Is The Metaverse Dead?

04-05-2023
#tech
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The metaverse was meant to be many things. A virtual mecca, a digital oasis in the barren desert of 21st century technocapitalism, the future of social connection, a new frontier. It was also meant to be a whimsical place where you could actually own land, as crazy as that sounds and you didn’t even have to be the child of an oligarch! 

However, despite over $30 billion of sweet sweet cash being injected into it by Meta alone, the metaverse dream may be over. It was fighting a losing battle against crypto as the tech world’s premier pipe dream, and then AI entered the game like the kid on the school basketball team who you lied and said he was in year 8 when he was actually in year 10, and beat the daylights out of everyone involved.

But just how bad is it looking for the metaverse, could it make a Rocky-like comeback or has the ship sailed? Let’s look into the data.

How are metaverse companies performing financially?

As with everything (including countries) the metaverse was really just roughly eight companies in a trench coat rather than its own self sustaining thing. There’s a whole blog post on whether centralised companies can actually deliver on a metaverse given the decentralised implications thereof, but that’s for another day. For the meantime, let's look at the financial performance of big players in the metaverse game, including the main one, Meta.

Meta share price.png

Want to hazard a guess where Meta went all in on the metaverse? I’ll give you a clue, it’s the same answer to “when did you buy Bitcoin Matt?”. 

That’s it, right at the top there. 

And whilst 2022 was a tough year for tech stocks, Meta definitely took a bigger hit than its compatriots, overseeing the largest one-day value loss for a company in history.

Now, I’m being a bit of a debbie downer, so I just want to say I actually respect the vision Zucc has for the metaverse, and going all in on an idea with this scope is absolutely wild. We are talking about the future of communication, work, relaxation, gaming, socialisation and society in general, so if it paid off, we would look back on possibly one of the best company pivots since New York Bagels brought pre-sliced bagels back (you can thank my quite frankly unhinged email campaign for that one, you’re welcome).

But, it has to be said, the market vehemently rejected the metaverse dream being sold to them, and it took laying off thousands of workers and an austere “Year of Efficiency” to pump the stock back up again. It’s still to be seen if Meta are staying in their metaverse dream as reports are conflicting and they’re making huge leaps in AI technology, but it was a hell of a ride for a while there, it’s a shame it was more Tower of Terror than anything else.

But it wasn’t all about Meta, even though they are the easiest company to highlight as they were the only ones to go with the “all the eggs and the chicken and most of the bricks from the farm in one basket” strategy. We can look at another darling of the metaverse world, Decentraland, to check the vitals of the metaverse.

For the uninitiated, Decentraland was a decentralised virtual, 3D world where users could buy plots of land, and was heavily hyped at the start of the metaverse hype. In fact, a plot of land in Decentraland (which is completely digital) actually sold for $2.4 million at the height of its fame in 2021, and was projected to be a leader in a $1 trillion industry according to some hedge funds. Transactions in Decentraland are made through the MANA cryptocurrency, the project's official coin, so let’s start by seeing how that is fairing over the past few years.

Decentraland to USD chart.png

Oh no.

Notice the similarities between Meta’s stock chart and the price of MANA, they’ve been steadily sinking since early 2022 after the initial metaverse hype died off.

Let’s put that into perspective. That $2.4 million plot of land I mentioned earlier, that was purchased with 618,000 MANA, which has a USD value at the time of writing of $333,720. 

That is a whopping 86.095% decrease in value, and what people in investment circles like to call “WHAT IS HAPPENING HOW DID IT GO DOWN THAT MUCH IN TWO YEARS”. It’s pretty technical, you probably wouldn’t get it but it is bad.

How many people are searching for the metaverse on Google?

Okay, so not all is lost right? The metaverse takes time to build and not everything is about money, right? So let’s look into user sentiment and interest around the metaverse to see if this can make a comeback. We can do this by looking at search data using Google Trends

A large amount of searches would indicate a high level of anticipation, and for a “dead” tech trend, you could expect to see a large increase in searches, say when one of the biggest companies in the world changes their name to reflect this tech, and then a sharp decline thereafter as people lose interest.

Anyways, enough stalling, I’ll get on with showing you the data!

metaverse search volume.png

Ouch.

You don’t have to be a data scientist to see that’s not good. You can see a huge jump up in late 2021, sustained for a few months, and then slowly started tapering off. I assume this is because the metaverse didn’t produce any tangible results or outcome despite having a massive hype around it, leading to decreased public interest. Put simply, the metaverse wasn’t real, so people didn’t care.

If you remember the financial graphs above (they’re seared into the brain of the poor person who bought that Decentraland plot), this tanking search volume coincides almost perfectly with the economic freefall of metaverse related companies and coins.

When compared to something tangible and helpful, like ChatGPT, you can see that after the initial hype, searches steadily increased, rather than tapering off.

Metaverse vs Chatgpt search volume.png

Even something like blockchain, you can see has a steadier interest level compared to the metaverse : 

Metaverse vs blockchain search volume.png

The metaverse actually has a more similar interest trend to a different, much maligned technology : NFTs.

Metaverse vs NFT search volume.png

NFTs are pretty much synonymous with “lot’s of hype for nothing”, or as my girlfriend’s Tennessee family would say : Big hat, no cattle.

A large problem with the metaverse hype was that it occurred almost purely in an echo chamber, with tech people talking to other tech people about a tech thing, rather than outlining actual, tangible value to the consumer. Like seriously, try and think of an actual application of the metaverse? You probably can’t, because the education/PR/marketing side of the industry did an absolutely woeful job in lieu of any real products of explaining why you should care. 

Marketing and value is important, and I’m smart for noticing that.

I don’t rule out a comeback in some form for the metaverse concept, and I actually think that a pared down version of the original vision is actually a really appealing prospect for consumers and the future of social communication, but I can’t help but feel like we were trying to plug a square peg into a round hole with metaverse technology, and when generative AI came along we all dropped the metaverse like bad scampi. Hopefully we can see more/leaner development in the area that has a clear value to users, because judging by the above data : the space needs it.

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