How has the metaverse changed in the past few years

Is the metaverse just another buzzword, or does it hold genuine significance for businesses and users? Questions like these surround the current landscape. However, as we move beyond the hype, the potential of the metaverse becomes increasingly apparent.

The metaverse or 3D internet can be defined as a collective virtual shared space, usually run on the blockchain, that can be accessed through immersive technologies and the web. This digital realm represents a blending of immersive virtual worlds where physical and digital realities merge through technologies such as augmented reality (AR), virtual reality (VR), artificial intelligence (AI), and the Internet of Things (IoT). In recent years, the metaverse has undergone rapid evolution, significantly impacting various sectors of society and technology.

 This evolution of the 3D internet is primarily fueled by significant tech corporations, with companies like Meta (Facebook), Microsoft, and Apple investing in metaverse-related technologies and initiatives, with funds over $120 billion poured into the sector in the first five months of 2022. Such investments underscore the potential of the 3D internet to reshape interactions within digital platforms. The metaverse's transformative impact is also evident through user adoption. Gartner predicts that by 2026, a significant portion of the population will spend at least an hour daily in the metaverse, engaging in activities ranging from work to leisure, highlighting its role as a new arena for human activity.

 This blog breaks down the evolution of the 3D internet from its initial hype-driven era to its current utility-driven focus, along with predictions for future trends to give you a better perspective on the evolving technology.

Hype era (2020-2022)

The spur of popularity and public attention received by the metaverse in 2020-2022 marked a pivotal period in the evolution of the metaverse. A series of events and big moves by multinational corporations shaped the fate of the metaverse. In March 2021, Roblox Corporation went public through a direct listing, and its valuation soared to over $38 billion, highlighting the increasing mainstream recognition and investor confidence in the potential of the 'metaverse concept.' Later in the year, Facebook rebranded the company to 'Meta,' shining the spotlight on the 3D internet and the company's focus on being a part of this growing technology. This phase also coincided with a remarkable bull run in the cryptocurrency markets, which was crucial in propelling and popularizing 3D internet platforms that utilized blockchain technology and tokens. According to Bloomberg data, the term 'metaverse' was only mentioned 19 times in company transcripts in the two decades before 2020, rising to 813 times in 2021 and 1800 times in 2022.

 Metaverse platforms like The Sandbox and Decentraland, which allow users to meet, socialize, and trade virtual land and assets using their native tokens, saw tremendous success. For instance, in 2021, real estate sales on four major 3D internet platforms reached $501 million, per MetaMetric Solutions. This massive uptick in sales reflected the growing investor enthusiasm and demand for virtual real estate within these platforms during the hype period.

 Moreover, these 3D internet platforms emerged as frontrunners in the space by forging strategic brand partnerships and collaborations. For instance, The Sandbox collaborated with brands like Atari, driving a surge in users with classic game introductions, and fashion brands like Gucci and Burberry to introduce digital fashion. The platform also hosted experiences for financial institutions like PwC Hong Kong and KPMG. During that period, Decentraland also saw successful partnerships with brands like Adidas for a virtual store, Coca-Cola to create NFT wearables, and Sotheby's to open a virtual gallery, boosting brand immersion and sales. These alliances enhanced the visibility and credibility of these platforms. They attracted diverse users—from gaming enthusiasts and digital artists to real estate investors and corporate brands—eager to explore the new opportunities presented by these virtual worlds. The partnerships often involved unique marketing campaigns, exclusive digital content, and innovative engagement strategies, further leveraging the growing fascination with virtual and augmented realities.

 The convergence of these factors—crypto-market dynamics, innovative platform features, and strategic partnerships— significantly amplified public interest and investment in the metaverse. This era laid the groundwork for the metaverse as a significant cultural and economic phenomenon, demonstrating its potential to reshape digital interaction and create new forms of social and economic value in a digitally interconnected world.

Era of utility (2022-present)

Despite the early hype, metaverse platforms faced challenges in 2022, with Decentraland and The Sandbox experiencing a declining user count. A report by Coindesk indicated they had only 38 and 522 active users a day, respectively, though both platforms disputed this, claiming higher daily and monthly active users. Meta's Horizon Worlds also struggled to meet its user target of 500,000 by 2022, with users averaging around 200,000. Expensive VR headsets deterred adoption of the metaverse, and those who bought them didn't use it, with over 50% of headsets abandoned within six months, as per the Wall Street Journal. As the cryptocurrency hype diminished, many brands and organizations began reassessing their involvement in the metaverse. They turned away from these platforms, which had once been bustling digital interaction and commerce hubs. Limitations of the 3D internet, like technological roadblocks, fragmented metaverse platforms, and increasing privacy and security concerns, challenged the metaverse's appeal.

