Key Points
It has been four years since Mark Zuckerberg made a full commitment to the metaverse, and today this concept is considered one of the biggest failures in the tech industry in recent years. One of the main reasons for the decline of the metaverse is the rise of generative artificial intelligence. Despite the overall industry slump, some projects continue to show strong growth momentum. Experts point out that this field is undergoing a process of elimination, gradually pushing out insincere participants.
When Mark Zuckerberg outlined his vision for the metaverse in October 2021, the idea of a digital utopia where people could connect and interact in an immersive virtual environment sounded achievable. The billionaire founder believed that the metaverse was the next frontier of the internet, and the company soon began investing billions of dollars to develop the technology needed to realize its metaverse strategic vision. Zuckerberg even renamed Facebook to Meta to reflect its new strategic ambition of building the metaverse. The metaverse is a virtual world built on virtual reality and augmented reality technology, where people can interact, work, and create within this environment.
Given the enormous financial scale that Meta (which has invested approximately $46 billion in the metaverse since 2021) and other competitors have poured into this concept, it is hard to imagine why the metaverse has failed to take off. Once, artists including Sir Elton John and Travis Scott held concerts in the metaverse while people started to tour cities and visit art exhibitions in virtual environments. However, four years after Zuckerberg’s strategic transformation, the metaverse has become one of the most significant failures in the tech industry in recent years. Due to its failure to deliver on grand promises, the tide of billions of dollars that once flooded into this field has receded, and public interest has seen a dramatic decline.
According to DappRadar data, in 2024, the trading volume and sales of metaverse NFT projects have fallen to the lowest levels since 2020, with trading volume plummeting by 80% year-on-year and sales dropping by 71% compared to the same period last year.
Image /DappRadar
AI “Intercepts” the Metaverse
According to experts, one of the main reasons for the decline of the metaverse is the rise of generative artificial intelligence (AI) chatbots, such as OpenAI’s ChatGPT and Google’s Gemini. Irina Karagyaur, co-founder and CEO of BQ9 ecosystem growth agency, told Cryptonews: “Generative AI has achieved immediate and scalable business impact.” Karagyaur, who is also an expert member of the UN International Telecommunication Union (ITU) metaverse focus group, further pointed out that unlike the metaverse, which requires significant infrastructure investment, AI tools represented by ChatGPT, MidJourney, and DALL·E demonstrate immediate usability. Enterprise users and consumers are increasingly turning to AI due to optimized automated processes and enhanced content generation efficiency. The shift in venture capital strategy is particularly significant: capital is flooding into AI startups while metaverse-related projects face downgrades.
Herman Narula, CEO of metaverse venture incubator Improbable, revealed to Cryptonews that AI has played a significant role in the decline of the metaverse. He stated that AI technology has captured industry attention as a “next-generation disruptive technology,” causing a massive shift in focus away from the metaverse. Furthermore, this evolution involves multiple other factors. “The term ‘metaverse’ has faced criticism due to its association with speculative cryptocurrency hype, where companies raised substantial funds, sold numerous assets, and made a series of promises that ultimately went unfulfilled,” Narula further noted.
“More importantly, the early versions or prototypes of the metaverse failed to meet expectations, as they provided closed and restricted environments that greatly limited user activities.” After Meta (formerly Facebook) announced its entry into the metaverse, related tokens such as Decentraland (MANA), The Sandbox (SAND), and Axie Infinity (AXS) saw significant price increases. Today, as doubts about the future of Meta’s metaverse dream continue to grow, the prices of these tokens have plummeted amid extremely low daily active user numbers.
Since hitting an all-time high in November 2021, the prices of the SAND, MANA, and AXS tokens have all fallen by over 95% from their peaks. MANA once reached a historical high of $6.96, SAND surpassed $5.20, and Axie Infinity’s AXS token even reached a staggering price of about $153. However, a recent on-chain data analysis from cryptocurrency research firm Glassnode shows that despite the price volatility, “committed holders are steadily increasing their positions” in these three projects. For example, Glassnode noted that the MANA token has formed a significant accumulation zone around $0.60, reflecting an increase in market buying activity after the price decline. Similar accumulation patterns are also observed in SAND and AXS tokens. Glassnode believes: “The continued accumulation phenomenon of major metaverse tokens indicates that many investors consider these projects as undervalued investment opportunities rather than failures.”
