The recent rollout of ChatGPT by OpenAI has set the world abuzz about the potential of artificial intelligence. But whatever happened to the last tech phenomenon, the “metaverse”?
The once-heavily hyped future of immersive 3D technology seems to have drifted into the background, its bold virtual-reality future yet to materialize as hoped by its biggest proponents. Chief among its backers: Facebook founder Mark Zuckerberg, who two years ago went so far as to change his social media company’s name to Meta and vowed to spend billions to bring the metaverse to reality.
A new case study by Harvard Business School researchers concludes that the decades-old “pendulum of metaverse hype” began to swing toward skepticism in early 2023, as major tech corporations announced massive layoffs and cutbacks in virtual-reality development. Harvard Business School Associate Professor Andy Wu coauthored the case with HBS professor David B. Yoffie, the Max and Doris Starr Professor of International Business Administration at HBS, and Matt Higgins, now a senior researcher at the HBS California Research Center.
At this point, it seems that AI has eclipsed the metaverse as the next “big thing” in technology, the “Metaverse Wars” case notes.
The case makes clear that the metaverse hasn’t emerged as soon as its biggest enthusiasts would have hoped. Nevertheless, it still has the potential to become a truly transformative technology that could one day change companies, industries, and even society. But it must first overcome key technological and developmental challenges.
One of the most critical questions yet to be answered: Will it be an open and interoperable virtual world, similar to today’s internet, or will it be a closed 3D universe with one or multiple companies controlling their own technological fiefdoms, similar to how social networks and mobile app stores operate today? The answer is not yet clear—and may not be for years to come.
When will the metaverse make a splash?
“For the last 10 years, metaverse and virtual reality have always been one year away or five years away,” Wu says. “The timeline is perpetually pushed back. And so, for businesses thinking about making a commitment to the metaverse, it’s still unclear if this is the right moment. We’ve still got a long way to go on the metaverse, but the foundation and the basic ideas are already here.”
Indeed, some industries, such as construction and medicine, are already extensively using virtual-reality technology. And, of course, “young people today are already living in a 3D virtual world,” via Roblox, Minecraft, and other gaming platforms, Wu says.
“We still haven’t seen what that killer app is going to be for the metaverse. It is like we are trying to talk about the internet, but email hasn’t been invented yet.”
Meanwhile, Apple recently unveiled a new $3,500 headset called Vision Pro, although the company isn’t referring to its technology as a form of virtual reality, Wu says.
“The challenge is coordinating all the pieces of the ecosystem,” he says. “It’s not just a matter of a headset. You also have to have content like games or simulations or social media interaction platforms. We still haven’t seen what that killer app is going to be for the metaverse. It is like we are trying to talk about the internet, but email hasn’t been invented yet.”
What exactly is the metaverse again?
People view the metaverse in different ways. Some associate it with a “massive participatory videogame inspired by science fiction,” while others see it as an “evolution of the internet into something more three-dimensional and social,” according to the case.
Matthew Ball, author of the recently published book The Metaverse: And How it Will Revolutionize Everything, has described the future technology as a “massively scaled and interoperable network of real-time rendered 3D virtual worlds” that can be used by an unlimited number of people at the same time.
The metaverse term, a combination of the words “meta” and “universe,” originated from Neal Stephenson’s influential 1992 science-fiction novel Snow Crash, which portrays a world in which characters are connected via virtual-reality goggles and their avatars interact with other avatars in virtual spaces.
The early years of gaming
The metaverse has its non-fiction roots in early massively multiplayer online role-playing games (MMORPGs) that took off in the late 1990s, including Ultima Online and EverQuest, as well as games released in the early 2000s, such as Eve Online and World of Warcraft. Linden Lab’s Second Life game, with its open-world multiuser virtual environment, has also played a key role in demonstrating the potential of metaverse technology.
“Metaverse-related hype grew throughout the 2010s, reaching a fever pitch during the global pandemic,” the case says. “With lockdowns and reduced mobility, the concept of online virtual worlds that could replicate aspects of pre-pandemic social life and in-person interaction took on a new appeal.”
And that new appeal included funds flowing to companies, such as Epic Games, for further development of virtual-reality technologies. In October 2021, Facebook changed its name to Meta and announced it would spend $10 billion a year to “bring the metaverse to life.” Other tech firms that have invested funds in metaverse-related projects include Apple, Google, Microsoft, and Nvidia.
The future of the metaverse
While billions of dollars have been spent on virtual-reality technologies, Wu says a “killer app” that could drive widespread adoption has yet to emerge.
“People are particularly excited about using the metaverse as a way to engage with physical retailing.”
Many think a use-case breakthrough could indeed arrive via gaming, but Wu suspects it will emerge from the enterprise category, perhaps for the retail or education sectors.
“People are particularly excited about using the metaverse as a way to engage with physical retailing,” Wu says. “The general idea is that the online shopping experience today is currently lacking a sense of immersion and customization that, in theory, a 3D virtual world would provide.”
What should businesses do?
Wu believes the metaverse will eventually impact most organizations, big and small, but says during this period of uncertainty, business leaders might consider two paths:
Explore possible internal use cases cautiously. Business leaders may want to hold off on making any substantive commitments for the time being. “The key is to make sure your firm has knowledge about the metaverse, so it can move quickly if the need arises,” Wu says.
Find business opportunities that steer metaverse development. On the other hand, some organizations, particularly tech companies, may decide to go all-in and help advance the metaverse. For instance, Wu says, “one might invest in platform technologies that can generate a profit and be viable, independent of the timing of the metaverse.” Companies like Nvidia (GPUs) and Epic Games (Unreal Engine) are doing this already, but a lot more is needed, he says. In that way, the business is actually investing in the future infrastructure of the metaverse.
“The most enthusiastic advocates of the metaverse believe in and fight for the notion of interoperability.”
Wu emphasizes that the true potential of the metaverse won’t be achieved if companies don’t cooperate and agree on basic technological standards and
protocols that would allow people to openly interact in online virtual worlds—without technological walls put up by corporations.
To achieve widespread adoption, Wu says, those passionate about it say interoperability is key.
“The most enthusiastic advocates of the metaverse believe in and fight for the notion of interoperability,” Wu says. “The metaverse in some form will definitely happen. I ask my students to reflect on two questions. First, will people use the internet more in the future? Second, will more of the internet be 3D in the future? If your answer is yes to both those questions, then we have to entertain and plan for the metaverse concept. But it may not be one virtual world. It may be many worlds, closed off to one another. We’ll have to see how the future unfolds, but it will be exciting in either scenario.”
“Harvard Business School is the graduate business school of Harvard University, a private research university in Boston, Massachusetts. It is consistently ranked among the top business schools in the world and offers a large full-time MBA program, management-related doctoral programs, and executive education programs.”
