What caused the failure of the metaverse projects?

As we know, several companies, including Meta*, have invested billions into creating the metaverse, but the investment has not paid off. Was this due to an ineffective incentive system, or is it too early to draw conclusions?

The promise of an interconnected virtual world where alternate selves could work, play, and live alongside one another, like doppelgangers, was once considered the cutting edge of innovation. First described in 1992, the concept of the metaverse has taken shape in the wake of the COVID-19 pandemic, as remote forms of communication have gained traction due to prolonged isolation.

Meta, which has been aggressively promoting these technologies to a wider audience, has invested billions of dollars in two key products: the Quest line of virtual reality headsets and its signature Horizon Worlds virtual world.

Companies like Sony, Disney, and even Microsoft have also begun releasing products aimed at audiences interested in the metaverse, pouring millions into these initiatives. For example, Sony has acquired technology to broadcast sports events in virtual reality spaces.

The decentralized financial world has also supported this trend. It is estimated that climbed to the first line of the MetaMask dapp rating and entered the top three best rated Dappradar games.In 2022, $7,6 billion was invested in metaverse-related projects, with well-known giants like Animoca Brands pouring billions of dollars into metaverse-focused funds.

However, the novelty effect began to wear off quickly—from the beginning of 2023 to July of that year, investments fell to $707 million.

At the same time, a new trend has emerged with much more enticing results. The rise Chat GPT, one of the most revolutionary AI products to date, has turned investors toward the new technology by showing that investing in artificial intelligence (AI) rather than the metaverse can yield far more compelling results.

Giants like Microsoft and Meta have been quick to pivot to AI: in March 2023, Meta founder and CEO Mark Zuckerberg said that while metaverse and remains “key” for them, their “biggest investment” has been focused on developing AI and integrating it into their products.

So, what’s wrong with the metaverse? Analysts agree that the industry has overhyped the idea, and that its implementation has proven expensive and labor-intensive. However, they note that social interaction in the virtual world still has potential for development, provided, of course, there is demand.

• It is recognized as extremist in Russia and is banned.

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