TOP consultants once predicted the metaverse would add trillions of dollars to global gross domestic product (GDP)!
In Malaysia, one government agency cited projections that the market would reach US$32.1bil in 2025 with 18.8% user penetration (45.1% by 2030), as the country ploughed in development opportunities for local creators to establish itself as a “leading metaverse hub”.
But the future had other plans.
What does the metaverse actually do? It simulates our natural environment with immersive extended reality experiences.
You might test-drive a car in a virtual showroom, watch a history textbook come alive in a digital museum, build new worlds or replicate existing ones from the model of a city to the insides of our human body.
Interest surged in 2021, peaking when Facebook was famously rebranded as Meta. Then the artificial intelligence (AI) boom came along, leaving the sector scrambling or pivoting to save face.
ChatGPT exploded into mainstream in 2022, reaching 100 million users in just two months. Soon after, search engines and messaging apps began integrating generative AI for billions of daily users.
During this period, Google Trends showed public searches for the metaverse falling off a cliff so much that a popular trade journal quipped: “No one cared about the metaverse in 2022”!
In the years that followed, major backers shut down their metaverse divisions like Disney, or ended collaborations like Walmart with Roblox. Chinese tech giants including Tencent, Bytedance and Alibaba laid off staff.
For blockchain-based projects, the aftermath was especially brutal: The popular Mana and Sand tokens used for payments in the metaverse, plunged roughly 99% from their all-time highs; while around 80% of their virtual lands remain unoccupied and undeveloped today!
Incidentally last month marked, in memoriam, the end-of-life for Meta’s flagship virtual virtual reality platform Horizon Worlds, capping a high-profile experiment that reportedly cost around US$80bil.
The lights went out on the metaverse: AI may not have killed the switch, but it cut the power. Venture capital for the metaverse collapsed by 87% in the space of one year and redeployed to AI (per S&P Global) – the sharpest and most decisive capital exit in modern tech!
Investor enthusiasm, engineering talent, and corporate priorities fled to AI which has faster adoption than smartphones and is more monetizable.
Similarly, in the blockchain sector, investors rotated out as the “play-to-earn” model proved difficult to sustain once post-pandemic audiences had less free time.
Consciously or not, this episode reflects one of the ancient 36 Stratagems in business: “Remove the firewood from under the pot” i.e. to neutralise a rival force by taking away the resource base that fuels it.
The metaverse isn’t dead but the fever certainly is.
In Gartner’s Hype Cycle framing, the technology has descended into the “Trough of Disillusionment” after failing to meet outsized expectations and has even been phased out as a standalone focus.
Meanwhile, AI is the new north star. AI-generated content (AIGC) has captured public imagination because it can create superior multimodal assets in a quicker and more cost-effective way (including real-time video, scene construction, custom avatars, and interactive dialogue).
Next is to integrate AIGC with spatial computing and robotics for phygital (physical and digital) feedback and connect with the Internet of Things – instead of jumping headlong into virtual reality like the original metaverse did, with costly wearables and network latency holding it back.
There are valuable lessons for us. National ambitions have fallen short of giddy forecasts and their credibility gutted.
The future metaverse will iterate without its namesake, as it’ll be led by an AI-native stack that performs like enterprise software and is grounded in commercial validation.
So let’s look beyond social gamification, which previously failed to take off as intended, and focus on return on investment-driven applications in strategic sectors. The possibilities abound: In healthcare, clinicians can extend telemedicine beyond remote consultations, guide rehab exercises with motion tracking, or practice rare surgical procedures before touching the patient.
In manufacturing, high-fidelity simulators can train technicians on dangerous equipment, test factory layouts before machines are moved, or provide augmented interfaces while repairing production lines. There’s already early success with industrial 3D visualisation under the Malaysia Digital Economy Corp’s Digital Transformation Labs.
In construction, building information modelling, which is becoming mandatory for large projects, can do much more.
Last year, the Selangor government set a precedent for public infrastructure with a metaversal Intelligence Operations Centre.
In a digital economy that often undergoes creative destruction, taking stock of “what happened” is more insightful than always asking “what’s the next big thing”.
AI is quietly bringing the metaverse back to life by preserving its utility, with echoes of another 36 Stratagems wisdom: “Borrow a corpse to resurrect the soul”.
Much like a shrewd businessman, AI is turning a tech obituary into a proverbial opportunity. Goes to show the graveyard is the richest place on earth, as they say!
Edmund Yong is a director of the Generative AI Association of Malaysia and ambassador of the Global Blockchain Business Council founded in Davos. The views expressed here are the writer’s own.
