Key Points
It has been four years since Mark Zuckerberg fully bet on the metaverse, and now this concept is regarded as one of the biggest blunders 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 downturn in the industry, some projects continue to show strong momentum. Experts point out that this field is undergoing a process of elimination, gradually squeezing out the less credible participants.
When Mark Zuckerberg presented his vision for the metaverse in October 2021, the idea of a digital utopia where people could connect and interact in immersive virtual environments seemed achievable.
The billionaire founder believed the metaverse was the next frontier of the internet, and the company immediately began investing billions of dollars to develop the technology necessary to realize its metaverse strategic vision.
Zuckerberg even renamed Facebook to Meta to reflect its new strategic ambitions in building the metaverse. The metaverse is a virtual world built on virtual reality and augmented reality technologies, where people can interact, work, and create within this environment.
Given the massive 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.
In the past, artists including Sir Elton John and Travis Scott held concerts in the metaverse, while people began exploring cities and visiting art exhibitions in virtual environments.
However, four years after Zuckerberg’s strategic pivot, 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 tidal wave of billions of dollars that once flowed into this field has receded, and public attention has plummeted.
According to DappRadar data, the trading volume and sales quantity of metaverse NFT projects in 2024 have fallen to their lowest levels since 2020, with trading volume plummeting by 80% year-on-year and sales volume crashing by 71% compared to the previous 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 the BQ9 ecosystem growth agency, told Cryptonews: “Generative artificial intelligence has achieved instant and scalable business impact.”
Karagyaur, who is also an expert member of the ITU’s metaverse focus group, further pointed out: Unlike the metaverse, which requires high infrastructure investment, AI tools represented by ChatGPT, MidJourney, and DALL·E demonstrate immediate availability. Business users and consumers are increasingly turning to AI due to optimized automated processes and improved content generation efficiency. The strategic shift in venture capital is particularly notable: capital is pouring into AI startups, while metaverse-related projects are facing downgrades.
Herman Narula, CEO of Improbable, a metaverse venture capital incubator, revealed to Cryptonews that AI has played a significant role in the decline of the metaverse.
He stated that AI technology has taken the spotlight as a “next-generation disruptive technology,” leading to a massive shift in attention away from the metaverse. Moreover, this evolution involves multiple other factors.
“The term ‘metaverse’ had previously drawn criticism for being tied to speculative cryptocurrency hype, where companies raised substantial funds, sold massive assets, and made a series of promises that ultimately went unfulfilled,” Narula further pointed out:
“More importantly, early versions or prototypes of the metaverse failed to meet expectations, as the closed and restricted environments they offered greatly limited user activities.”
After Meta (formerly Facebook) announced its entry into the metaverse, related tokens like Decentraland (MANA), The Sandbox (SAND), and Axie Infinity (AXS) saw significant price increases. However, as skepticism about the future of Meta’s metaverse dreams continues to grow, the prices of these tokens have plummeted amidst extremely low daily active user counts.
Since hitting an all-time high in November 2021, the prices of SAND, MANA, and AXS tokens have all dropped more than 95% from their peaks. MANA once reached a historical high of $6.96, SAND peaked above $5.20, and Axie Infinity’s AXS token even soared to about $153.
However, a recent on-chain data analysis from cryptocurrency research firm Glassnode shows that despite the volatile price fluctuations, “faithful 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 increased market buying activity following the price decline. A similar accumulation pattern is also observed in SAND and AXS tokens.
Glassnode believes: “The ongoing accumulation phenomenon of major metaverse tokens indicates that many investors consider these projects to be 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 priced at $0.27, down 2% for the day; the token SAND of The Sandbox platform has dropped 3.2% to $0.28; and the Axie Infinity ecosystem token AXS has decreased by over 1%, currently reported at $3.43.
Hardware Becomes a Roadblock
Charu Sethi is an expert in the Web3 field and also the chief ambassador of Polkadot. In an interview with Cryptonews, Sethi stated that the business model of the metaverse was not fully mature when its concept became popular.
“At that time, major brands began launching NFTs and expensive virtual land projects, but hardly any users gained sustained value,” she said. “For instance, despite attracting millions of dollars in investment, Decentraland and The Sandbox have long seen their daily active users hovering below 5,000.”
Sethi also mentioned that the high prices of high-end virtual reality (VR) and augmented reality (AR) headsets, along with “complex login processes,” further hindered the popularization of the metaverse.
Hardware is key to enhancing the metaverse experience.
“Thus, funding and attention have shifted to artificial intelligence, which can deliver immediate returns on investment,” she emphasized: “For many enterprises, the quick returns brought by AI make the metaverse seem less appealing.”
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 engage in various activities in the metaverse through digital avatars: gaming, social interactions, and even virtual offices. 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, and their $20/month premium version provides unlimited service without requiring users to purchase additional hardware.
ITU metaverse expert Karagyaur noted that the stagnation in the VR headset market is due to devices like the Apple Vision Pro and Meta Quest 3 “only being able to attract a niche user base and failing to open up 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 have increasingly become difficult to justify.”
Kim Currier, Market Director of the Decentraland Foundation, pointed out that the metaverse is not just a narrative about VR/AR hardware. “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’s Quest 3 have already sparked a revolutionary wave, the consumer side will still face a reality: for the vast majority of users, wearing headsets all day is unrealistic.”
Currier is more interested in how artificial intelligence and the metaverse can truly benefit people, referring to these individuals as “the core users of the metaverse.”
