this to Meta, who continued to hold the market in a strong grip via the Quest 2—though the price leap hampered appetite for the headset. Even then, I would be surprised if the Quest 2 failed to meet sales expectations during Christmas. Enterprise variations should remain strong, facilitated by the Pimax, Varjo, Magic Leap, and XTAL headsets.

The future looks shaky, however. CCS Insight predicts that only 11 million VR and AR units of hardware will sell in 2023, though will bounce back in 2024. Economic conditions will scrape consumer appetite for VR hardware, though it's hard to say to what extent. I suspect Meta is well-insulated and buoyed by a strong library of content. Pico should be as well, with the backing of Bytedance and a well-established hardware and software strategy. More corporate software should be safest, focusing on a small but valuable segment of the market.

Yet more content may be needed, argues Paul Lee, a partner at Deloitte UK. 'The success of virtual reality relies heavily on content, and the way it can differentiate from everything else in a busy entertainment market. Compared with mobile phones, tablets, laptops, and games consoles, which boast billions of users every day, VR headsets still tend to be used relatively infrequently. The growth of VR will be dependent on the industry creating engaging content that cannot be found elsewhere, which might include an accessible and immersive ‘metaverse’ experience, at a competitive price.'

I would not be surprised if virtual reality remains strong, if hardware pick-up slows. The long-term view remains strong, and developers will work on software which can land well in 2024 and beyond.

Augmented reality: Business as usual

AR continued its fair pace. The biggest news was Niantic buying 8th Wall, a platform specialised in webAR development. I can see the development of AR glasses continuing in 2023, as the form factor shrinks and we will see actual use-cases on the ground. The Nreal Air provides a compelling consumer example, while Vuzix continues its steady growth. I am less sure that AR glasses will see huge leaps next year, but we will see more go to market and give a good shake at it.

Players embedded in immersive technologies are excited about the 'inevitable' arrival of immersive technologies. Stefan Hauswiesner CEO and co-founder of Reactive Reality, compares the trend to Blackberry phones. 'Touch, sight, hearing, and potentially even smelling and tasting will play a role in the immersive devices of the future. Such devices will ultimately be far more immersive than the traditional smartphone and the companies that are able to and willing to engage consumers with AR and VR experiences will win out.' I am less sure, but I can see the appeal of more 'frictionless' devices.

Others think the device will be much smaller. Mike Rhodes, CEO and founder of ConsultMyApp, seems to think so. 'The crossover between the metaverse and augmented reality will become normal and with it, the ability to seamlessly transition between AR and real life. This instantaneous access to the metaverse is only truly valuable with an always-on device such as contact lenses.' There has been promising work here, most notably from Mojo Vision—though I will be surprised if 2023 will see a huge pick-up on it. If anything, I see the next year as a period of iteration, not revolution.

AI: Embedded more among other technologies

As a sub-trend, AI will be a contributing part of the metaverse. We have seen generative AI rise in immense popularity in 2022, which will inevitably continue in the year after. But what interests me more is the fact that we may see generative assets as well. We have already seen Meta experiment with ways to build worlds with voice, for example. More will surely come.

AI can also solve issues like population density, too. Dr. Ben Goertzel, an AI innovator and developer at Sophiaverse, comes up with one unique example: making sure virtual worlds seem populated, via AI NPCs. 'These characters can help to create a sense of activity and community in virtual worlds, making them more appealing to users. The initial excitement of being one of the first few users in a new metaverse may quickly fade if the platform is underpopulated. However, the presence of AI characters that are capable of building, conversing, creating art, and participating in economic activities can help to transform a desolate virtual world into a vibrant and engaging environment.' Then again, I would much prefer more people using the platforms, to begin with.

What is less clear is whether these trends will happen next year, rather than many years in the future. I suspect we will see AI characters over time, but we will have to see.

Digital twins: One to keep a close eye on

Another huge area, but one I am following closely. We're already seeing experts like Siemens use the technology to improve production processes, and building firms integrate them for construction projects. The area has a ravenous type of intrigue, too. When I was at Immersive Tech Week, the interest levels behind it were larger than I expected, filling out theatres. 'This leads to a better understanding and deeper knowledge of actual manufacturing processes without having to access them directly, said Manfred Berger, Senior Manager, Business Development at Western Digital. 'In this way, product development or design, for instance, can be improved.' So where will it go in the future?

Prith Banerjee, Chief Technology Officer at Ansys, proposes that 'hybrid digital twins' will have a big impact by melding physical assets with a simulated model in platforms. 'By leveraging predictive analytics from IoT and combining it with the power of physics-based simulation, companies can supercharge their predictive capabilities from ~80% to 99% accuracy through this convergence of IT and OT. This hybrid digital twins approach enables businesses to merge asset data collected by IoT sensors with physics data to optimize system design, predictive maintenance and industrial asset management.'

