Is Metaverse rising and falling because of the rise of AI?

At the time of the booming development of artificial intelligence (AI), the future of the Metaverse seems to be in a precarious situation.

Author: Alinda Gupta

Compilation: oneflumen, Centreless

The emergence of the Metaverse has made many unimaginable things possible, shaping the future of work, mental health, and influential marketing concepts. However, as artificial intelligence (AI) flourishes, the future of the Metaverse seems to be in a precarious situation.

When Facebook changed its name to 'Meta' to signify its new direction and ambition, it spent billions of dollars trying to become synonymous with augmented reality (AR) and virtual reality (VR). However, after suffering a $26 billion loss from this new venture, 'Meta' decided to shift its focus to the field of AI. This is not surprising, as the success of OpenAI's ChatGPT chatbot in recent months has inspired many other companies to follow suit and expand their businesses using the advantages of generative AI technology.

Meta, the parent company of Facebook, will form a new product team focused on generative artificial intelligence, bringing together teams across the company to create innovative tools and experiences that will integrate this technology into all Meta products. The long-term goal is to develop AI characters to assist users in 'multiple ways,' as stated by Meta's founder and CEO Mark Zuckerberg in a Facebook post on February 28.

But what does it mean for the entire Metaverse?

How does Metaverse lose momentum?

When it comes to the Metaverse, virtual land cannot be bypassed. It should be said that in the early development of the Metaverse, virtual land can be seen as synonymous with the Metaverse.

In the Metaverse, virtual real estate dominates, and the price of Ethereum directly affects the value of virtual land. However, the fluctuation in Ethereum prices has left many buyers and sellers in a predicament. According to WeMeta's data, this has led to a significant drop in the average selling price of virtual land, plummeting from over $11,000 to less than $2,000.

Additionally, in 2022, the virtual land sales volume of Ethereum-based Metaverse projects (such as Sandbox and Decentraland) suffered a severe setback, with their valuations and other key metrics seeing significant declines.

In February 2022, the average price of land sold on Decentraland reached a historical high of $37200. However, by August 1st, its value had dropped to around $5100 on average. Similarly, the average price of land sold on Sandbox plummeted from around $35500 in January to around $2800 in August.

The volatility of cryptocurrency prices, especially Ethereum prices, has introduced a new level of uncertainty to the market, making investors uncertain about the future of their virtual assets. In addition, the current Metaverse lacks proper infrastructure, governance, and collaboration mechanisms. This may be why some people think that, in its current state, the Metaverse is just a marketing gimmick.

The potential of AI

Over the past three years, generative AI solutions have attracted more than $1.7 billion in venture capital, with AI-assisted drug discovery and AI software coding being the two most funded areas.

With the rapid development of the artificial intelligence field, its impact is affecting various industries, including marketing and media. Leading research and consulting firm Gartner predicts that the use of generative artificial intelligence in these areas will significantly increase in the coming years.

By 2025, it is expected that the marketing information sent by large organizations will be generated by artificial intelligence, and this proportion will increase from less than 2% in 2022 to over 30%. The impact of generative artificial intelligence will not stop there. According to Gartner's prediction, around 2030, a blockbuster movie may be released, with 90% of its main content, from text to video, all generated by AI.

While generative artificial intelligence has great potential, it currently faces accessibility restrictions. For example, the ChatGPT mechanism is not open-source, which means it cannot be publicly accessed. This limitation makes it difficult for other companies to replicate the technology. However, Facebook aims to introduce smaller, enterprise-friendly, and optimized AI models, which will help make generative AI more widely available and easily accessible.

The death of Metaverse: trend or fact?

While some reports suggest this is the end of the Metaverse, some argue that we should not associate Meta's recent shift with the overall development of the Metaverse. For example, computer scientist Roy Amara proposed Amara's Law, pointing out that humans often incorrectly judge the timing and potential of technological breakthroughs, tending to overestimate their short-term impact and underestimate their long-term potential. This trend is also evident in the skepticism and hype surrounding emerging technologies such as autonomous vehicles, virtual reality (VR), and augmented reality (AR). Even the Internet was once seen as a fad.

Furthermore, AI - especially generative AI - may even have the potential to advance the development of the Metaverse by creating more persuasive environments and characters.

More importantly, some people firmly deny that the Metaverse will die or decrease in its popularity. However, with many companies adopting Metaverse technology, this field will thrive. To achieve this, some structural changes are needed. For example, VR headsets need to be cheaper, and virtual systems need to perform better in terms of privacy.

Almost every new invention was once a passionate dream - often a frightening one. However, over time, these new technologies have become so ingrained in our daily lives that we can't imagine a day without them. Perhaps this is the fate of the Metaverse. If not, another immersive technological invention will replace it, leaving us to debate whether the Metaverse is in its dawn or decline.