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What Happened to the Metaverse?

What Happened to the Metaverse?

  • 21.03.2025 00:00
  • cryptonews.com
  • Keywords: metaverse

The metaverse has declined due to competition from generative AI and high VR/AR costs. While some projects thrive, experts suggest its success lies in integrating with existing industries rather than isolating itself.

Meta ReportsMeta NewsMETAsentiment_dissatisfied

Estimated market influence

Meta

Meta

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Invested heavily but failed to meet expectations

OpenAI

Positivesentiment_satisfied
Analyst rating: N/A

Generative AI like ChatGPT diverted attention from metaverse

Context

Analysis: What Happened to the Metaverse?

Overview

  • The metaverse, once hyped as the next frontier of the Internet by Mark Zuckerberg (now CEO of Meta), has faced a significant decline in interest and investment.
  • Despite massive investments ($46 billion since 2021 from Meta alone), the metaverse failed to meet its promises, leading to reduced funding and public interest.

Market Trends

  • Decline in NFT Trading:
    • DappRadar reported a 80% drop in trading volume and a 71% decline in sales counts for metaverse NFT projects in 2024 compared to the previous year.
  • Token Price Crash:
    • Key tokens like SAND, MANA, and AXS saw over 95% declines since their November 2021 highs.
      • MANA peaked at $6.96, SAND at $5.20, and AXS at $153.
  • Low User Adoption:
    • Major platforms like Decentraland and The Sandbox struggled with daily active users (often below 5,000), despite significant investments.

Competitive Dynamics

  • Shift to AI:
    • Generative AI tools like ChatGPT and Gemini captured attention and investment, offering immediate ROI compared to the metaverse's expensive infrastructure.
  • High-Cost Hardware:
    • VR/AR headsets (e.g., Oculus Rift at $3,500 and Meta Quest 3 at $500) deterred mass adoption, unlike free or low-cost AI tools.

Strategic Considerations

  • Overhyped Expectations:
    • The metaverse was overpromised as a "digital utopia," leading to disappointment when early versions failed to deliver on their hype.
  • Focus on Integration:
    • Experts suggest the metaverse's future lies in complementing existing industries rather than replacing them. AI-enhanced, domain-specific applications are emerging as key use cases.

Long-Term Effects and Industry Implications

  • Reshaping the Metaverse:
    • The decline has allowed "real builders" to focus on meaningful projects, such as Mocaverse (1.79 million registrations) and Pixels (over 1 million daily users).
  • Community-Driven Ecosystems:
    • Platforms like Roblox, Fortnite, and Somnium Space are thriving due to community-driven experiences rather than corporate-controlled worlds.
  • Utility Over Aesthetics:
    • The metaverse's success will depend on delivering practical utility for users, such as virtual workspaces or educational platforms.

Financial Impact

  • Meta’s Losses:
    • Reality Labs (Meta’s metaverse division) reported a $17.7 billion operating loss in 2024, with total losses over six years nearing $70 billion.
  • Investor Sentiment:
    • Despite price volatility, long-term holders of MANA, SAND, and AXS are increasing their positions, signaling confidence in the metaverse's future.

Conclusion

The metaverse’s decline is a result of overhyped expectations, technical limitations, and shifting tech trends. However, it is evolving into more practical applications, with a focus on integration rather than isolation. While AI has overshadowed the metaverse, successful projects like Mocaverse and Pixels suggest that the sector is still viable if grounded in utility and community-driven innovation.