I think the impact will be wider. After seeing the high amount of interest in the area, it would not surprise me if we see more companies advertise their digital twin capabilities in a more direct way, over time. We will see.

Welcome to the web3 era

Blockchain technologies underpin the principles of web3 and digital identity, which we will touch on soon. But we also need to address the bright-pink elephant in the room, painted with FTX across its wide belly. The market jittered with the exchange collapsed, challenging the trust in decentralised systems. Take metaverse land as one example, which fell in value by 80% over the year. What is the long-term viability of blockchain-based companies and decentralised organisations, in 2023 and beyond?

I believe the fundamentals stand strong, in much the same view as the Economist. The chaos of FTX and other falling projects shows the weaknesses of some business models and approaches, but the idea of decentralised ownership and communities is still quite tantalising as a way to conduct business. Plus, we've seen booms and busts before, and news articles tend to cover true work in the space. Quietly, many companies build in the interim. Amy Ramage, founder and creative director at Célibataire, suggests taking a step back from the headlines and focusing on infrastructure, in a way that gives customers value.

Also, a core group of developers remain dedicated to web3. Take Stack Overflow, which ran its data on the topic. Although 15% of respondents have actual blockchain experience, and of these users, 41% think web3 is the future. 'As the hype and mania recede, we will see the Web3 industry consolidate,' said Prashanth Chandrasekar, CEO of Stack Overflow. 'Ultimately, 2023 is an opportunity for a few high-quality companies (perhaps even existing companies that have been waiting patiently on the sidelines) to take a leadership role. In doing so, they’ll drive high-trust innovation that unlocks meaningful progress and legitimate product-market fit.'

Digital assets: A new kind of ownership

The emergence of web3 seeps into the value of digital assets as well. As a new form of ownership comes about, we should see some interesting evolutions in the concept in 2023. 'We have made great strides with digital assets in recent years,' said Mark Mamone, group CIO at GBG. 'These digital assets can now be represented in the digital world as accurately as the real world which is potentially game-changing for brands.'

The natural evolution of this is NFTs, which we have touched on a fair bit. But one angle I am particularly interested in is their use in museums. We have already seen Rembrandts split into thousands of pieces to be sold off, as one example—which is an interesting way for organisations to generate funds. Hussein Hallak, the founder of Momentable, goes into further detail: 'While museums can certainly create NFTs of the existing items to sell while they maintain the custody of the physical item, we believe a more interesting use of NFTs is to create limited edition digital copies of the item, just like limited prints, and sell those as price tiers that are more accessible to a wider audience allowing new groups of people to become patrons and collectors.'

Ultimately, I see the topic as an extension of web3 principles and ideology. While not all NFT projects will succeed, some will spark out and turn successful.

Digital identity: A new spark of discussions

One significant repercussion of blockchain technologies is the notion of digital identity. The topic itself is not new; video games and online forums sparked the discussion on what 'identity' meant in the age of the internet. But blockchain technologies introduce a new wrinkle, as assets and ownership are more tightly tied to the user. That sense of identity will continue into 2023, argues Jawad Ashraf, CEO and co-founder of Virtua. 'We envisage more and more social media users taking their first steps into, or at least towards, the metaverse through the desire to curate and showcase ever more intricate and impressive versions of their digital selves.'

I can see a new era for identity crest the horizon, as a key metaverse trend in 2023. We're already seeing successful communities spurn from web3 principles, from Bored Ape Yacht Club to Nouns. Countless others have fallen, but the core principle of greater ownership remains persuasive. I suspect the topic will become more nuanced in 2023, as people highlight digital identity as a key driver in web3 activities.

That opens security concerns as well, according to Bhavesh Vaghela, VP of global product growth at Callsign. 'There will be a need for metaverse creators to tap into modern identity verification technologies—such as behavioural biometrics and facial recognition—to provide ongoing user authentication. Regulators will also have a part to play in setting up protections for users of the metaverse around identity and to proactively curb the efforts of bad actors.' The same goes for more enterprise applications, according to David Mahdi, CSO and CISO advisor at Sectigo. 'Enterprise leaders must place significant focus on identity-first security, thereby establishing and maintaining digital trust for the massive (and growing) amounts of human and machine identities.'

