As generative Artificial Intelligence (AI) technology continues to grow more mainstream across the globe, the allure of the metaverse appears to be slowly fading off.
Two years ago, the metaverse was almost a household name in the technology scene. It was highly touted as a futuristic technology that had the potential of growing into a multibillion-dollar industry.
Google Trends data shows that interest in the metaverse in East Africa and across the globe peaked in October 2021, when social media giant Facebook renamed to Meta to capture its investment interests in the metaverse but has so far fallen by over 90 percent.
What followed was a surge in the metaverse market value and the prices of non-fungible tokens (NfTs) and virtual real estate, which are often used together with the technology, as demand rose following multiple developments that were expected to drive the technology mainstream.
Data by blockchain research firm Chainalysis shows that between September 2019 and March 2022, the prices of virtual land – spaces in which to build different metaverse applications – rose by 879 percent, much faster than the growth of the value of physical real estate globally.
At the time, several events were held in the virtual reality space, prompting the growth. For example, American rapper Snoop Dogg built a mansion in the metaverse and went ahead to shoot a music video in it.
Fashion brands Gap and Nike also set up shops in the virtual realm to sell digital versions of their products. The Vatican announced plans to launch a digital gallery in the metaverse in mid-2022 and proceeded with the plans late last year.
However, two years after the metaverse hype, even Meta has little to show for its massive investments into the technology. Their Reality Labs division, which steers their metaverse dreams, made an operating loss of $4.8 billion in 2022. They are yet to release results for 2023.
By November 2022, web searches for metaverse had fallen by over 81 percent, the first sign that the metaverse allure was on a downward trajectory. At the same time, interest in AI suddenly spiked, with searches exceeding those of the metaverse, following the launch of text-based generative AI platform ChatGPT.
Today, data firm Statista estimates that the metaverse market is worth about $74.4 billion, representing the revenue expected to be generated from all metaverse related products, including digital media, virtual assets, advertising, virtual reality hardware, gaming, e-commerce, and entertainment.
While this is a rise from last year’s $56.7 billion, it is nowhere near the projected $298 billion that will be raised by AI-powered products this year. By 2030, AI market is projected to be generating over $1.8 trillion, more than thrice the expected market value of the metaverse, according to Statista’s data.
Kenyan metaverse developers and enthusiasts concede that the industry is indeed losing prominence to AI, but it hasn’t lost relevance and continues to grow despite the becoming less popular over time.
“The metaverse is dead only to speculators. Those who invested huge amounts of money in NFTs, virtual land and all things metaverse are expecting huge gains as the metaverse grows. Those people have been disappointed and now they say the metaverse is dead,” said Matthew Munyao, a metaverse developer and founder of the Africa Meta Club, an association of metaverse developers and enthusiasts.
Indeed, the value of digital collectibles (NFTs), which are normally used for metaverse and virtual reality experiences, have significantly fallen since the 2021 hype.
Currently, the total market capitalisation for NFTs, including virtual land, is at about $264 million, down from over $11 billion at the end of 2022, based on data by NFTGO.
According to Mr Munyao, the metaverse allure seems to be fading because those who drove the ‘hype’ back in 2021 were never really interested in the technology in the first place, but only wanted to make money out it.
“They never understood the real value of the technology. The metaverse is like a more advanced social media, which enables better ways to interact with others and express yourself on the digital space,” he said.
Lynn Gitau, a Nairobi-based technologies commentator, contends that the metaverse was hyped by those who never really understood it, and that made it fade away much sooner than expected.
“The metaverse represents a shared virtual world, integrating emerging technologies such as fifth-generation networks, extended reality and AI to enhance virtual human interaction and business connectivity,” Ms Gitau told The EastAfrican.
“Thus, understanding the metaverse as an advanced virtual immersive experience, rather than just a buzzing destination, is critical.”
Indeed, the metaverse industry is projected to keep growing, with companies such as Meta still betting on that growth to stay afloat.
In 2030, the industry will be worth an approximated $507 billion, almost a tenfold rise from the market value in 2023.
Mr Munyao argues that despite the projected growth, the value of the technology will not be realised until the cost of virtual and augmented reality hardware, including headsets, come down.
“Whatever real-world use cases the metaverse provides, if people are not able to afford the VR headsets, they cannot really appreciate the difference that the metaverse brings into the world,” he explained.
Meta entered multiple partnerships in 2022 to advance the useability of the metaverse technology.
The collaborations with Microsoft, Zoom, NBCUniversal and other big tech companies would enable users to attend online meetings and conferences, create or edit office files, and stream videos using three-dimensional technology, among other unprecedented use cases that were projected to revolutionise the metaverse technology and make it mainstream.
However, Mr Munyao argues, all these use cases remain theoretical to many users across the globe because they can’t afford the VR headsets needed to fully enjoy these capabilities. The headsets sell for at least $1,500 each.
Nonetheless, both Mr Munyao and Ms Gitau agree that AI is not the enemy of progress for the metaverse. In any case, AI becoming more mainstream is good for the metaverse, they argue.
“AI acts as the canvas paintbrush, shaping the immersive experience within the metaverse. They are not inherently at odds; instead, they complement each other,” said Ms Gitau.
“AI contributes to the enhancement of virtual interactions, making them more seamless, intelligent and personalised. The metaverse, in turn, provides a canvas for AI to showcase its capabilities in shaping virtual interactions.”
According to Mr Munyao: “AI will be very good for the metaverse. For example, one of the main reasons why the metaverse is not yet mainstream is because there still aren’t many developers.”
“As generative AI grows enabling even non-technical people to be able to generate codes and create immersive metaverse experiences, so will the metaverse grow.”
As the metaverse allure fades, many await to see whether the AI hype will stand the test of time, or if another innovation will emerge that will move and shake the globe like AI has.