When will Spring come for the metaverse?

The internet has come a long way since its inception as a text-based system. The World Wide Web gave it a graphical interface, leading to radical growth and many new use cases. 

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We are now amid another radical transformation towards the Semantic Web, a system of linked data that will revolutionise how we use the internet – not unlike browsers that freed users from the messaging boards that dominated the early internet. A key challenge for business leaders is knowing when this new internet will materialise and investing in the correct capabilities at the appropriate time.

Wintertime for the promising metaverse

One way of applying the Semantic Web is the metaverse. Many observers see the metaverse as the future internet, a virtual world where people can interact, play, work, and live. But that view is problematic. The metaverse is not the future of the internet. It’s a virtualised (not virtual) version of existing and new products and services that will use Web3 technologies. The metaverse is one application of the future internet, which is usually called the Semantic Web. The metaverse promises a lot for this exciting future, but it is currently stuck in a cold winter, leading to lowering investments, which, in turn, lengthens the winter.

Emerging technologies go through their own summer and winter cycles, which lead to the ebb and flow of investment cycles, which often follow the underlying sentiment in the popular press. For example, one of the hottest technology topics of the day, Artificial Intelligence (AI), recently emerged from multiple winters of low investment and disillusion to attract significant investments and stand at the forefront of many technology strategies.

Ever since humankind noticed a rhythm in the changing seasons, we have been looking for a reliable way to forecast the weather ahead of us. Groundhog Day, the 1993 Hollywood blockbuster film, depicted one of the world’s many folklore festivals to predict the length and severity of the winter. Hopefully, we can do better than folklore to peer into the future of the internet and figure out when the present negative metaverse cycle will end.

Currently, there is overwhelmingly negative sentiment in the press about the metaverse. Some articles even refer to the death of the metaverse, which is leading to a reduction in business activities exploring the metaverse. When companies like Meta, Disney, Microsoft, Walmart and Sony are shrinking – or even disbanding – their metaverse activities, it’s time to take notice. Many other organisations have scaled back from Augmented Reality and Virtual Reality projects and are re-assessing investments in the collective Web3 technologies and applications.

Over-hyped but not a fad

At the same time, some exciting metaverse business cases are emerging, like the virtual metaverse fashion week (#mvfw23), Nike ‘minting money in the metaverse‘, and Coca-Cola’s success story. The metaverse is not a passing fad. Instead, it is an excellent case of the Gartner hype cycle in action. The metaverse was completely over-hyped and, to an extent, misunderstood as being the use case for Web3 technologies. I have little doubt the metaverse will eventually become one of the most valuable use cases of the Semantic Web, seeing widespread adoption in many industries.

However, there is no denying the negative narrative around the metaverse, given the number of layoffs in the technology industry, particularly by those players hedging their bets on the metaverse. It is currently in a winter cooldown with cryptocurrencies which went through the same over-hyped cycle a few years ago. Articles announcing the death of the metaverse are common and usually follow each technology staff layoff or cancelled business initiative. But there is an important difference between hibernation and death.

Amara’s law

Observers who have spent sufficient time in the technology industry will recognise Amara’s law: we tend to overestimate the impact of new technology in the short run, but we underestimate it in the long run. This is precisely where we are right now – in a period of disillusionment – because many businesses (and even industries) bought into the hype and invested with limited business cases to ensure they would not miss The Next Big Thing in tech. So often, as Amara's law reminds us, the hype is not wrong about the impact, but it is wrong about the timescale. Sadly, negativity is driven by expectations of impact that are based on incorrect timescales.

The internet's basic principles and foundational technologies were developed in the 1960s. Yet, 35 years later, prominence was still being given to opinions questioning the value of the internet, like this classic article from Clifford Stoll about the limitations of the internet. The article – which argues the severe limitations, and thus limited value, of the internet – has not aged well. More time elapsed between the inception of the internet technologies to when the article was written than between its publication and today’s transformation of business and society. Stoll should have looked at Amara’s law before making so many negative inferences. Salim Ismail has done exceptional work using the principles of exponential technologies to explain the disillusionment and missed opportunities associated with this over-and-under estimation, using Web3 technologies as examples as well.

The Semantic Web / Web3

The metaverse is but one manifestation of the Semantic Web using Web3 technologies. The Semantic Web, which includes the metaverse, is the next evolution of the internet built on decentralised technology, such as blockchain, which allows for greater security, privacy, and transparency. As a result, it will create a more open, fair, and decentralised internet. This lays the foundation for a future internet, where individuals have greater control over their data and can participate in online communities without relying on centralised platforms.

Some of these things may happen in virtual environments, and others not. Importantly, Web3 creates the potential for new business models and revenue streams. For example, content creators can monetise their work directly without relying on third-party platforms like YouTube. This could result in a more equitable distribution of wealth in the digital economy. Yet, all of this is still in its early stages, and there are many challenges to overcome – which is the topic of a future blog post.

Waiting for the thaw

For now, the critical questions are: how long will this ‘metaverse winter’ last, and what should a business do during winter? Surely, we can do better than plucking an unsuspecting groundhog from his winter resting place and checking for a shadow to predict the number of days until spring?

Many challenges still need to be addressed for widescale metaverse adoption. However, I also recall my first online order for a bouquet of flowers using infant web technologies. The image took a number of minutes to render. I was not impressed. In addition, I remember my first foray into MySpace using Web2 technologies. I was underwhelmed by the experience and misread the potential completely.

I conclude with two hopefully straightforward answers. First of all, regarding the duration of the metaverse winter, our existing tools from the Futures Studies domains – such as horizon scanning, tracking hype cycles, and building scenarios – will remain important. These techniques will help us predict the length of the metaverse winter more scientifically than the shadow of even a virtual groundhog. The answer is not apparent – it’s hidden in many signals and will emerge over time. The astute business scientist should monitor these signals using well-established methods and practices.

Building capacity responsibly

So, what do we do while waiting for the inflection point in Amara’s diagram to harness the impact of technology without overpaying school fees? When technology enters the exponential growth phase and every man, woman, avatar, dog and cat jumps on the bandwagon, it matures and commercialises quickly. The past year in AI, and the numerous initiatives following ChatGPT’s emergence, are prime examples. Significantly, many commercial AI applications were developed during the AI winter and period of disillusionment. When technology goes mainstream, it moves quickly. Building capacity responsibly for future acceleration has proven to be the best strategy.

The hype surrounding Web3 technologies and the metaverse is not unwarranted – they have the potential to fundamentally transform the way we use the internet. The current season of bare trees and negative press will change quickly when the timescale shifts. Is your business keeping an eye on the emergent signs? And, importantly, building capacity during the winter for the spring and summer when the internet will transform yet again?

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Annelies Claeys

Annelies Claeys

Project Manager New Business