Industries that will be impacted by metaverse trends in 2023

Now we have the fundamentals done, let's look at some industries that will be impacted in 2023, and a little beyond as well. In short, I believe there will be some iterative changes, but not big ones. Professionals clearly consider it to be a revolutionising force, and I agree. But whats less clear is whether 2023 will be the huge change that people expect.

I suspect that it will be a slower change, but we may see sparks of innovation, too. Retail is a clear example of an industry that is going faster than I expected. Let's go a little deeper, and you can see what I mean.

Retail: A surprising bit of innovation

As metaverse conversations reared up throughout the year, retail professionals looked into how to tap into the trend for their own benefit. What I found remarkable was the level of experimentation with it. When I went to Retail Week Live this year, I found it interesting that retailers were willing to take risky leaps and drop collections, or run events in virtual worlds (such as boohoo). CIO and CMO budgets intermingled to create campaigns, which they iterated upon after each run. Gucci is a clear success example, allowing for crypto payments in certain stories and constantly releasing collections.

Still, we should see greater accessibility over time. Not everyone has digital wallets, and I would imagine many do not understand why they need one, to begin with. The exception includes countries with less trust in their financial systems. Tim Smith, a creative and tech director at NewTerritory, argues that the metaverse will be more accessible over time. 'Different entry points will start to increase in number, whether through in-store environments or via smartphones, opening up accessibility to a larger audience. These creative entry points will also begin to leverage our senses beyond traditional audio-visual and include multi-sensory features that speak to a broader range of needs, such as dialling up touch and smell for those with vision impairments.'

My suspicion is that we will see more retailers dip into the space as well. Still, the more tech-native ones will dip their toes. I suspect stories like Primark, solidly traditional with a weaker online presence, will see no need to shift its strategic direction.

Customer experience: A rising area of interest

Curiously, customer experience repeatedly came up as a topic by experts. But after some further digging, it does make sense; immersive experiences have a natural impact on the way customers interact. The relevance was neatly put by Martin Taylor, co-founder and deputy CEO at Content Guru. 'When it comes to traditional CX, brands risk losing almost 40% of their existing customers due to poor levels of personalization. The metaverse is capable of changing that—with new avenues opening up to improve customer experiences using next-generation hyper-personalization, customization and interactivity.' Building on this, Rajashekara Visweswara Maiya, the VP and global head of business consulting at Finacle, believes that 'voice-based contact centres may soon be replaced by bank executives' metaverse avatars, allowing banks to give their clients more in-depth real-time information (statements and forms, for example) than they could over the phone.'

The zeal is so powerful that others believe that we will move away from talking about metaverse experiences, towards the 'metaverse customer experience' in 2023. That was the argument pushed by Britta Guldmann, customer success manager at Artificial Solutions, as brands open new experiences in virtual worlds. My position is less strong. I believe brands will create new experiences in virtual locations, and will need to deploy teams to service them to ensure a smooth customer experience. But the trend will only grow in strength as much as metaverse platforms grow, and I am unsure the trend will be fast next year. I would say the metaverse customer experience will improve as a metaverse trend in 2023.

Financial services: Slow or fast regulation?

Not a small area, I know. But we will see banks look into digital currencies and grapple with a potential new paradigm in the financial infrastructure of transactions. The UK and US are taking a deep interest, and we may see smaller countries double down in a more digital side of currencies. Still, I do not believe that more consumer blockchains—such as Ethereum—get any support unless they make hefty concessions on their layering structure, which would need drastic approvals and a shift in perspectives. We will see more types of commerce as well, argues Josh Wood, founder of Bloc. 'E-commerce will likely move onto a whole new level as virtual stores become host to a wide variety of product offerings for users.'

Regulation is the big question, here. How quickly will we see new reforms in financial services go out? The World Economic Forum will give recommendations early in 2023, so we may see more come from that as well. I also suspect we may see some 'shotgun' reforms as cases of fraud become more widespread, as jitters from governments to protect people. But I do not think we will see big moves until the second half of the year, if then.

Enterprise and hybrid work: Continued evolution, slow revolution

After a pandemic-induced boom in 2020, hybrid work is here to stay—even if it is not perfect for many companies. We've all had days where we've been in the office, and then hopped into virtual meetings all day. And I've certainly found a range of meetings where I rolled my eyes and went 'why was this not an email?' The metaverse seeps into the conversation; Dan Alldis, innovation lead at Pixel Artworks, rightly argues that we will see what it will actually mean in our daily lives. For me personally, I see it was a year where we address the challenges we already have in place.