However, companies like Landvault continued to see the metaverse's underlying potential beyond the hype. Recognizing the need for a shift from novelty to utility in 3D internet experiences, Landvault spearheaded the transition toward creating meaningful and practical applications within these virtual environments. This new era of utility in the metaverse focuses on providing experiences beyond novelty and social interaction, adding real-world value through immersive applications.

Metaverse use cases are now moving toward utility-driven applications. For instance, they can replicate and simulate complex systems in the industrial sector. These digital twins can be a game changer for product development and medical training. Enterprises are also recognizing the metaverse's ability to facilitate employee productivity, enhance customer experiences, and improve learning.

This new perspective of the 3D internet enables the metaverse's resurgence. The Fidelity Metaverse ETF, which aims to reflect the performance of companies that facilitate the metaverse through their products and services, grew by 50% from October 2022 to July 2023.

Landvault has been a critical player in the utility-focused metaverse and has collaborated with prominent organizations in the Middle East to develop immersive experiences that serve practical purposes. These projects often involve the creation of digital twins for potential megaprojects, allowing for detailed virtual explorations of future developments or virtual tours of culturally significant landmarks.

 One notable metaverse project offering real utility is a leading virtual real estate project in the Middle East. NEOM, a $500 billion urban development project in Saudi Arabia, has invested $1 billion in creating a digital twin of its city project, The Line, using artificial intelligence (AI) and metaverse applications. The digital twin will help potential investors virtually visit the project before buying property and support city planners with the design process of the location. This focus on utility represents a maturation of 3D internet applications, proving that the value of virtual worlds extends beyond speculative investments to include tangible, beneficial impacts on society and industry.

Looking into the future

The metaverse's future outlook is poised to be transformative as advancements in immersive technologies, interoperability, high-definition graphics and dynamics, and digital economies take center stage. These potential developments suggest a future where digital and physical realms become seamlessly integrated, offering new possibilities for interaction, commerce, and social connectivity.

Here are some key trends that will shape the future of the metaverse:

• Enhanced immersive technologies: As VR and AR technologies advance, we can expect them to become more accessible, affordable, and capable. Future VR/AR devices will likely be more lightweight, have longer battery lives, and offer higher resolutions, providing more immersive and visually compelling experiences. This evolution will enable a wider adoption across various sectors, including education, healthcare, and entertainment. The future of VR and AR is bright, with the global VR market projected to reach $184.66 billion by 2026. The Apple Vision Pro exemplifies the industry's advancement, showcasing mixed reality capabilities​​. These technologies are expanding into sectors like healthcare, where AR and VR are used for training and surgical visualization​​.

  
  

• Interoperability: The current 3D internet infrastructure allows users to explore virtual experiences in a single metaverse at a time without seamlessly shifting from one metaverse project to another. Open standards and advanced blockchains are evolving to allow different metaverse projects to interact, enabling social connecting, trading, and other activities through cross-chain networks. The idea of an interoperable metaverse has even attracted the attention of tech giants Microsoft and Meta. The World Economic Forum also launched an initiative supported by a multi-sector working group of over 150 experts to enable the vision of an interoperable 3D internet.

  
  

• Realistic interactions: As AI and machine learning evolve, virtual interactions within the metaverse will become increasingly realistic and responsive, mimicking real-world physics and human behaviors more accurately. This advancement will enhance the feeling of presence, making virtual experiences more lifelike and engaging.

  
  

• Rise in immersive experiences: Due to their enhanced accessibility, immersive nature, and engaging content, virtual worlds are becoming increasingly popular for hosting cultural events and social activities. KPMG mentions in one of its publications that by 2030, we could be spending more time in the metaverse than in the real world for activities like meeting friends, shopping, and working. Of the consumers surveyed by Capgemini, 58% said that immersive experiences will be valuable while exploring and purchasing products and services.

  
  

• New economic models: Expanding digital economies will likely lead to new business models and revenue streams. Consumers will increasingly be interested in purchasing digital collectibles to accessorize their avatars. Digital products minted as NFTs will help brands earn an income from sales and royalties from secondary sales. Brands can also experiment with hybrid-reality products to connect virtual items with physical products. As digital goods increase in variety and complexity, we can expect to see a rise in virtual fashion brands, digital real estate agencies, and virtual event planning companies. Brands like Gucci have already entered the metaverse, creating the "Gucci Garden" on Roblox, engaging millions of visitors, and exploring new digital revenue streams through digital wearables​​. Nike also launched a collection of NFTs known as "Cryptokicks," contributing significant revenue from its digital operations​​.