Can the Metaverse Dream Ever Become a Reality?

In 2021, Mark Zuckerberg announced the rebranding of Facebook, changing its name to Meta. He committed to investing $10 billion per year in AR tech, expressing his confidence in the potential of metaverses. However, some may say these expectations fell short. Meta’s stock price has dropped 70% over the past year, resulting in significant losses of $700 billion in market value. In 2022, the company announced plans to lay off 11,000 employees. What's next? Is the concept of metaverses still a viable possibility, or is it merely a utopian vision?

How did the Metaverse become such a buzzword?

Virtual worlds have been around for a while — Neal Stephenson wrote about them in his 1992 sci-fi novel “Snow Crash.” The protagonist lived in two realities: the normal world and the 3D city of Metaverse, which spanned over 40,000 miles.

In 2003, the first ‘real’ metaverse emerged — Second Life, a digital alternative reality with its own social network, internal currency, and customizable avatars. In 2007, nearly a million people joined it.

Metaverse-like environments have also been present and thriving in the gaming industry — including popular games such as World of Warcraft, Minecraft, Fortnite, and Pokemon Go. These games not only allow players to progress through levels, but also provide a platform for them to interact with each other, make friends, and even find romantic partners.

The concept of metaverses was previously a niche “geeky” interest, popular primarily among fans of science fiction, futurism, and gaming. However, the COVID-19 pandemic and widespread adoption of remote work brought significant changes. Quarantine measures and lockdowns left people with no choice but to communicate and connect with loved ones online. The idea of merging the physical and digital in a shared digital space became highly captivating, and the trend toward metaverses experienced rapid growth.

Social Discovery Group predicts that by 2026, 25% of romantic encounters will occur in metaverses.

“Thanks to Web3, people can create a decentralized society that will allow us to transcend the limitations of the physical world,” said KJ Dhaliwal, Director of Strategic Development of Social Discovery Group.

Dating.com, the flagman company's dating platform, has recently announced a series of virtual events in the metaverse. The first event, which occurred in April, ran for two hours and featured multiple games and icebreakers, including movie and TV trivia.

VR dating apps like Nevermet, Planet Theta, and Flirtual have gained popularity, primarily targeting Zoomers. On the other hand, Match Group, the parent company of Tinder, halted its plans for metaverse dating and the launch of a corresponding app in Q3, 2022 due to the disappointing earnings result.

Microsoft has also expressed interest in developing virtual reality technology — to enable teams to communicate through digital avatars. Facebook, now known as Meta, has revealed plans to build Horizon Worlds, a metaverse accessible through the Meta Quest VR headset (formerly Oculus). Nike is releasing virtual sneakers, while the major American retailer Walmart is creating its own digital world, NFT, and cryptocurrency.

Leading tech companies have begun building their immersive virtual realities — metaverses — which could potentially serve as alternatives to reality. Other companies have also followed this trend.

Does the metaverse’s future look bleak?

As time has passed, some people have started to look at the idea of metaverses with more skepticism. There are questions about how to make the metaverse more realistic and whether it is truly necessary, as well as about how long people can spend in virtual reality. No one can give clear answers to these concerns.

Elon Musk, CEO of SpaceX, Tesla, and now Twitter, is a well-known critic of metaverses. He believes that the current implementations do not have any practical or successful uses, and he is certainly not compelled by the idea of “strapping a frigging screen to their face all day and not wanting to ever leave.” In an interview, he said: “Sure you can put a TV on your nose. But I’m not sure that makes you ‘in the metaverse’.”

Vitalik Buterin, the creator of Ethereum, shares Musk’s skepticism about the metaverse’s feasibility. He thinks it is unlikely that attempts will succeed. “The ‘metaverse’ is going to happen but I don’t think any of the existing corporate attempts to intentionally create the metaverse are going anywhere,” he wrote on Twitter.

As the pandemic recedes and technology still struggles to meet the demand for immersive virtual experiences, it’s not surprising that interest in metaverses has started to decline.

The facts speak for themselves. Since the start of 2022, Meta has been experiencing significant losses, totaling almost $9.5 billion. Investors are failing to grasp the company’s vision for a virtual world and the significant investments being made in its development. Moreover, Meta anticipates that spending on Reality Labs, the division responsible for developing technology for metaverses, will significantly rise in 2023. This is likely to lead to further losses. By the way, Meta is willing to invest significantly more in the metaverse than was required for the purchases of Instagram ($1 billion in 2012) and WhatsApp ($19 billion in 2014). Despite the challenges, Zuckerberg is unwavering in his belief that the company’s investments will eventually pay off and that they are moving in the right direction.

Here’s another example to consider. Recently the European Commission’s foreign aid department tried to throw a virtual party in a metaverse — but only five people showed up! They spent a whopping €387,000 on the AR world, inviting young people to virtually wander a tropical island and learn about their Global Gateway initiative while jamming to some house music. Unfortunately, the attempt fell short.

Are we ready for the meta era?

The future of metaverses is bright, but it’s not quite here yet. In 2021, analysts from ABI Research predicted that the trend toward metaverses would not fully develop until 2023. Although companies are creating their own virtual worlds, they are still in the early stages and have a long way to go before they can be considered fully-fledged metaverses

In addition to technological considerations, there are also other important questions.

How will metaverses fit into our existing reality and where does the balance lie between the two? 

The pandemic has shown us the power of digital technology to bring people together. The Gartner research says that by 2026, a quarter of the population will spend at least an hour a day in the metaverse. However, some experts believe that the human brain may not be ready for a complete transition to virtual reality. Jeremy Bailenson, a professor at Stanford University and a virtual reality expert who consulted Mark Zuckerberg, talked about the “20–30 minute rule,” which states that after this amount of time, it is important to take a break from VR.

Who will be in charge of content moderation in metaverses? 

Sex parties and neo-nazi clubs in metaverses have raised important questions of content moderation. Who should be keeping an eye on what goes down in these virtual spaces?

How can safety be ensured in the metaverse? 

Augmented reality poses just the same risks as standard websites or apps when it comes to threats and personal data breaches. Hackers can still target a user’s account and steal their digital avatar.

Are regulators ready? 

With metaverses drawing the attention of government bodies, particularly financial regulators, it’s important to consider how earnings and taxes will be controlled in these virtual worlds. The sale of virtual land and other AR goods also raises questions that current laws just can’t seem to answer.

Although metaverses may still have much to be understood, they hold immense potential. Building a virtual world may be a challenge, but addressing the questions raised earlier can bring us closer to making them a reality.

The consulting firm McKinsey & Company predicts that by 2030, augmented reality will have a worth of $5 trillion — that’s the size of Japan’s economy. It’s no surprise that both businesses and governments are investing in this promising industry.

In 2022, the South Korean government allocated $187 million for the creation of the Expanded Virtual World metaverse, which is expected to stimulate business growth in South Korea. Similarly, authorities in Dubai are developing the ambitious Dubai Metaverse concept, with the goal of the virtual world contributing $4 billion to the country’s economy by 2030.