The metaverse is a bust… for now, advertisers say

In 2022, the metaverse was just around the corner.

Kantar’s Media Reactions survey showed that 61 per cent of marketers claimed they would increase spend in the metaverse in 2023. 

Twelve months later, only 12 per cent of these marketers actually did increase their metaverse spend. They haven’t simply kicked the can further down the road, either. In this year’s survey, only one in five believe they will raise their budget for metaverse advertising in 2024. 

Is the metaverse a bust? These statistics certainly aren’t comforting for those advertisers looking to dive into this brave new world.

Twelve months ago, advertisers had every reason to believe the metaverse would be a gold mine. Mark Zuckerberg is the technology’s biggest zealot, and he has been singing the praises of the metaverse loud and proud; he did, after all, change the name of his entire company to reflect his shifted focus.

But his unwavering commitment has also shone a spotlight on the metaverse’s failure to live up to its promise.

Those advertisers who are tentative certainly won’t be soothed by the recent revelation that Meta’s Reality Labs, the division that focuses on its augmented and virtual reality products, has posted a whopping A$33.1 billion in losses since the start of 2022.

Nor will they be pleased by the development hell that Apple’s own ‘Vision Pro’ virtual reality headset has been through. After years of delays, the headset will apparently arrive in early 2024, and will cost “roughly” A$4,500 – putting it out of reach for most consumers. According to Bloomberg, Apple is well aware of the prohibitive cost, with global sales projections for the first year at a modest one million units. Even worse, Bloomberg reports Apple has now indefinitely delayed the release of their lightweight — and more affordable — mixed-reality headset.

But maybe the metaverse is just under construction.

At a recent in-company presentation, Mark Rabkin, Meta’s vice president for VR, told employees the company has sold nearly 20 million of its Meta Quest virtual reality headsets to date.

So, the audience is there. Somewhere.

The company’s roadmap, also shared during that same presentation, suggests momentum.

Meta will release a pair of smart glasses with a display in 2025, and a neural interface smartwatch that will control them. The company’s first fully-fledged augmented reality glasses have been earmarked for a 2027 release. This move to augmented reality, where the virtual and the real will be blended is tipped as the moment when things will turn truly sci-fi for the metaverse, even if, at first, it probably manifests as a lot of people bumping into kitchen benches while navigating their virtual surroundings.

So the market certainly isn’t dead yet.  

Statista Market Insights predicts a global metaverse advertising spend of A$2.3 billion in 2023, with a projected annual growth rate of 24.75%. 

But there are other, more IRL reasons, that the metaverse is yet to catch fire with advertisers and users alike. 

Kantar’s head of media effectiveness, Straford Rodrigues, tells Mumbrella he believes there are two key factors that have stalled the predicted take-off of the metaverse.

“Firstly, as we ventured out of COVID, people were and are craving face-to-face interactions, rather than more of the virtual encounters that they’d been living with 24/7 during pandemic lockdowns,” he explains.

“And secondly, just like in the early 2000s, where there was a dot.com bust ahead of its time, the metaverse, I feel, is also ahead of its time, and the general public are just not ready — attitudinally — to virtually meet with avatars, like one would with online games.”

Rodrigues’ last point is an interesting one.

A McKinsey Quarterly article published last May cautions against warning shots, like the one you’ve almost finished reading. 

“There’s ample skepticism right now from people who think the metaverse is just a flash in the pan,” the article warns.

“That’s also what some people thought about the internet during the 1990s.”

Maybe we all just jumped the gun.


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