In 2023, the heatwave of the AI model poured on the head of the metaverse and turned into a basin of cold water. Since the beginning of this year, the metaverse, which has attracted countless companies to compete, has drawn a clear line between multiple top companies and it.
On October 25th, it was reported that Microsoft was responsible for developing an artificial intelligence based drone simulation software called Project Airsim. The team was informed that the company would fire the entire team and terminate the project. Subsequently, Microsoft confirmed that the project would be terminated on December 15th of this year.
Prior to this, Microsoft officially ceased its support for the Project Bonsai project on October 19th, which was used to build automation systems for industrial purposes. Both projects mentioned above are considered important components of Microsoft's "industrial metaverse".
The current metaverse, apart from games, has not yet found suitable application scenarios. "Business expert Chao Chenglin, director of the Industrial Space Research Institute, told reporters from the China Times that how the metaverse can effectively transform data flow, information flow, and business flow into commercial transformation is a must face problem. When can we form new social mechanisms and business models between human real life scenes and virtual worlds, Only then can the metaverse truly develop.
Microsoft has closed another metaverse project
It is reported that both Project Airsim and Project Bonsai were founded by Microsoft's Chief Technology Officer, Kevin Scott, with the aim of incubating these two projects to enable industrial customers to use new products from Microsoft's cloud business.
At the end of 2022, Microsoft announced its vision for an industrial metaverse. Surprisingly, this spring, Microsoft terminated Project Bonsai and laid off the 100 person team responsible for the project, which was only a few months before Microsoft formed the team.
In addition, in January of this year, Microsoft CEO Satya Nadella issued a letter confirming that Microsoft would lay off 10000 employees within three months, accounting for approximately 4.5% of Microsoft's 220000 employees. The focus of this layoff is on virtual reality related departments, including hybrid reality hardware HoloLens, hybrid reality (MR) department, AltSpaceVR, Surface devices, and Xbox, all of which have significantly adjusted their core architecture.
Compared to Microsoft, the Meta of the "All in" metaverse is even more bleak. Its recently released financial report for the second quarter of the 2023 fiscal year shows that the company achieved positive growth in revenue and profit in the second quarter, but the department responsible for the metaverse business, Reality Labs, lost $3.739 billion, a 33% increase from the same period last year. In fact, since the fourth quarter of 2020, the department has lost approximately $33.7 billion (approximately RMB 240.7 billion).
Meta Chief Financial Officer Susan Li admitted that she expects a year-on-year increase in losses in 2024, but in terms of business development, the company's ambition has not changed. The company has a long-term time frame to evaluate investment returns in this area.
Despite such a large investment, Meta's metaverse products are still unpopular. The Meta report states that as of now, its metaverse application Horizon Worlds has established 10000 independent worlds, but only 9% of independent worlds have over 50 visitors, and most of the worlds are completely deserted. Many users who enter the Horizon Worlds virtual world launched by Meta find that the current metaverse is vastly different from the imagined metaverse. After experiencing disappointment for the first time, they have never logged in again.
In addition, its new high-end VR head display device Quest Pro, which was publicly priced at $1500, was reduced by $400 in just three months due to unsold products.
In the conference call after the financial report, Zuckerberg also mentioned opportunities related to AI multiple times. Previously, he stated that Meta will not miss the current wave of AI and will continue to invest in metaverse related businesses, focusing on the combination of AI and metaverse.
Meta's shareholders are clearly not satisfied with this. In October 2022, Meta's shareholder investment and chairman of Altimeter Capital, Brad Gerstner, publicly wrote a letter stating that investment in "metaverse" related technologies (i.e. VR hardware and software) should be limited to a maximum of $5 billion per year.
Brad believes that "the company's current investment in VR may take up to 10 years to see returns; however, investing a total of over $100 billion in an uncertain future project is terrifying, even by Silicon Valley standards
In terms of stock price, since September 2021, Meta's stock price has been consistently declining from its historical high of $384.33. Throughout 2022, Meta's stock price fell by 64%, making it the worst performing major technology company in the United States. It is worth noting that Meta has undergone multiple rounds of layoffs since November last year. According to the financial report, as of the end of the second quarter of this year, the total number of Meta employees decreased by 14% year-on-year to 71469.