According to CoinGecko data, as of the time of writing, the native token MANA of the Decentraland platform is currently at $0.27, down 2% for the day; the token SAND of The Sandbox platform is down 3.2% to $0.28; and the ecosystem token AXS of Axie Infinity is down over 1%, currently at $3.43.
Hardware Becomes a Roadblock
Charu Sethi, an expert in the Web3 field and the chief ambassador of Polkadot, stated in an interview with Cryptonews that the business model of the metaverse was not fully matured when its concept became popular. “At that time, various brands launched NFTs and expensive virtual land projects, but almost no users gained sustainable value,” she stated. “For example, despite attracting millions of dollars in investment, Decentraland and The Sandbox have long hovered below 5,000 daily active users.” Sethi also mentioned that the high prices of high-end virtual reality (VR) and augmented reality (AR) headset devices, along with “complex login processes,” further hindered the popularity of the metaverse.
Hardware is key to enhancing the metaverse experience. “As a result, funding and attention have shifted to artificial intelligence, which can deliver immediate returns on investment,” she emphasized, stating: “For many businesses, the rapid gains brought by AI overshadow the metaverse.” As part of the metaverse race, Meta and Apple have launched VR headset devices that allow users to immerse themselves in virtual spaces. After using these hardware devices, people can do various activities in the metaverse through digital avatars: gaming, social interaction, even virtual office work. However, these types of headsets can be quite expensive. The Apple Vision Pro is priced at $3,500, while the Meta Quest 3 headset starts at $500. In contrast, AI tools like ChatGPT offer limited free services, while their $20/month premium version provides unlimited services without requiring users to purchase additional hardware.
ITU metaverse expert Karagyaur pointed out that the stagnation in the VR headset market is due to devices like the Apple Vision Pro and Meta Quest 3 “only appealing to a niche user group and failing to open up to the mass consumer market.”
She said:
“Due to the failure to explore a sustainable profit model, the high investment and high risk in the metaverse field are becoming increasingly difficult to justify.”
Decentraland Foundation Market Director Kim Currier pointed out
that the metaverse is not just about VR/AR hardware narratives. “It creates a virtual space for human collaboration where users can socialize, explore together, and create new things,” she emphasized.
Currier continued:
“Although Apple’s Vision Pro and Meta Quest 3 have sparked a wave of innovation, the consumer side still faces a reality: the vast majority of users find it unrealistic to wear headsets all the time.”
What Currier is more interested in
is how artificial intelligence and the metaverse can bring real benefits to people, referring to these individuals as “core users of the metaverse.”
This senior executive at Decentraland does not view the rise of generative AI as “competition”
but as an “opportunity,” stating:
“AI tools can accelerate the construction of virtual worlds, helping people track dynamics in virtual spaces in real-time, and making the metaverse experience more dynamic and personalized. It can be said that AI will help the virtual world evolve in ways we have just begun to explore.”
Industry Shakeup
Currier attributed the weakening of the metaverse to: “market bubbles caused by overstated expectations; technological bottlenecks that are hard to break through; and structural changes in the tech industry.”
Currier told Cryptonews that the current phase of cooling in the metaverse is actually a reconstruction of industry value, and this shakeup is filtering out loyal builders:
“Like all bear market cycles, this is a significant industry shakeup—clearing the market to leave space for loyal builders who will understand the boundaries of the metaverse and focus on the products that users truly need.”
BQ9 ecosystem executive Karagyaur emphasized that the metaverse is not heading towards extinction, but is undergoing a technological paradigm shift—this field is evolving into an AI-empowered cluster of vertical applications based on public demand.
“Although the initial hype may have faded, what remains is something more profound: the transition from enterprise-controlled virtual worlds to community-driven ecosystems centered on humanity,” she elaborated, adding:
“While industrial applications (such as Siemens and NVIDIA’s collaboration in digital twins) continue to evolve, the real vitality has shifted to platforms like Roblox, Fortnite, and Immersive World. Here, the experiences are shaped by user communities rather than enterprises. These platforms do not offer escape solutions but empower people to create, connect, and collaborate.”
