Published on the 04/04/2023 | Written by Heather Wright

It’s just 18 months since the metaverse was ‘the next big thing’ garnering more than a little publicity and plenty of hype. It was the future of the internet and big brands were in a race to embrace it amid promises the metaverse was going transform work and play, transporting us to virtual worlds where we would all live, work, shop, learn and interact with each other from the comfort of our own living rooms.

But as generative AI steals the spotlight, big name companies such as Microsoft and Disney, once leading the charge as advocates for the technology, seem to be turning their backs on the metaverse.

“What’s needed is innovation rather than repackaging old immersive experiences.”

Last October, Forrester predicted a metaverse and NFT winter was on its way to chill the market, noting that the metaverse didn’t even exist yet.

Recent weeks suggest that winter has now arrived.

Last week, Disney culled its metaverse division of around 50 staff, as part of the company’s broader restructuring and layoffs. The same day, US retail giant Walmart dumped its Universe of Play virtual world in Roblox, just six months after launching.

Targeted at children and touted as ‘the ultimate virtual toy destination’ Universe of Play and featured products and characters from a range of children’s franchises. But recent months had seen it come under fire from US consumer advocacy group Truth in Advertising and other watchdogs including the Center for Digital Democracy and National Association of Consumer Advocates.

They alleged the metaverse game was ‘deceptively marketing its goods and services… by blurring the distinction between adverting content and organic content and failing to provide any clear or conspicuous disclosures that the game, or contents within the game, are ads’.

Roblox itself adjusted ad policies last week to ban ads targeted at under-13s.

Microsoft, meanwhile, has laid off all 100 staff in its Industrial Metaverse Core team, just four months after the team was formed to help customers harness the metaverse for industrial use, The Information reported in February.

Microsoft itself was, however, still pushing its ‘industrial metaverse’ aspirations, but focusing instead on technologies such as IoT, digital twins, along with HoloLens and a common data foundation.

Also gone from Microsoft’s metaverse push: The entire Alspace VR team and the Mixed Reality Tool Kit team.

The company apparently is taking more of a back seat – letting others forge the early pathways and deal with the headaches, and regulatory uncertainty, involved in being a trailblazer, confident it can catch up later on thanks to its strong installed base across both business and consumer.

Even Meta, so wholeheartedly invested in the metaverse that it changed its name in October 2021, appears less bolshy about the virtual world.

It’s reportedly invested US$36 billion into its metaverse vision, but its ‘year of efficiency’ is likely to slow progress at the very least.

Horizon Worlds, the VR ‘social universe’ launched by Meta as its flagship metaverse app, appears to be floundering, with reports that only one in 10 users return. At the end of 2022, it was logging a user base of just 200,000, with the company keen to open it up to children – an idea which rapidly attracted criticism from US senators. The company launched ‘quests’ in March in an effort to lure users in. Its Reality Labs division, meanwhile posted a US$4.3 billion operating loss for Q4, for a total loss for last year to $13.7 billion.

Several key executives, including John Carmack who helped build the Occulus business (now Reality Labs) for Meta, have also parted company with the Meta. In a letter posted to his Facebook account, Cormack said in December that while he was happy with the products created, the company’s inefficiencies were a struggle.

Mark Zuckerberg, meanwhile has flagged increased focus on generative AI, with a ‘new top-level product group’ created at Meta to focus on the technology and ‘turbocharge’ its work there.

Forrester believes the metaverse isn’t necessarily dead and buried. Instead it has a more pragmatic vision – one where the metaverse is the 3D experience layer of the internet, much as the worldwide web is to its 2D counterpart.

“But it will take a decade for that vision to be fully realised,” Forrester says.

Early this year, Forrester’s Sydney-based principal analyst Sam Higgins cautioned local companies to take a more pragmatic approach to IT in the current economic uncertainty. And while that approach doesn’t include shutting down every emerging technology, he told iStart companies shouldn’t be chasing the metaverse yet.

Australian and New Zealand companies have been surprisingly bolshy about the metaverse. An IDC survey late last year showed 31 percent of A/NZ businesses were investing in emerging technology such as the metaverse and Web3.

Around the same time a Tenable study showed 64 percent of Australian businesses planned to invest in the metaverse in the next six to 12 months in an effort to enhance customer engagement, improve learning and training and collaborate better.

Forrester says now, however, is the time to don a sweater and coat until things eventually heat up, though the metaverse as a collaboration point is one bright spot.

It’s forecasting that there won’t be a big aha moment, a la Pokemon Go which brought augmented reality to the masses.

“While metaverse precursor experiences have enjoyed pockets of popularlity – such as through a handful of well-attended concerts in spaces like Fortnite – few consumers have found Pokemon Go-level excitement.,” Forrester says.

“What’s needed is innovation – particularly hybrid, physical-digital experiences – rather than ‘metaverse washing’ or repackaging old immersive experience. But it won’t happen in 2023.”