The global technology environment is undergoing a paradigm shift. The wave of digital disruption is getting stronger as new technologies and solutions based on them continue to enter the market. The Metaverse has managed to gain a lot of hype among players in various industries as it is perceived to have the potential to impact nearly every aspect of modern business. , the metaverse is a virtual shared space, created by the fusion of virtually augmented physical and digital realities. This space is device independent and not owned by a single vendor. Rather, it is an independent virtual space, the primary enablers of which are digital currencies and non-fungible tokens (NFTs). The metaverse can be viewed as an amalgamation of different technologies, coming together to provide the functionality they are known to have.
How will blockchain contribute to the metaverse?
Not-so-new technologies like the cloud, artificial intelligence, and AR/VR provide significant capabilities for the metaverse, but blockchain alone provides the bulk of it. The chart below shows the top metaverse her technologies perceived by executives (respondents).
Clearly, cryptocurrencies, web3, blockchains, and non-fungible tokens (NFTs) are some of the major metaverse technologies. Blockchain is one of the building blocks of cryptocurrencies, web3, and NFTs, so it’s not wrong to think of it as one of the main building blocks of the Metaverse. Part of the future growth of the Metaverse can therefore be attributed to the flow of investment in blockchain, with investment in Metaverse applications such as e-commerce, games, concerts, social and entertainment events among others. . However, the current state of the metaverse market is one of immediate concern for both investors and technology providers.
What do we know about the current state of the market?
Meta Platforms Inc., one of the leading innovators in the metaverse space, has posted heavy losses in its Reality Labs division. Reality Labs is a unit of meta focused on the metaverse. So far, investors aren’t too thrilled with the sector’s performance.
Meta lost about $13.7 billion to Reality Labs in 2022. This is almost 35% more than the sector’s loss in 2021. During the same period, revenue from the division fell from $2.27 billion to $2.16 billion.
In other words, the company lost more than six times the revenue it generated in 2022 through its reality lab division. This was worse than his 4.5x loss recorded in 2021. The company expects operating losses at Reality Labs to widen. The company plans to plan its investment in Reality Labs to help it achieve its long-term goal of growing overall operating profit from 2023 onwards.
While this seems somewhat encouraging, there are still signs that businesses are losing faith in the metaverse. In March 2023, Disney laid off his 50-person Metaverse team, hinting that his passion for the project was waning. In early February 2023, Microsoft reportedly laid off his 100-member industrial metaverse core team that it founded last October. Most recently, the Walmart Universe of Play left his Roblox metaverse. While some companies continue to cling to the Metaverse to provide their customers with an out-of-the-world experience, the waning enthusiasm of some technology providers for the Metaverse is an indication of the growth of this market. It shows that the outlook is uncertain.