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 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 an overall industry slump, some projects continue to show strong development momentum. Experts point out that this field is undergoing a process of distinguishing the genuine from the false, gradually squeezing out insincere participants.
When Mark Zuckerberg articulated 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 feasible. This billionaire founder believed that the Metaverse would be the next frontier of the internet, and the company promptly began investing billions of dollars to develop the technologies necessary to realize its Metaverse strategic vision. Zuckerberg even renamed Facebook to Meta to reflect its new strategic ambitions in creating the Metaverse. The Metaverse is a virtual world built on virtual reality and augmented reality technologies, where people can interact, work, and create in this environment.
Given the massive financial investment by Meta (which has invested about $46 billion in the Metaverse since 2021) and other competitors in this concept, it is difficult 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 began to tour cities and visit art exhibitions in virtual environments. However, four years after Zuckerberg’s strategic pivot, the Metaverse has become one of the most significant failure cases in the tech industry in recent years. Due to its failure to deliver on grand promises, the tide of billions of dollars that once flowed into the field has receded, and public interest has seen a cliff-like decline.
According to DappRadar, the trading volume and sales of Metaverse NFT projects in 2024 have fallen to the lowest levels since 2020, with transaction volume plummeting by 80% year-on-year and sales dropping 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 AI has achieved immediate and scalable business impact.” Karagyaur, who is also an expert member of the ITU Metaverse Focus Group, further pointed out: 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 turning to AI due to optimized automation processes and improved content generation efficiency. The strategic shift in venture capital is particularly pronounced: a significant influx of capital is pouring into AI startups, while Metaverse-related projects are facing downgrades.
Herman Narula, CEO of the Metaverse venture incubator Improbable, revealed to Cryptonews that AI has played a considerable role in the decline of the Metaverse. He stated that AI technology has captured industry attention as a “next-generation disruptive technology,” leading to a large-scale shift in focus away from the Metaverse. Moreover, this evolution involves multiple other factors. “The term ‘Metaverse’ has attracted criticism due to its association with speculative cryptocurrency hype, where companies raised large amounts of funds, sold significant assets, and made a series of promises that ultimately went unfulfilled,” Narula further pointed out:
“More importantly, early versions of the Metaverse or prototype Metaverses 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 space, related tokens such as Decentraland (MANA), The Sandbox (SAND), and Axie Infinity (AXS) saw significant price increases. Now, as doubts about the future of Meta’s Metaverse dream continue to brew, the prices of related tokens have plummeted amid extremely low daily active user counts. Since reaching all-time highs in November 2021, the prices of SAND, MANA, and AXS tokens have all dropped over 95% from their peaks. MANA once hit an all-time high of $6.96, SAND surpassed $5.20, and Axie Infinity’s AXS token reached an astonishing price of about $153.
However, a recent on-chain data analysis from cryptocurrency research firm Glassnode shows that despite the price volatility, “strong believers are steadily increasing their holdings” in these three projects. For example, Glassnode noted that the MANA token has formed a significant chip concentration area around $0.60, reflecting increased market buying activity after the price drop. Similar accumulation patterns are also seen in SAND and AXS tokens. Glassnode believes: “The ongoing accumulation phenomena in major Metaverse tokens indicate that many investors view these projects as undervalued investment opportunities rather than failure cases.”
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 has dropped 3.2% to $0.28; while the Axie Infinity ecosystem token AXS has fallen over 1%, currently priced at $3.43.
Hardware Becomes a “Hurdle”
Charu Sethi, an expert in the Web3 space and 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, major brands were launching NFTs and expensive virtual land projects, but very few users gained sustained value.” She noted, “For example, Decentraland and The Sandbox attracted millions of dollars in investments, yet their daily active user counts have long hovered below 5,000.” Sethi also mentioned that the high prices of high-end virtual reality (VR) and augmented reality (AR) headsets, as well as “complex login processes,” further hindered the popularity of the Metaverse.
Hardware is key to enhancing the Metaverse experience. “Thus, funding and attention have shifted to artificial intelligence, which can deliver immediate ROI,” she emphasized, stating, “For many businesses, the rapid returns brought by AI overshadow the Metaverse.” As part of the Metaverse race, Meta and Apple have launched VR headsets 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, and even virtual office work. However, these types of headsets are somewhat 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, with a premium version at $20/month providing 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 attracting niche user groups 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 are increasingly difficult to justify.”
Decentraland Foundation’s Marketing Director Kim Currier pointed out
that the metaverse is not just a narrative of VR/AR hardware. “It creates virtual spaces 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 already sparked a wave of innovation, consumers will still face the reality that the vast majority of users find it unrealistic to wear head-mounted displays all day.”