This senior executive from Decentraland does not view the rise of generative artificial intelligence as “competition” but as “an opportunity,” stating:
“AI tools can accelerate the construction of virtual worlds, help people track dynamics in virtual spaces in real-time, and make the metaverse experience more dynamic and personalized. It can be said that AI will help virtual worlds evolve in ways we are only beginning to explore.”
Industry Reshuffling
Kim Currier attributed the decline of the metaverse to “market bubbles triggered by overstretched expectations, technological bottlenecks that are hard to break through, and structural changes in the tech industry.”
Currier told Cryptonews that the current phase of the metaverse’s cooling off is actually a reconfiguration of the industry’s value. This reshuffling is screening for loyal builders:
“Like all bear market cycles, this is a major industry reshuffling—through market clearing, space is made for loyal builders, who will understand the boundaries of the metaverse’s role and focus on products that users truly need.”
Karagyaur, CEO of the BQ9 ecological organization, emphasized that the metaverse is not heading towards extinction but is undergoing a technological paradigm shift—it is “evolving into AI-powered vertical domain application clusters based on public demand.”
“Although the initial hype may have dissipated, what remains is something more profound: a shift from enterprise-controlled virtual worlds to human-centered, community-driven ecosystems,” she explained, adding:
“While industrial applications (such as Siemens’ and NVIDIA’s cooperation in the digital twin field) continue to develop, the real vitality has shifted to platforms like Roblox, Fortnite, and the Everlife world. Here, experiences are shaped by user communities, not corporate entities. These platforms do not sell escapism solutions but empower people to create, build connections, and collaborate.”
Sethi, a representative from the Polkadot blockchain project, cited industry data pointing out that the gaming platform Roblox surpassed 80 million daily active users in 2024, setting a peak of 4 million concurrent users this year, continuing to lead the metaverse in user engagement metrics.
The blockbuster game Fortnite from Epic Games continues to show strong growth. According to the latest operational data, its single-event user reach has consistently surpassed 10 million, solidifying its position as a leading social entertainment platform in the metaverse.
Sethi, a blockchain analyst from Polkadot, deeply analyzed the ecosystem-enabling model of Fortnite. Through brand strategies synchronized between virtual and real worlds, such as with luxury brand Balenciaga and the iconic film IP “Star Wars,” the platform successfully created a business closed-loop with daily user retention in the millions, proving the sustained value creation of metaverse IP operations.
Hope in the Dark
Experts claim that Zuckerberg’s gamble on the metaverse has turned into a complete disaster. In 2024, Reality Labs, the Meta division responsible for developing metaverse products, reported a record operating loss of $17.7 billion.
Meta’s official financial reports show that Reality Labs has accumulated losses of nearly $70 billion over the past six years. Although Zuckerberg’s metaverse blueprint has turned into a bubble, several projects within the ecosystem are still showing countercyclical growth.
The blockchain data analysis agency DappRadar released its “2024 Annual Game Industry Report,” highlighting the two most industry-influential metaverse projects this year: the digital identity protocol Mocaverse and the chain game platform Pixels. Both have achieved dual breakthroughs in user scale and commercial value through differentiated ecosystem-building strategies.
According to the report, Animoca Brands’ Mocaverse project launched the MOCA token and a decentralized on-chain identity called Moca ID, attracting 1.79 million users to register in a short time and successfully integrating with 160 Web3 applications. The project has secured $20 million in funding to expand its ecosystem and launched the Realm Network aimed at promoting interoperability in the gaming, music, and education sectors.
Pixels, which was first launched in 2022, gained significant attention last year. The browser-based farm-themed multiplayer online game “received huge attention,” with its daily active user count surpassing 1 million. The Pixels project has migrated from Polygon to Ronin Network and integrated its “Farm Land NFT” assets into the Mavis Marketplace.
DappRadar also mentioned some significant progress in Yuga Labs’ Otherside metaverse, The Sandbox, and Decentraland. Decentraland launched a new desktop client that reportedly “improves operational performance and optimizes visual effects.”
The report pointed out that Decentraland’s creator-centric economic system is its “distinct feature.” Creators not only retain 97.5% of their sales but also receive 2.5% in royalty shares on secondary transactions of digital assets—this revenue-sharing ratio sets an industry record.
Nevertheless, some aspects still show severe deficiencies. According to DappRadar’s data:
“Due to the lack of ‘killer applications’ capable of driving mass adoption, media attention has decreased, and companies that had heavily invested in virtual worlds have shifted their business focus.”
Is the Metaverse Declining?
Karagyaur, an expert from the International Telecommunication Union, told Cryptonews that the success of the metaverse will “depend on integration, not isolation.” She explained:
“It will only continue to develop where it can complement existing industries, not where it tries to replace them. The next stage of digital technology development will no longer aim to escape reality but to improve reality itself.”
Narula, founder and CEO of Improbable, the company behind Yuga Labs’ Otherside metaverse platform, pointed out that value-driven innovation can save the metaverse. Beyond flashy visuals, users must have practical value.
“The metaverse has always been a deeper, more grounded concept, rooted in fulfilling people’s basic needs for self-realization,” he said. “Although the ‘flashy’ Meta investor conference-style metaverse is gradually fading, we are still working on building a technology-focused, practical version that remains strong.”
Narula also mentioned that teenagers and minors spend a lot of time on game platforms like Minecraft, Roblox, and Fortnite, engaging in increasingly complex virtual experiences, economic activities, and even virtual work.
This article is reproduced in cooperation with: PANews