Paul Hardy, EMEA innovation officer at ServiceNow, argues that it has made employee engagement more challenging as well, as communication can become difficult in virtual spaces. One solution he proposes comes back to immersive experiences: 'Leaders have begun to see the benefit of hosting traditional training and development sessions using VR and AI-enhanced coaching. In the next few years, we will see more workplaces go a step beyond this, for example, offering employees the chance to earn recognition in the form of tokens they can spend in the real or virtual world, gamifying the experience.'

Some companies go beyond, and say that they will host immersive virtual meetings that will improve the employee experience as well. We have seen Microsoft look into Mesh as one example, and other companies build a host of worlds to engage with employees. 'Instead of staring at a grid of 2-dimensional faces on a videoconferencing screen, colleagues will be able to choose their seat at a virtual table, pop out of the room for a break and even go on a virtual walk with their boss,' argues Nathalie Vancluysen, the head of extended reality at DXC Technology.

Quietly, I suspect we will see companies experiment with it. What I am less sure about is whether 2023 will be a sea-change, and we will see a pitter-patter of people donning virtual avatars and sitting in virtual meeting rooms. If we are going to see virtual meetings revolutionise the workspace, it needs to genuinely improve on some aspects of real-life meetings. I do not think that means recreating meeting rooms in VR. Instead, I suspect it will mean a suite of new services that will heighten the experience, such as what HTC offers with its VIVE XR Suite which helps to improve learning.

Marketing: Cut the noise

I've gone into a lot of detail via my Marketer's Guide to the Metaverse, so I will leave this as a light area for now. But what I will say is that, as a key metaverse trend in 2023 will see the continued evolution of what we have seen previously, including noise. We have seen so much fluff come about that I hope it becomes a clearer focus for the next year, as brands show what they are capable of.

I also believe that AR will continue its strong growth in marketing. It is still cheaper and easier to develop for marketing than VR in most cases, so we will see independent creatives continue to see a lot of impact. TikTok has only exasperated the trend via its effects business.

Still, I wanted to share a great insight from Peter Vindevogel, CEO at The Park Playground, who argued that we need a more 'continuous' type of interaction between developers and customers. 'Not only does it allow them to deliver better, higher quality experiences with the customer’s needs at the core, but it also helps developers create propositions - not just products - that are engaging. I hope to see this dialogue between brands and customers improve in the VR space as the technology becomes more mainstream.' Wise words, and I agree.

Miscellaneous insights

The piece was already longer than the Lord of the Rings extended cuts, so smaller areas needed to be cut. Still, a few experts had some great metaverse insights on 2023 which I wanted to share, as I found them interesting:

• The growing role of trademarks. Dale Carter, partner at Reddie & Grose, argued that trademarks will play a prominent role over time. 'Whilst brand owners may not be certain of their future plans in the Metaverse, registering Metaverse-related trade marks early on is highly recommended. This will ensure that brand owners are well placed to leverage their Intellectual Property rights against trade mark squatters and infringers (those seeking to hijack an established brand or ride off the back of its success).' I agree with this, and believe it will become incredibly important next year.

• New types of defence systems. We've already seen the US army experiment with new ways to simulate the earth to work on defending the country. That trend will continue, according to Pete Morrison, the CPO of BISim. 'I predict we’ll start to see these true metaverse projects emerge from the commercial buzz this year.'

• A key focus for CSPs. Piyush Mishra, director of solution consulting for Tecnotree Corporation, argues that they will look into an environment to support the metaverse in 2023. 'Whilst many have already established edge cloud computing capabilities to satisfy a number of other non-metaverse functions, particularly within the enterprise, the focus for 2023 will be to strengthen this capability and identify ways to work with hyper-scalers.'

Metaverse trends in 2023: Concluding remarks

I get the impression that metaverse professionals are like magpies, gravitating to the flash and shininess of things—myself included. Based on everyone I have spoken to, will see huge changes when it comes to the metaverse. I agree, but it's the timescale I dispute.

2023 will see a fair few changes come out of the woodwork, but I disagree that we will see them happen over 12 months. We are in an economic climate where consumer spending will decrease, which will impact the bottom line of companies investing in their own services.

On the other side, we have a large influx of investments coming in which we will see beyond the year. Timoni West, vice president of emerging tools at Unity, believes in this as well. 'Greater investments in technology, particularly for industries like automotive, AEC and prototyping, coupled with further advancements in the democratisation of content tools for more and more creators, means we’ll be closer to establishing the metaverse as the next internet in 2023.' The views were corroborated by Dave Haynes, founding partner at FOV Ventures, who says there is plenty of funding for the 'missionaries and builders' who are deeply invested in the space.

'Closer' is the the key word here. I believe 2023 will be an exciting year for the metaverse, and I have no doubt a new term, like web3 will gain greater prominence over time. We live in interesting times.