Introduction
The metaverse is the latest buzzword in tech, with companies like Meta (formerly Facebook) investing billions into building what they believe will be the next evolution of the internet. But does this virtual world really have legs yet? Or is it just hype? In this article, we’ll examine the current state of the metaverse, looking at adoption rates, technological hurdles, and whether businesses are embracing it.
What exactly is the metaverse?
The term “metaverse” refers to a persistent virtual world where users can interact with digital objects and with each other through avatars. It encompasses augmented reality, virtual reality, and everything in between. The key components of a metaverse include:
- Persistent virtual worlds that continue to exist even when you’re not playing or logged in.
- A shared sense of presence with other users.
- Interoperability of avatar identity, history, entitlements, and purchases across different metaverse environments.
- Use of VR/AR hardware for more immersive experiences.
In a fully realized metaverse, users would be able to seamlessly travel between virtual worlds, interacting with brands, playing games, and connecting with others. It’s meant to feel like an embodied internet.
Current state of metaverse adoption
Low user numbers so far
Despite all the hype, user adoption of metaverse platforms remains relatively low. As of Q4 2022:
- Meta Horizon Worlds had about 500,000 monthly active users.
- Microsoft Mesh had about 22,000 monthly active users.
- Decentraland had about 38,000 daily active users.
- The Sandbox had about 32,000 daily active users.
- Roblox had about 59 million daily active users (but is arguably not a full metaverse yet).
To put those numbers in perspective, Instagram has about 2 billion monthly active users. So adoption of true metaverse platforms remains niche. Horizon Worlds saw rapid growth after launching in December 2021 but that has since flattened. It’s clear that Meta will need to improve the user experience to attract the masses.
VR/AR headsets have limited reach
One factor limiting metaverse adoption is that fully immersive experiences require VR/AR headsets which are not yet mainstream. As of January 2023:
- Less than 15 million monthly active VR headsets in use globally.
- Meta Quest 2 dominates with around 90% market share.
- Apple has not yet released their rumored VR/AR headset.
For most people, putting on a VR headset to enter the metaverse remains too cumbersome. This technology needs time to mature before it’s ready for mainstream use.
Teething problems with interoperability
A key promise of the metaverse is the ability to maintain identity and purchase history across multiple virtual worlds. But in practice, interoperability remains fragmented. A few examples:
- Horizon Worlds and Microsoft Mesh don’t connect to each other.
- Items purchased in one metaverse don’t transfer to other platforms.
- Avatars are often limited to the platform where they were created.
Until these disparate virtual worlds can seamlessly link together, the metaverse will continue to feel more like isolated islands rather than an expansive new frontier.
Table summarizing current metaverse adoption metrics
| Platform | Monthly active users | Key metric |
|---|---|---|
| Meta Horizon Worlds | 500,000 | Flattening growth in 2022 |
| Microsoft Mesh | 22,000 | Slow uptake so far |
| Decentraland | 38,000 daily | Niche user base |
| The Sandbox | 32,000 daily | Niche user base |
| Roblox | 59 million daily | Not fully a metaverse yet |
Are businesses buying into the metaverse?
Brands are experimenting
Although consumer adoption remains low, brands are eager to stake their claim in the metaverse. Marketing dollars are pouring into virtual worlds with experimental activations including:
- Nike created Nikeland in Roblox.
- McDonald’s had a virtual restaurant in the Sandbox.
- Samsung held a product launch in Decentraland.
- Coca-Cola held a virtual concert with Lil Nas X in Roblox.
For many brands, these early forays are more about learning than immediate returns. They want to be ready to capture the next generation of consumers in immersive digital worlds.
Virtual real estate is booming
Virtual land sales are going through the roof, suggesting businesses see potential in the metaverse. In Q3 2022:
- Over $100M of virtual real estate sold across major metaverse platforms.
- Decentraland saw $15M in land sales, up 50% from previous quarter.
- The Sandbox saw $32M in land sales, up 96% from previous quarter.
Major brands like JPMorgan, HSBC, and Nike have purchased virtual land plots. The bet is that these plots will increase in value as the metaverse grows. But the payoff is still highly speculative.
In-game spending remains small
Although virtual real estate is booming, in-game spending remains modest. In Q3 2022:
- User spending in Meta’s Horizon Worlds estimated under $10 million.
- User spending in the Sandbox estimated around $18 million.
- User spending in Decentraland estimated around $1 million.
When these numbers are divided across user bases in the tens of thousands, it equates to around $30-$50 per user per quarter. Virtual goods commerce has a long way to scale before becoming big business.
Table summarizing business metaverse metrics
| Measure | Q3 2022 data |
|---|---|
| Virtual real estate sales | Over $100M total |
| Decentraland land sales | $15M, up 50% vs. prior quarter |
| The Sandbox land sales | $32M, up 96% vs. prior quarter |
| Horizon Worlds user spending | Under $10M |
| The Sandbox user spending | Around $18M |
| Decentraland user spending | Around $1M |
Technological barriers to mainstream adoption
While the metaverse holds exciting potential, there remain significant technological barriers to mainstream adoption.
VR comfort and fidelity challenges
Today’s VR headsets often cause motion sickness and fatigue after prolonged use. The hand controllers can be clunky. And the resolution provides an immersive experience but generally not a convincing sense of reality. VR technology remains in its early days and needs to mature before most consumers will be ready to spend hours per day in metaverse worlds.
Inadequate internet infrastructure
The amount of data transmission required for detailed virtual worlds is immense—far beyond what today’s internet infrastructure can handle at scale. 5G and fiber optic connections will help but there’s a long way to go. Compression algorithms and edge computing can mitigate some of these needs in the interim.
Security and privacy concerns
Any new digital environment raises concerns around hacking, data privacy, and preventing toxic behavior. Meta has already had to deal with harassment issues in Horizon Worlds. And blockchain-based platforms like Decentraland have been hacked before. Strong identity verification, moderation, and governance will be needed to build user trust.
Lack of standardization
Without standards, metaverse platforms will struggle to interoperate. There are nascent efforts to develop standards—like the Metaverse Standards Forum—but unified frameworks will take time. Everything from payments to avatars need to work seamlessly across worlds.
Table summarizing metaverse technology barriers
| Barrier | Description |
|---|---|
| VR comfort | Motion sickness and fatigue issues with prolonged headset use |
| VR fidelity | Resolution good but not realistic. Controller experience clunky. |
| Internet infrastructure | 5G and fiber can help but still inadequate for massive user bases |
| Security and privacy | New attack surfaces and concerns around data use |
| Lack of standards | Need interoperability across platforms and use cases |
Does the metaverse have legs yet?
Conclusion: Cautious optimism merited
So does the metaverse have legs yet? The verdict is cautious optimism. While still niche, momentum is building both from a user and business standpoint. And the technological barriers aren’t insurmountable given time and investment. But tempered expectations are smart. It may be 5-10 years before the metaverse reaches mainstream adoption and realizes its full disruptive potential across gaming, social, commerce, education, and work. The foundations are being laid but it’s still early days.
For businesses, the smart play is to start experimenting now to be ready for the next generation of consumers. But resist the urge to overhype the metaverse before it is technologically ready for primetime. For users, approach with curiosity but caution. The first iterations of the metaverse will be basic compared to the eventual possibilities. But those willing to engage now in good faith can help shape this virtual frontier toward being safe, inclusive, and fulfilling for all.