She is more interested in 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 from Decentraland does not view the rise of generative artificial intelligence as “competition,” but rather as “opportunity,” stating:
“AI tools can accelerate the construction of virtual worlds, helping people track dynamics in virtual space in real-time, and making the metaverse experience more dynamic and personalized. It can be said that AI will help virtual worlds evolve in ways we have just begun to explore.”
Industry Reshuffle
Currier attributes the weakening of the metaverse to: “market bubbles triggered by over-expectation; technological bottlenecks that are difficult to break through; and structural changes in the tech industry.”
Currier told Cryptonews that the current cooling phase of the metaverse is actually a reconstruction of industry value, and this reshuffle is filtering loyal builders:
“Like all bear market cycles, this is a major reshuffle in the industry—creating space for loyal builders through market clearing, who will understand the boundaries of the metaverse’s role and focus on the products that users truly need.”
BQ9 Ecological Agency CEO Karagyaur emphasized that the metaverse is not heading towards extinction but is undergoing a technological paradigm shift—this field is evolving into an AI-enabled cluster of vertical applications based on public demand.
“Although the initial hype may have faded, what remains is something far more profound: a shift from enterprise-controlled virtual worlds to a community-driven ecosystem centered on humanity,” she elaborated, adding:
“While industrial applications (such as Siemens’ collaboration with NVIDIA in the digital twin field) continue to develop, the real vitality has shifted to platforms like Roblox, Fortnite, and Everworld. Here, the experiences are shaped by user communities rather than enterprises. These platforms do not sell solutions for escaping reality, but empower people to create, connect, and collaborate.”
Polkadot blockchain project representative Sethi cited industry data indicating that the gaming platform Roblox is set to surpass 80 million daily active users in 2024, with this year achieving a peak of 4 million simultaneous online users, continuing to lead in metaverse user engagement metrics.
Epic Games’ phenomenon Fortnite maintains strong growth momentum—latest operational data shows that its single-event user reach consistently exceeds 10 million, solidifying its position as a leading platform for social entertainment in the metaverse.
Polkadot blockchain analyst Sethi deeply deconstructed the ecosystem empowerment model of Fortnite—by engaging in synchronous brand strategies with luxury brands like Balenciaga and the phenomenon film IP Star Wars, the platform successfully built a commercial closed loop with daily user retention in the millions, validating the continuous value creation of metaverse IP operations.
Hope in the Dark
Experts say that Zuckerberg’s bet on the metaverse has turned into a complete disaster. In 2024, Reality Labs, the department responsible for developing metaverse products under Meta, reported a record operating loss of $17.7 billion.
Meta’s official financial report shows that Reality Labs has accumulated losses nearing $70 billion over the past six years. Although Zuckerberg’s metaverse blueprint has turned to ashes, several projects within the ecosystem still show counter-cyclical growth.
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 blockchain gaming platform Pixels, both achieving breakthroughs in user scale and commercial value through differentiated ecological construction strategies.
Image /DappRadar
The Mocaverse project, developed 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 states 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 farm-themed multiplayer online game “gained immense attention,” with its daily active users surpassing one million.
The Pixels project has migrated from Polygon to Ronin Network and integrated its assets called “Farm Land NFTs” into Mavis Marketplace.
DappRadar also mentioned some significant developments from Yuga Labs’ Otherside metaverse, The Sandbox, and Decentraland. Among them, Decentraland launched a new desktop client, which reportedly “enhanced operational performance and optimized visual effects.”
The report points out that Decentraland’s creator-centric economy is its “significant feature,” where creators can retain 97.5% of their sales and earn 2.5% of royalty shares from the secondary trading of digital assets—this revenue-sharing ratio sets a record for the entire industry.
However, certain aspects still have serious shortcomings. According to DappRadar’s data:
“Due to the lack of ‘killer applications’ capable of driving mass adoption, media attention has declined, and companies that previously invested heavily in the virtual world have 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 in areas that can complement existing industries, rather than attempting to replace them. The next stage of digital technology development will no longer aim at escaping reality, but rather at improving reality itself.”
Narula, founder and CEO of Improbable, which is building the Yuga Labs metaverse platform The Otherside, pointed out that value-driven innovation can save the metaverse. Beyond dazzling visual effects, users must possess practical value.
“The metaverse has always been a deeper, more grounded concept rooted in meeting people’s fundamental needs for self-realization,” he said.
“While the ‘flashy’ Meta investor conference-style metaverse has gradually faded, we are still striving to create a version that emphasizes practicality and remains strong,” he added.
Narula also mentioned that teenagers and minors spend significant time on gaming platforms like Minecraft, Roblox, and Fortnite, engaging in increasingly complex virtual experiences, economic activities, and even virtual work.