Hello! I'm your financial news analysis assistant. The article "The Death of the Metaverse" is incredibly insightful; it's not just about the collapse of a few companies but a reflection on a global tech bubble that has lasted for five years.
To help you understand the logic behind this "retreat" more easily, I've broken down the key points of the article into five sections and explained them in plain language.
Summary of Key Points
In short, the concept of the "metaverse" officially declared "clinical death" in the summer of 2026. The virtual world, once touted as the "next internet gateway," failed due to immature technology, an inability to retain users, unworkable business models, and the rise of more practical AI technologies. As a result, capital withdrew, platforms shut down, and asset prices plummeted. The "virtual land" and "digital collectibles" that people spent hundreds of thousands on have now become nothing but a bunch of code and files with no value.
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In-Depth Analysis: How the Metaverse Came to an End
1. Current Situation from the "Death Premonitions": Platforms Shutting Down, Assets Unavailable
The article starts with three typical examples of "deaths," which are not just news stories but a microcosm of the metaverse's current state:
- ENGAGE XR (Irish company): This company provided virtual meetings for businesses. At its peak, it earned 3.9 million euros a year, but by 2025, it was down to 1.94 million. It went bankrupt after its largest customer decided not to renew its contract. This shows that business customers (B2B) were not willing to pay for virtual meetings, as existing tools like Zoom and Tencent Meeting were already convenient and affordable.
- Spatial & Holoearth (social and virtual world platform): After these platforms stopped serving, the virtual exhibitions, games, and items created by users were all deleted and could not be retrieved. This reveals a fatal flaw of the metaverse: your "properties" actually belong to the platform's servers, and they are lost when the platform closes.
- Rec Room (social gaming platform): With 150 million users and a valuation of 3.5 billion dollars, it still shut down due to higher costs than revenue. Users said goodbye in the virtual world, saving photos and exchanging contact information. This demonstrates that even with a large user base, a project fails if it can't generate enough revenue to cover high server and development costs.
Plain Language: It's like everyone pooled money to build a huge "online playground," but the ticket sales weren't enough to cover the expenses. When the playground closed, the "virtual tickets" and "toys" were gone, and all you were left with were screenshots to remember it by.
2. The Big Players' Initial Intentions and the Reality of Failure: Zuckerberg's Big Bet
The metaverse craze was largely driven by Facebook (now Meta):
- Zuckerberg's Anxiety: In 2015, Zuckerberg realized Facebook had lost its dominance in the smartphone era to Apple and Google. He needed to find the next "gateway" and bet on VR/AR, believing they would be the next computing platform.
- The Name Change to Meta: In 2021, Facebook changed its name to Meta and announced a commitment to bring a billion people into the virtual world, investing tens of billions of dollars over ten years. This gave the market confidence that getting in would lead to wealth.
- The Cruel Reality:
- High Fees: Meta charged a 47.5% commission on virtual transactions, even higher than the fees imposed by Apple and Google.
- Product Failure: Its virtual meeting software, Horizon Workrooms, was discontinued after less than two years. Even its own employees preferred to use Zoom for meetings.
- Strategic Shift: By 2026, Meta's focus had shifted to more portable devices like AI glasses, away from the massive virtual world.
Plain Language: Zuckerberg was like a gambler who felt he had missed the smartphone era and bet everything on VR glasses. He promised a golden future, and everyone believed him and followed. But the path was difficult, the glasses were cumbersome, and people preferred more convenient smartphones. Eventually, Meta changed direction to more practical AI glasses.
3. The Crazy "Virtual Real Estate" Boom: A Bubble Based on Expectation
The most extreme part of the metaverse bubble was the trading of "virtual land" and "digital assets":
- **The Sandbox's "Neighborhood Effect": Someone bought virtual land for $450,000 just because rapper Snoop Dogg lived nearby. It was like buying land in the wilderness, betting that someone would hold a concert there in the future. But as interest faded, the land dropped to less than $1,000 and no one bought it.
- China's "Hong Universe" Real Estate Boom: Similar virtual properties in China soared from 8.88 yuan to 999,900 yuan. People boosted traffic and traded outside the platform, leading to illegal activities. The prices collapsed due to poor quality (lags, overheating), and investors lost all their money.
- Other Absurd Transactions: Gucci digital bags were more expensive than real ones, virtual yachts for $650,000, virtual mortgages, virtual weddings. These transactions relied on the belief that more people would use them in the future.
Plain Language: It was like a "pass the hat" game where people bought the expectation of future value. When the hype faded and AI emerged, those who held the "virtual assets" lost everything.
4. Poor Experience: Immature Technology and Fake Demand
Users stayed away because of poor quality and fake demand:
- Physical Discomfort: At Baidu's "XiRang" launch, reporters felt dizzy and sweaty after 20 minutes of using VR glasses. This shows that VR devices were too heavy, uncomfortable, and power-consuming.
- PICO's Dilemma: ByteDance's PICO, despite having good hardware, was uncomfortable to use. Users preferred more practical AR.
- **Zhongqingbao's "Wine Master": A Chinese company's stock soared due to the metaverse hype, but its product had only one paid user after a year, with a single yuan in revenue. This shows that the market was speculating on concepts, while users chose practical solutions.
Plain Language: Imagine watching a movie with heavy, uncomfortable glasses that lagged. People prefer phones, computers, and Zoom for movies and meetings because they are more comfortable and convenient.
5. The Arrival of AI: The Quiet Death of the Metaverse
The end of the metaverse wasn't sudden; it was overshadowed by AI:
- AI's Immediate Value: ChatGPT launched in 2022, allowing users to get answers, code, and images instantly. AI represents the "present," while the metaverse represents the "future." Investors and users preferred immediate benefits.
- Shift in Capital: At Meta's earnings call, mentions of the metaverse decreased from 20 to 4, while mentions of AI increased to 90. Money and attention shifted to AI.
- Concept Disintegration: Features of the metaverse (virtual meetings, games, social interactions, virtual hardware) returned to existing platforms (Zoom, Steam, WeChat, Instagram, AI glasses). When these functions no longer needed the metaverse label, the concept died.
Plain Language: The metaverse was like a "全能 package" that included meetings, games, and social interactions. But people found that they could use these functions on other platforms. The package was too complex and cumbersome, and when a new, more practical product (AI) emerged, the metaverse became obsolete.
Conclusion
The retreat of the metaverse teaches us a simple lesson: Technology must serve real needs, not just the future. Without mature devices, a poor user experience, and clear business models, a "virtual world" built on capital is just an early bubble that overdraws the future.
Although the term "metaverse" may be gone, the technologies within it (VR, AR, 3D modeling, digital assets) will continue to be used in better products (better games, smarter glasses, more realistic movies). They just won't be labeled as part of the metaverse.