This is a question raised within the boardrooms of tech companies and retail brands. The answer may be simple enough: the American consumer is preoccupied with real world problems. The metaverse is here but we’re not ready. In 2020, our report “Enter the Metaverse” asked a key question:
Can a company build a Metaverse or does it simply manifest?
When Facebook rebranded to Meta, with intentions to go all-in on the metaverse, it was known then it would be a years-long transition. Perhaps the Meta leadership didn’t envision 9% inflation, falling consumer confidence, layoffs at some of the largest corporations in America, and high interest rates bringing the housing market to a halt. In the same report from nearly three years ago, we mentioned timing as an essential ingredient.
Some of the most valuable commercial real estate for retail is in the Metaverse. Where brands, content, creativity, and consumerism meet, civilization forms. There is a juxtaposition of this virtual community forming as physical gathering spaces are temporarily prohibited or even permanently shuttered. If history has a lesson to share: in the world of network effects, timing is an essential ingredient.
This is where those two ideas intersect:
- Can the metaverse be manufactured? Or is it the result of digital agglomeration?
- Will the metaverse accelerate as this recessionary period expires?
The metaverse holds promise for how we work, play and interact. But even as brands have begun building worlds in metaverse platforms like Decentraland, they’re building for an audience that hasn’t yet come. High rates of remote work are not translating to higher participation in virtual community. Not only is it still a novel concept for most, but in challenging economic environments, the futuristic and fantastical can become sidelined. Instability is often an ideal backdrop for innovation; this seems to be the exception, but that doesn’t mean Meta hasn’t made progress. Heavy investments are still planned for 2023, though it is being outpaced by investments into retail media networks (ding, ding, ding):
In two reviews this week, the Meta Quest was tested for its current experience and its potential. The headset costs $1,500, making it a luxury purchase only for those who are already invested or willing to invest in gaming. In a New York Times review, the headset and experience are praised for their ability to change the world of gaming, but not much else.
There’s a valuable lesson amid all the hype surrounding virtual (augmented, mixed, whatever-you-want-to-call-dorky-looking) goggles: We shouldn’t spend our dollars on a company’s hopes and promises for what a technology could become. We should buy these headsets for what they currently do. And based on what I saw, for the foreseeable future, the Meta Quest Pro will primarily be a gaming device. (I predict the same outcome for the Apple headset expected for an unveiling next year.)
But Mark Zuckerberg’s vision for Meta Quest is wider-ranging. He sees it as a place people will want to spend time socializing with others in a variety of environments. But you can’t socialize when there’s no one around, and for now, there aren’t enough people to make the metaverse what it could be.
What role do brands play? Many companies are operating out of a dual desire to “stay ahead of the curve” and avoiding FOMO (fear of missing out). Similar to Meta, they’re working toward a future that isn’t yet a reality. The promise is there but the momentum is not. AdWeek’s position on this matter makes a note of it:
Major brands including Walmart, Nike, Disney, Levazza, Argos and Mini have flocked to develop their own experiences across platforms such as Meta’s Horizons, Decentraland, Sandbox and games such as Fortnite, Roblox and Star Atlas. Even Second Life, which was born in 2003 during Web 1.0, is getting a second life in Web3. But are audiences buying in? Not so much. At least not yet.
It’s clear that there’s corporate investment in the metaverse but it goes back to the two questions that began this report: can the metaverse be manufactured? And is our economic uncertainty hindering the moonshot that is required to achieve digital agglomeration? The issue is not that the spaces aren’t welcoming themselves — people are distracted and the utility of the metaverse hasn’t yet proven itself. The period that led to the fast rise of Web3, where NFT hype and value exploded as a community of eager opportunists, seems like years ago. But even though that time was sullied by pandemic concerns, most Americans felt reassured that opportunity, money, and other resources would always be available (in the real world). Today is proving that it is not the case.
As such, more pressure is on Meta. It’s building for a future that isn’t currently supported by reality. It’s finding that virtual reality has its roots in the excesses of the real world, when there are worries, people aren’t flocking to a make belief world quite yet (this is the premise of Ready Player One). Meta’s share price is reflective of the broader tech industry and a downward shift in gears from the trust in the digitally-native world. Online retail, digital advertising, and Web3 technologies are all suffering from the same sociological bent. And it will struggle until the economy regains its footing. Right now, Meta’s avatars don’t have legs – literally and figuratively. Mark Zuckerberg’s avatar has gone through multiple iterations after being mocked online. And according to the WSJ review, even internal employees have stopped using Meta Quest.
What the New York Times gets right is that, at least for right now, gaming is the best and most active use case for the metaverse. It has active users who are willing to spend on the leisure of digital competition. It may be quite some time until work, social, and educational catch up to the leisure of gaming.
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