What happened to Mark Zuckerberg’s $46 billion investment in the Metaverse?
The influx of billions of dollars into the metaverse has dried up, causing a significant decline in public interest and leading to its categorization as one of the tech industry’s major failures in recent years.
By Jeffrey Gogo , Cryptonews
Compiled by: Tim, PANews
Key Takeaways
It has been four years since Mark Zuckerberg championed the metaverse, yet it has now been dubbed as one of the biggest tech flops in recent memory. The emergence of generative AI is identified as a key factor contributing to the metaverse’s decline. Despite the downturn, some projects continue to show robust development. Experts indicate that the industry is in the process of filtering out unsustainable elements and retaining those with genuine potential.
When Mark Zuckerberg first presented his vision for the metaverse in October 2021, it seemed feasible to create a digital utopia where people could engage in immersive virtual interactions.
Zuckerberg firmly believes that the metaverse represents the next frontier of the Internet, prompting his company to invest billions in developing the necessary technology to realize this strategic vision. Facebook even rebranded itself as Meta to align with this new endeavor of building a virtual world based on VR and AR technologies for people to connect, work and create.
Despite significant investments from Meta and other competitors (Meta alone invested approximately $46 billion since 2021), the metaverse has failed to gain significant traction. Notable artists such as Elton John and Travis Scott have held concerts in the metaverse, and individuals have explored virtual cities and art exhibitions. However, four years following Zuckerberg’s pivot towards the metaverse, it has become a notable tech disappointment with billions of funding receding and dwindling public attention due to unfulfilled promises.
According to DappRadar data, the transaction and sales volume of Metaverse NFT projects dropped to the lowest levels in 2024 since 2020, with transaction volume plummeting by 80% year-on-year and sales volume decreasing by 71% compared to the same period last year.
AI “intercepts” the Metaverse
The rise of generative artificial intelligence (AI) chatbots such as OpenAI’s ChatGPT and Google’s Gemini has been highlighted as a significant factor contributing to the metaverse’s decline. This shift towards AI tools has offered immediate benefits and scalability, diverting attention and resources away from metaverse projects. AI startups are now attracting more capital compared to metaverse initiatives as they provide tangible business outcomes.
Herman Narula, the CEO of metaverse venture capital incubator Improbable, emphasized the role of AI in diverting attention from the metaverse. He believes that AI technology has become the focal point of disruptive innovation, overshadowing the metaverse. The shortcomings of early metaverse prototypes and their failure to deliver as promised have also contributed to the decline of public interest in the concept.
The announcement of Meta’s entry into the metaverse led to a surge in token prices related to virtual worlds like Decentraland (MANA), The Sandbox (SAND), and Axie Infinity (AXS). However, as doubts regarding the metaverse’s future persist, token prices have plummeted alongside a decrease in daily active users.
Despite the market turbulence, a new analysis from cryptocurrency research firm Glassnode indicates that dedicated investors are steadily increasing their holdings in major metaverse tokens. This accumulation suggests that investors view these projects as undervalued opportunities rather than complete failures.
As per CoinGecko data, current token prices for Decentraland’s MANA stand at $0.27, The Sandbox’s SAND at $0.28, and Axie Infinity’s AXS at $3.43.
Hardware becomes a roadblock to implementation
Charu Sethi, a Web3 expert and chief ambassador of Polkadot, highlighted the immaturity of the metaverse business model when it gained popularity. The high costs of VR and AR headsets and complex login processes have hindered widespread adoption of the metaverse. Hardware devices are crucial in enhancing the metaverse experience, but their high price points have deterred many potential users.
As a result, funding and attention have shifted towards AI solutions, which offer immediate returns on investment. VR headsets from companies like Apple and Meta allow users to engage in various activities within the metaverse using digital avatars, but their expensive nature limits accessibility.
Karagyaur, an ITU metaverse expert, pointed out that VR headset market growth has stagnated due to limited market reach of high-end devices. She emphasized the need for sustainable profit models in the metaverse ecosystem, as high investment risks have made it challenging to justify continued funding.
Kim Currier, marketing director of the Decentraland Foundation, emphasized the importance of the metaverse in facilitating human collaboration and socialization beyond just hardware constraints. She noted the potential for AI to enhance the metaverse experience by accelerating virtual world construction and personalizing user interactions.
Industry reshuffle
Currier of the Decentraland Foundation identified market bubbles, technical challenges, and broader tech industry shifts as reasons for the metaverse’s decline. She viewed the current phase as a necessary restructuring of the industry to prioritize sustainable value creation over speculative hype.
Karagyaur, CEO of BQ9 Ecosystem, emphasized the ongoing technological evolution of the metaverse into an AI-enabled vertical application cluster driven by consumer demand. She highlighted a transition towards human-centered, community-driven ecosystems that empower users to create and collaborate.
Sethi, representing Polkadot, pointed to the success of gaming platforms like Roblox and Fortnite in maintaining user engagement and leading the metaverse industry. These platforms offer diverse user experiences and business opportunities that drive sustained growth and innovation.
Hope in the Dark
Experts acknowledge Zuckerberg’s failed Metaverse vision, with Meta’s Reality Labs division reporting significant operating losses. Despite these setbacks, projects like Mocaverse and Pixels have shown promising growth within the metaverse ecosystem. The success of these initiatives underscores the potential for value-driven innovation to revitalize the metaverse landscape.
DappRadar’s reports on Mocaverse and Pixels highlight their achievements in user registration and daily active user numbers, underscoring their successful ecosystem development strategies. Decentraland’s creator-centric economic model and revenue distribution approach have set new standards in the industry, despite ongoing challenges in mass adoption and shifting industry priorities.
Is the Metaverse in decline?
Experts like Karagyaur stress the importance of integrating the metaverse with existing industries to drive sustainable growth. The future of the metaverse lies in complementing, not replacing, traditional sectors, with an emphasis on enhancing reality through digital technologies.
Narula, CEO of Improbable, believes that the metaverse’s future hinges on delivering tangible value to users beyond superficial visual experiences. As the industry evolves, a focus on practical applications and user-centric innovation will be critical in reshaping the metaverse landscape.
Despite setbacks, the metaverse continues to evolve, with opportunities for AI integration, community-driven platforms, and innovative user experiences driving renewed optimism in the industry.
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