R. Srikumar is the Chief Solutions Officer at Mphasis.
The concept of the metaverse, a virtual reality (VR) landscape, has captured widespread attention and sparked significant hype in recent years. However, setbacks arising from economic slowdowns and the industry’s shift toward AI have raised questions about the feasibility and timing of this ambitious concept.
Several challenges hinder the metaverse’s progress, including a lack of a unified platform, high entry costs and a dearth of compelling content. Also, the necessary hardware and computing power required to fully realize the metaverse’s potential are still in their infancy.
Because of these challenges, in 2023, Microsoft’s closure of its virtual-workspace platform, AltSpaceVR, resulted in layoffs and downsizing of its HoloLens team. Disney has shut down its metaverse division, while Walmart discontinued its Roblox-based metaverse projects. Even Meta has cut back on its aggressive metaverse-building efforts, redirecting its focus toward AI with plans to enhance its metaverse pursuits in the future.
While some view the metaverse as a flawed idea, plagued by privacy and security concerns, I, on the other hand, argue that it is simply ahead of its time. Combining existing VR and augmented reality (AR) technologies, the metaverse still holds immense potential for innovation and the creation of new applications.
Staying Invested In Future Potential
Last year, the metaverse trend was booming. In 2022, McKinsey reported that over $120 billion flowed into the Metaverse, with predictions that the market could reach a value of up to $5 trillion by 2030. Citi analysts were even more optimistic, projecting a metaverse economy valued between $8 trillion and $13 trillion by the same year.
Gartner forecasted that, by 2026, a quarter of the global population will spend at least one hour per day in the metaverse, engaging in various activities, such as shopping, working, socializing and learning. They also predicted that 30% of the organizations will develop products or services tailored for the digital realm.
However, considering the economic challenges faced by many households in the real world, the idea of investing in expensive VR headsets, properties, items and non-fungible tokens (NFTs) may seem out of reach. Even the Apple Vision Pro headset that can cost over $3,499 when released leaves a lot to be desired in terms of hardware capabilities.
Right now, among all sectors, gaming demonstrates the greatest potential for a cohesive metaverse. Massively multiplayer online role-playing games (MMORPGs) like “World of Warcraft” and “EverQuest” established virtual realms over a decade ago, showcasing digital assets and attire with actual monetary value.
The pivotal question arises as to whether businesses can effectively leverage these foundational models to provide a customer-centric experience for their products and services. While the gaming and entertainment industries may thrive within the metaverse, targeting specific audiences, other businesses have yet to fully comprehend the practical applications of this virtual realm.
This raises the question of whether the initial hype and promises surrounding the metaverse were indeed ahead of their time.
Building Capacity For A Functional Metaverse
The true metaverse, as envisaged, would be a device-independent digital landscape not owned by a single vendor. Such a metaverse would require its own virtual economy facilitated by digital currencies and NFTs.
While we have the underlying technology to build such a digital landscape, the computing power necessary for its smooth operation may still be a few decades away. Moreover, the success of a metaverse would depend on cloud infrastructures to host these virtual worlds, necessitating enterprises to prioritize digital transformation and build their cloud infrastructure.
Many enterprises that stand to benefit from the metaverse are currently undergoing digital transformation. They are still searching for the most effective technological solutions tailored to their needs. The primary driving force behind digital transformation efforts is often centered on enhancing customer experience, acquiring and retaining customers and digitally transforming internal processes.
Consequently, investments in the metaverse are targeted and carefully calibrated to provide customers with a seamless virtual experience catered to their products and services. Companies are still experimenting with the potential of Web3, AR cloud and digital twins solutions, determining which approaches best suit their requirements. Gartner predicts that by 2027, over 40% of large organizations worldwide will incorporate a combination of Web3, AR cloud and digital twins in metaverse-based projects aimed at revenue growth.
Cloud adoption among these enterprises is accelerating, though companies are still struggling with challenges, according to Flexera. They also found that some of the fastest-growing cloud trends are infrastructure as a service (IaaS) used for provisioning and managing compute, storage and networking resources and platform as a service (PaaS) for building and deploying applications. For innovation and improvement in emerging technologies like AR/VR, building infrastructure and platform capacity with cloud services is essential.
Because of these trends, we should view the metaverse as a concept ahead of its time that still has immense potential for transformative experiences and economic opportunities. With technological advancements, increased investment and strategic digital transformations, the metaverse may indeed become a reality in the decades to come.
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