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What Happened to the Metaverse?

Key Takeaways:

• Four years since Mark Zuckerberg pivoted to the metaverse, the concept is now being counted among tech’s biggest fails in recent memory.
• One of the main reasons for the decline of the metaverse is the rise of generative AI.
• Despite the slump, some projects continue to thrive, with experts saying the sector is shedding pretenders.

The idea of an alternate digital utopia where people could connect and interact in immersive virtual environments sounded like a done deal when Mark Zuckerberg shared his vision for the metaverse in October 2021.

The billionaire Facebook founder billed the metaverse as the next frontier of the Internet, and the company began to spend billions in developing the technology it needed to achieve its then-newly-found strategic vision. Zuckerberg even renamed Facebook to Meta to reflect his new focus on building the metaverse, a virtual world where people can interact, work, and create using technologies like virtual and augmented reality.

With the amount of money that Meta (the company has invested about $46 billion in the metaverse since 2021) and other competitors spent towards the idea, it was hard to imagine how it would not take flight. At one point, artists, including Sir Elton John and Travis Scott, hosted concerts in the metaverse, while people also toured cities and attended art exhibitions in virtual environments.

But four years after Meta CEO Zuckerberg’s strategic shift, the metaverse has become one of tech’s biggest failures in recent memory. Unable to meet its lofty promises, the billions that once flowed into the sector have dried up, and public interest is down badly. According to DappRadar, in 2024, trading volume and sales counts for metaverse NFT projects reached their lowest levels since 2020, with volumes slumping 80% and sales crashing 71% from a year earlier.

AI Encumbered the Metaverse

According to experts, one of the main reasons for the decline of the metaverse is the rise of generative artificial intelligence (AI) chatbots such as OpenAI’s ChatGPT and Google’s Gemini.

“Generative AI delivered immediate and scalable impact,” Irina Karagyaur, cofounder and CEO of ecosystem growth agency BQ9, told Cryptonews.

Karagyaur, who is also an expert contributor to the United Nation’s International Telecommunications Union (ITU) Focus Group on the Metaverse, added:

“Unlike the metaverse, which demanded expensive infrastructure, AI-based tools – ChatGPT, Midjourney, and DALL·E – offered instant accessibility. Businesses and consumers gravitated toward AI for automation, content generation, and efficiency gains. The shift in venture capital was decisive: funding flowed into AI startups, deprioritizing metaverse initiatives.”

Herman Narula, CEO of metaverse venture builders Improbable, told Cryptonews that AI played some role in the metaverse’s demise. He said the technology captured “the spotlight as the ‘next big thing,’ diverting attention away from the metaverse.” There were other factors, too.

More details continue throughout the article, analyzing the technological, financial, and cultural factors contributing to the metaverse’s decline, as well as highlighting the remaining projects still making an impact.

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