As the Metaverse Hype Cycle Wanes, Focus Continues to Shift to Foundational Building Blocks

The month of June brought intriguing and important developments, albeit through less eye-catching headlines, across both the consumer and enterprise metaverse spaces, with the retail and commerce markets receiving the most attention. While many of these news stories reflect applications and use cases that are still developmental in nature, they represent solid steps toward broader commercial opportunities and moving the industry as a whole forward. Some of June’s highlights are listed below:

• Mizuho Bank announced plans to launch its Metaverse Coin payment system for fiscal year 2023 (fiscal year ending March 31, 2024). The payment system will facilitate payments within metaverse environments, allowing users to seamlessly conduct transactions within virtual spaces. It is based on its J-Coin smartphone payment system, which acts as a digital wallet and is not based on cryptocurrencies or blockchain.
• India-based Kiya.ai, which specializes in Artificial Intelligence (AI) and emerging tech, announced its metaverse platform, Bharatmeta, which will focus on enabling commerce of both physical and virtual products. Applications could include banking, commerce, culture, and collaboration within metaverse spaces. True to the goals of the metaverse for interoperability and inclusiveness, the platform will support Extended Reality (XR) devices, Personal Computers (PCs), mobile devices, and kiosks.
• U.K.-based (and SoftBank-backed) Metaverse technology company Improbable announced its MSquared metaverse project designed to enable a network of metaverses to host thousands of users (initial goal targeting more than 10,000 users). Improbable partnered with Google, NVIDIA, and Ubitus for cloud infrastructure and technologies to enable the cloud-driven experience (streaming like cloud gaming). While initially focusing on PCs, it will eventually extend to mobile devices and consoles.
• Microsoft announced a public preview of Azure Remote Rendering (ARR) for the Meta Quest 2 and Meta Quest Pro Virtual Reality (VR) Head-Mounted Displays (HMDs)—Microsoft already offered support for desktops and HoloLens 2. ARR enables a hybrid rendering approach using both the device’s and cloud resources to render content; for example, the cloud could be used to render large and complex models that would not be possible on the standalone/portable Quest devices alone.  

Much of the initial metaverse hype cycle focused on virtual worlds, so that, too often, the linkage between the virtual and real worlds was lost in the conversation. The spotlight on virtual environments also caused some to intrinsically connect the metaverse to XR devices, which are still far from mainstream computing devices, pushing out the timeline further and adding to the skepticism. The commerce-related news highlighted this month, however, places the interconnection between the real and virtual worlds front and center, where it should have been from the start of the hype cycle. These announcements also speak to the diversity of devices, applications, and breadth of audiences that the metaverse will need to support if it is to become the future Internet.

Mizuho Bank’s Metaverse Coins, for example, while seemingly grounded in Web3, is an extension of commonly used digital payment platforms like PayPal, Alipay, WeChat Pay, J-Coin Pay, etc. and peer-to-peer electronic payment solutions like Venmo, Zelle, etc. This payment strategy creates a direct bridge to pre-existing payment systems (and currencies) and the virtual spaces, eschewing the concerns, complexities, and volatility of crypto. India’s Kiya.ai platform, Bharatmeta, similarly reflects how companies need to bridge preexisting real-world services to these virtual spaces, rather than replace or fully rewrite these experiences—the vast majority of what we do today will need to carry over to the metaverse if it is to serve as the future Internet.

A significant driver to bringing parity to the User Experience (UX) and accessibility to metaverse applications will be the cloud. Cloud computing will allow a significantly wider array of devices to access the same virtual and immersive experiences at similar, if not the same levels of quality. The metaverse cannot mirror tiers of service like the video gaming industry, where players can have significantly varying degrees of gaming performance based on the robustness of their computing devices—or worse, be locked out of these experiences because their hardware cannot render the virtual spaces. Like the Internet, the metaverse must be accessible and the experiences must have an acceptable level of parity across a wide range of devices, which will not be possible without the cloud.

Both Microsoft’s hybrid ARR and Improbable’s cloud-based metaverse illustrate the approach more companies will need to consider if the metaverse is to reach wider audiences. Unity and Vancouver’s Airport Authority, for example, recently announced a partnership to use digital twins to improve operations and meet sustainability goals. Users can see data and information by selecting sections of a Three-Dimensional (3D) model of the airport. With a hybrid cloud rendering solution, larger and more complex models, such as an airport, could be rendered in the cloud and streamed to an Augmented Reality (AR) device that would otherwise be unable to render the asset with its onboard hardware. Relatedly, Airbus announced it would be using mixed reality to help airlines design the cabins of airplanes, which again could benefit from a hybrid or pure cloud approach to allow Airbus’ customers to select from a broader range of devices to interact with this solution.

Speaking more broadly, failing to make metaverse experiences accessible will result in significant disparities in the UX based on one’s ability to afford higher quality computing devices. This does not mean there will be no differences in the UX. Those who use XR devices will still experience a deeper level of immersion, but pricing and availability of devices need to support a wider audience to enable end users to choose how deeply immersive they would like to interact with the virtual spaces. The cloud can make devices less expensive by distributing computing resources, allowing for better form factors and device performance.

Some of these examples may sound mundane compared to the visionary metaverse examples, but these are the applications that will help industries and end users transition and reach this future. It also grounds the metaverse in today’s market, rather than pointing to use cases that either require devices that are not here yet, such as mainstream smart glasses, or require significant changes to user behavior, perceptions, and expectations. The promise of Web3 for example, with Non-Fungible Tokens (NFTs), changes to digital content ownership, etc. would be truly transformative, but neither the broader industries nor the end users are remotely ready for this future on a wide scale. The examples discussed in this ABI Insight reflect steps that could enable this future, should this be the way the markets and users choose to move, but it takes steps to get to from here to there, not a single leap.

The consumer space needs to follow the example of the enterprise and industrial spaces by focusing on value today and transitioning current use cases to the metaverse to have a better perspective. While some continue to question the viability of the metaverse in the consumer market, headlines often suggest that AI has overtaken it (even though AI is a critical technology of the metaverse), the enterprise markets have a different perspective.

EY and Nokia, for example, conducted a study that surveyed 860 business leaders across 6 countries about the enterprise/industrial metaverse (verticals included automotive, industrial goods & manufacturing, transportation, supply chain and logistics, and power and utilities). Only 2% of firms felt the metaverse was a “buzzword or fad,” while 58% had either deployed or piloted at least one metaverse-related use case, with 95% claiming that metaverse journey plans are part of their next 2-year roadmaps.  Respondents also aptly named cloud computing, AI/Machine Learning (ML), and network connectivity (including private & public 5G/6G, and fiber broadband) as essential technical enablers for metaverse use cases.

Just as enterprises need to see a Return on Investment (ROI) to push deeper into the metaverse, consumers need to see value today, rather than trying to sell users on a future that is years, if not a decade-plus, away.