Is the metaverse a flop or a revolution?
Is the metaverse a flop or a revolution?
Metaverses

Is the metaverse a flop or a revolution?

By Adam Riccoboni - 28 Oct 2022

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The metaverse, the future virtual reality, could either be the next flop or the next technological revolution. 

As we know, Meta, whose name was Facebook, develops the Oculus Rift virtual reality visors, yet abandoned metaverse spaces are becoming increasingly common. 

Through the use of data, sources and statements, we try to understand whether the metaverse will be a flop, yet another gimmick, or whether, instead, it will allow the future to be shaped by virtual reality. 

What is happening to the metaverse and why it might turn out to be a flop

In an open letter to Meta CEO Mark Zuckerberg about their $10 billion per year investment in the metaverse, Altimeter Capital CEO and Meta investor Brad Gerstner said this week: 

“An estimated $ 100 billion investment in an unknown future is huge and terrifying, even by Silicon Valley standards. The era of excess is over: big tech companies must lose weight, get fit and earn the right to win the next big wave of innovation.”

As Zuckerberg stated, Meta made a major pivot last year to capitalize on the metaverse’s explosive growth. However, a year later, the speculative investment era has come to a screeching halt. 

This is because bond yields are rising and companies are shifting their focus toward survival in the wake of the global financial slowdown. 

Meta’s current figures and reported losses: flop or pioneer of a revolution?

In this situation, Meta is no exception. In fact, the company’s stock price is down more than 70% in 2022, and their underperformance compared to their big tech peers has led investors to turn their attention to Meta’s frivolous spending on the metaverse.

The most chilling fact occurred last night: Meta lost $3.7 billion from its metaverse division in the third quarter, bringing the loss since the beginning of the year to $9.4 billion from investments in the metaverse

So, Meta’s stock price fell another 20% after the earnings call and added fuel to the fire of metaverse critics.

Meta is under attack, although even the decentralized metaverse is hardly playing a good game at the moment, as we are in a bear market situation for crypto. 

The decentralized metaverse and gaming platforms have struggled to retain users as the lucrative in-game rewards dry up. Sandbox, Decentraland, and Axie Infinity have suffered steep declines in daily active users, and investors are taking notice.

One example demonstrating the critical situation is that of Axie Infinity, previously one of the fastest-growing decentralized games. The platform has experienced particularly difficult months, and an impending wave of token unlocks for the game’s native AXS token could indicate further problems. 

The metaverse is under the microscope, and the question is whether this type of technology is revolutionary or simply an impending flop. 

Why might Meta’s investment in the metaverse be a flop? 

The heavy investment in the metaverse may have been a risky move for Meta.

In fact, two weeks after Facebook was renamed Meta, crypto were leading the spike in positivity regarding their value. 

Thus, it is plausible to think, on the part of investors in the metaverse, that the latest bullish market would have lasted a bit longer than it did. 

Instead, today, the company is underperforming Apple by more than 50%, investors are becoming more outspoken about the metaverse and demanding more clarity on Meta’s plan for the future. 

In addition, it appears that people are confused about what the metaverse really means, according to Gerstner:

“If the company invested $ 1-2 billion a year in this project, then that confusion might not even be an issue.”

Meta, in the year following the announcement, invested $10-15 billion in the metaverse and created its own virtual universe, Horizon World, all yet to be substantiated. However, Horizon World has become a sterile metaverse, according to a Wall Street Journal report. 

The report states that only 9% of the worlds built by the creators are visited by at least fifty people. Most are never visited and Horizon World avatars have yet to possess legs 

Users need Meta’s Quest VR visors to access the metaverse. More than half of the Quest headsets, which cost $400 for the basic model, go unused six months after purchase.

Meta’s initial goal was to reach 500,000 monthly active users for Horizon Worlds by the end of this year, but in recent weeks it has revised that figure to 280,000. The current count is less than 200,000, according to internal documents obtained by the WSJ.

A look at the decentralized worlds of the metaverse 

The decentralized worlds of the metaverse are not doing much better, according to some. 

Earlier this month, Coindesk published an article showing that decentralized worlds, such as The Sandbox and Decentraland, had only a few hundred users per day, according to data from DappRadar, despite billions of dollars in valuations. 

The report garnered an immediate backlash, with Decentraland rebuking the figures, claiming that DappRadar counted only interactions with the Decentraland smart contract, i.e., purchases, rather than actual users. 

Decentraland compared it to counting visitors at the mall: akin to counting those who buy something rather than the actual number of people passing through. 

Sandbox, on the other hand, the blockchain-based game, apparently has 200,000 monthly users, so much so that it was considering increasing to a valuation of $4 billion earlier this year. 

As for non-blockchain-based games, such as Roblox or Grand Theft Auto, one can see their metaverse-like qualities and the growth of remarkably loyal communities. The platforms boast over 11 million and 17 million monthly active users, respectively. 

Following this data, one wonders, is the problem really the metaverse that may be a flop or the lack of interest shown by Meta in the project? 

Indeed, Meta has shown no signs of wanting to catch up with more established game metaverses, despite pumping infinitely more money into the projects. 

Perhaps, Meta’s interest is waning as a result of the bearish market, which brings with it limited funding and disappearing users. 

The Nemesis and Over: metaverses in the top five 

The Nemesis is the international metaverse born in Italy and based in Switzerland, which boasts over 100 thousand registered users and 23 thousand active users per month. In addition, there are 600 active users per day

With these numbers, Nemesis takes fifth place in the top five metaverse projects by active users. In fact, it registered a 48% growth over September

Over, another all-Italian metaverse, also records extraordinary numbers. Indeed, we can see over 100 thousand downloads on Android and 30 thousand land owners in the metaverse

With these figures, it’s not a flop as far as the metaverse is concerned. Considering that, if the trend continues like this, metaverses like Nemesis and Over are definitely making ends meet in the industry. 

Adam Riccoboni

Adam Riccoboni, is the Managing Director of Critical Future

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