The Metaverse has crashed with this year’s cryptocurrency and stock market meltdown, denting hopes that the Internet’s next iteration will be worth $13 trillion by 2030, at least when it comes to virtual real-estate sales.
But while key players such as Decentraland and The Sandbox have seen user traffic plunge in recent months, the nascent industry can revive its fortunes if it works to improve infrastructure and launch more exciting user experiences while paring down exorbitant headset prices.
“A lot of leg work has to take place to lay the plumbing and build really great experiences,” says Matt Bartlett, who oversees a Metaverse project for VanEck set to be launched next month. The backbone to improve crypto payments, digital currency swaps and communications, among other things, must also improve markedly to enable Web 3 to reach its next milestone, he adds.
Meanwhile, onboarding (or the process to procure new users) must also be streamlined to include new models, notably free-to-own or play-to-earn strategies that democratize a platform’s ownership by allowing users to own non-fungible tokens (NFTs), encouraging them to try new games and experiences. NFTs allow users to own digital assets including gaming avatars or real-estate properties in a particular platform.
Web 3 and Metaverse Issues
Kazi Zilani, co-founder and CFO of gaming concern Arcade2earn.io, says an educational gap, for both cryptocurrencies and the Metaverse, is also stalling growth.
“One of the biggest problems is that it’s too complicated for people to interact with Web 3,” he says. “Many people are not comfortable using or securing crypto wallets such as Metamask or Solana’s Phantom. It’s a complicated process.”
Project managers will need to tackle this issue if they want to get average users to join their properties. So-called gatekeepers are also a problem.
“With a lot of Web 3 platforms, anytime you create an app, it has to be approved by Google or Apple to be listed and for many early and risky projects this is hard to do,” Zilani notes. Startups are also unable to fork gatekeepers’ high fees, he adds.
To fix this, Epic Games, which operates the widely popular Fortnite game, plans to launch its own Android phone featuring a Web 3 app store that will eventually operate on all devices, helping new developers circumvent this challenge, according to Zilani.
Big Investments in Infrastructure
Zilani notes billions in infrastructure spending will be needed to build a more appealing Metaverse starting with the games making up the bulk of the industry’s use case.
“It takes years to make a great game,” he notes, adding that some can cost $300 million to $500 million and take a decade to iron out to perfection.
Then there is Virtual Reality (VR), which lets people experience simulated, 3D environments that look, feel and can even smell real. While gaining momentum, that sector is facing challenges from overly expensive tune-in headsets that must improve in quality and come down in price to win consumers’ hearts, analysts say.
Meta just launched its new Quest Pro headset priced at a whopping $1,500, three times the price of its more basic Quest 2 device. The Pro is made for a work-focused audience to draw a growing number of corporations seeking to engage in 3D meetings, says the firm, formerly Facebook. It features face-and eye-tracking technology aimed at humanizing avatars so VR conversations feel more personal.
VR Challenges and Predictions
The Quest 2 has sold more than 15 million units but critics note it and other VR devices still fall short of providing fully realistic experiences and can sometimes cause motion sickness.
“Some people get sick with VR tech,” says VanEck’s Product Manager JP Lee. “I personally don’t use it. Unless you can implant something in my brain that doesn’t make me sick to my stomach, I won’t do it.”
While used interchangeably, Lee notes VR and the Metaverse are not the same thing.
“Metaverse is not a headsets only thing,” he notes. “You can access many 3D Metaverse experiences without VR headsets like Zoom calls and in-office communities.”
Jorge Jimenez, also at Arcade2earn, says VR´s high U.S. entry price has kept consumers on the sidelines, allowing the technology to win hearts in other regions such as Asia where prices are much lower.
“In Asia, you can adapt a cellphone to access VR for $50 to $80 and it can do the same thing that Meta’s Quest does,” notes Jimenez, adding that consumers can currently access immersive experiences such as Netflix’s VR through cheaper, custom-made headsets.
Partly for this reason, Jimenez doesn’t envisage VR taking off as much as headset makers hope.
“I don’t think VR will be something that everyone uses,” he notes. “There might be some great features like games and shopping catalogs that will be created through VR tech but I don’t see everyone eventually walking around with headsets.”
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.