In response, Zhang Xiaorong, the director of the Deep Science and Technology Research Institute, told reporters from China Times that the cooling of the metaverse's popularity may be due to its development speed not meeting market expectations. Some large factories found that the returns were not significant after investing a large amount of resources, which also reflects that the development of the metaverse still faces many challenges, including technology and market acceptance. In addition, the development of the metaverse requires a large amount of technical support, including artificial intelligence, virtual reality, etc. These technologies are still in the development stage and have not yet fully matured. Therefore, the metaverse has become the "first knife" for layoffs in technology giants.
Is the metaverse dead?
At the same time, the metaverse projects of domestic technology giants are also facing numerous difficulties.
In recent days, the news of "nearly half of PICO employees leaving and multiple executives leaving and transferring positions" has attracted much attention. Although the PICO responsible person replied that the company maintains normal product operation and continues to strengthen investment in product technology. But since the beginning of this year, PICO has repeatedly reported the resignation of its employees and executives, making the market unavoidably nervous about it.
The dilemma of PICO may be related to the unsatisfactory sales of VR products. Data released by IDC China shows that in the second quarter of 2023, global AR/VR shipments declined for the fourth consecutive quarter, with shipments falling 44.6% year on year. The top five shipments were Meta (50.2%), Sony (1%), ByteDance PICO (9.6%), Xreal (slightly more than 2%) and Dapeng VR (slightly more than 2%).
According to research and tracking statistics by Weishen Information Wellsenn XR, global VR sales in the second quarter of 2023 were 1.44 million units, a year-on-year decrease of 37% and a month on month decrease of 21%. The sales volume of VR head displays in the domestic market was 120000 units, a year-on-year decrease of 65%; The sales volume of VR headsets in the overseas market was 1.32 million units, a year-on-year decrease of 33%; In the domestic market, the sales of VR headsets on the C-end were 70000 units, a year-on-year decrease of 75%, while the sales of the B-end were 50000 units, a year-on-year decrease of 6%; The sales of C-end units in the overseas market were 1.21 million, a year-on-year decrease of 35%, while the sales of B-end units were 110000, a year-on-year increase of 5%.
In response to the situation where VR development is not as expected, independent economist Wang Chikun told reporters from China Times that VR technology has made some progress in the past few years, but there are still some technological limitations. For example, the price of VR devices is relatively high, which has certain limitations on the user experience; The volume of VR devices is large and not portable enough; At the same time, the development and innovation of VR content also face certain challenges. The development and innovation of VR content are important factors driving the development of the VR industry. However, the current quantity and quality of VR content are not sufficiently rich and high-level, which also limits the attractiveness and user experience of VR.
In addition to PICO, ByteDance has previously shut down the "party island" of the MetaUniverse social app. In March of this year, Ma Jie, Vice President of Baidu and Head of "Xirang" Metaverse Products, announced his resignation and transferred to the field of big models as a senior executive of "Zero One Everything". On February 16th, Tencent announced that its gaming XR business will change its hardware development path and make adjustments to relevant business teams. Subsequently, Tencent's data collection platform "Fantasy Core" was also abolished. As early as August 2022, Tan Ping, the head of the XR (Extended Reality) laboratory at Alibaba Dharma Institute, announced his resignation.
In addition, the investment and financing aspects of metaverse enterprises are also not optimistic. A report by DappRadar shows that in the first half of 2023, the total financing for global metaverse projects was only a meager $700 million, less than one tenth of last year's total. The statement that the metaverse is dead quickly became popular.
In response, Wu Gaobin, Vice Chairman of the Yuan Universe Working Committee and Secretary General of the Founding Society of the Chinese People's Association, told reporters from the China Times that the Yuan Universe, as an emerging concept, had high expectations. However, over time, people gradually realized that the development of the metaverse was not smooth sailing. Its complexity and technical difficulty make the research and operation costs of metaverse projects high, while the benefits are difficult to immediately manifest. For large factories, layoffs in the metaverse department have become a way to reduce costs.
The joining of giant enterprises once filled people with expectations for the development of the metaverse. They invested a lot of resources and funds in an attempt to promote the development of the metaverse. However, reality tells us that the development of the metaverse is not achieved overnight. The exploration of technology and business models requires time and practice, and the departure of giant enterprises may be a reassessment of the prospects of the metaverse, "said Wu Gaobin.
But in Wu Gaobin's view, despite the problems, the metaverse still has enormous potential. We can expect that with the progress of technology and the maturity of business models, the metaverse will gradually usher in better development, "said Wu Gaobin.