Polkadot blockchain project representative Sethi cited industry data indicating that the gaming platform Roblox will surpass 80 million daily active users in 2024, setting a peak of 4 million concurrent users this year, continuously leading in metaverse user engagement metrics.
The phenomenon of Epic Games’ Fortnite maintains strong growth momentum—its latest operational data shows that user reach during single events consistently breaks the ten million mark, solidifying its position as a top platform for metaverse social entertainment.
Polkadot blockchain analyst Sethi deeply dissected Fortnite’s ecosystem empowerment model—through brand strategies synchronized with luxury brand Balenciaga and the iconic film IP Star Wars, the platform successfully built a commercial closed loop with daily user retention in the millions, demonstrating the continuous value creation of metaverse IP operations.
Hope in the Darkness
Experts claim that Zuckerberg’s gamble on the metaverse has turned into a complete disaster. In 2024, Meta’s Reality Labs, responsible for developing metaverse products, reported a record operating loss of $17.7 billion.
Meta’s official financial report shows that Reality Labs’ cumulative losses over the past six years are approaching $70 billion. Although Zuckerberg’s metaverse blueprint has turned into a mirage, several projects within the ecosystem are still showing signs of growth against the tide.
Blockchain data analysis firm DappRadar released the “2024 Annual Gaming Industry Report,” highlighting this year’s two most influential metaverse projects: the digital identity protocol Mocaverse and the chain game platform Pixels, both achieving breakthroughs in user scale and business value through differentiated ecosystem building strategies.
Image /DappRadar
The Mocaverse project, created by Animoca Brands, launched the MOCA token and an on-chain decentralized identity called Moca ID, attracting 1.79 million user registrations in a short time and successfully integrating with 160 Web3 applications.
The report noted that the project has secured $20 million in funding to expand its ecosystem and launched the Realm Network aimed at “promoting interoperability in gaming, music, and education.”
Pixels was first launched in 2022. Last year, this browser-based multiplayer farming-themed game “gained tremendous attention,” surpassing one million daily active users.
The Pixels project has migrated from Polygon to Ronin Network, integrating its assets named “Farm Land NFTs” into Mavis Marketplace.
DappRadar also mentioned some significant advancements in Yuga Labs’ Otherside metaverse, The Sandbox, and Decentraland. Decentraland launched a new version of its desktop client, reportedly “enhancing performance and optimizing visual effects.”
The report pointed out that Decentraland’s creator-centric economy is its “notable feature,” where creators retain 97.5% of their sales and earn a 2.5% royalty share on secondary trading of digital assets—this profit-sharing ratio sets a record high in the industry.
Nevertheless, there are still significant shortcomings in certain aspects. According to DappRadar’s data:
“Due to the lack of ‘killer applications’ capable of driving mass adoption, media attention has waned, and companies that previously invested heavily in the virtual world have also shifted their business focus.”
Is the Metaverse Declining?
ITU expert Karagyaur stated in an interview with Cryptonews that the success of the metaverse will “depend on integration, not isolation.” She explained:
“It can only continue to develop where it can supplement existing industries, rather than in areas trying to replace them. The next stage of digital technology development will no longer aim at escaping reality but will focus on improving reality itself.”
Improbable’s founder and CEO Narula, who is building Yuga Labs’ metaverse platform The Otherside, pointed out that value-driven innovation can save the metaverse. Beyond dazzling visuals, users must possess practical value.
“The metaverse has always been a deeper, more rooted concept in reality, rooted in meeting people’s fundamental needs for self-actualization,” he said.
“Although the ‘flashy’ Meta investor meeting-style metaverse has gradually faded, we are still striving to build a technology-focused, practical version.” he said.
Narula also mentioned that teenagers and minors spend a lot of time on gaming platforms like Minecraft, Roblox, and Fortnite, engaging in increasingly complex virtual experiences, economic activities, and even virtual jobs.
This article is a cooperative reprint from: PANews