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An impending metaverse winter will cool overheated expectations in 2023

An impending metaverse winter will cool overheated expectations in 2023 according to Forrester Research, Australia

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DQI Bureau
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The as-yet-nonexistent metaverse became the “next big thing” in 2021 and 2022. But, the end of lockdowns outside of China has reduced consumers’ appetite for spending time in online spaces, and economic headwinds have already exposed the vulnerabilities of a supposed experience revolution that has yet to garner mass consumer interest.

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For example, between April and June 2022, the number of job postings with “metaverse” in the description dropped by 81%. As economies slow further in 2023, irrational metaverse exuberance will give way to a focus on the core infrastructure, overdue product features, and improving immersive experiences on existing platforms — which will lay the groundwork for the future metaverse. Specifically, in 2023, we predict that:

  • Metaverse needs a “Pokémon Go” moment — and we won’t see it in 2023.

    Augmented reality (AR) was invented in 1968, but it didn’t hit the global mainstream until 48-years later with Niantic’s 2016 launch of Pokémon Go, which made AR accessible and approachable with a smartphone game. Few consumers see this kind of value yet in the metaverse.

According to Forrester’s Media And Marketing Benchmark Recontact Survey, 2022, the majority of online adults in the US (65%), UK (73%), France (67%), and Germany (65%) prefer to have social experiences in person.

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In 2023, we’ll see lots of “metaverse washing.” But, smart brands should bypass the simple repackaging of old immersive media experiences and innovate. This involves reimagining hybrid experiences to seek new sources of revenue, insights, and customer engagement.

  • Metaverse players won’t agree on standards in 2023, which will inhibit growth.

    For the metaverse to succeed, industry players must coalesce around standards, just as they have done for decades with the web. The Metaverse Standards Forum asked its 1,500-plus member organizations to vote on what to prioritize, and their most upvoted topics are: 1) 3D assets; 2) privacy, safety, security, and inclusion; 3) avatars and apparel; 4) user identity; and 5) real- and virtual-world integration.

Forrester predicts that none of these will see a viable standard emerge in 2023 due to a “splinternet” of competing metaverse standards that will inhibit growth. As a result, brands that do want to experiment will lean into large, single platforms such as Meta’s Horizon Worlds or Roblox that offer audience scale and interoperability within their platforms.

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  • Employees and consumers will experience the metaverse as a feature — not a product.

    Microsoft is adding 3D mesh components directly into Teams, which will allow users to navigate 3D virtual spaces with avatars and engage in collaborative whiteboarding.

In 2023, we expect at least three more major providers of collaboration technologies — think Zoom, Slack, Webex, or Google Apps — to add 3D metaverse-style features, reaching tens of millions of potential users. But, just 5% of those potential users will turn into active ones. B2C brands like Nike and Netflix will follow, though in even smaller numbers.

A fraction of US Fortune 500 companies will stay in the race to create net-new “metaverse” activations, but most consumers still won’t have a path to discover them in 2023 due to the current lack of scale and accessibility of pure-play metaverse precursor platforms.

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Savvy brands should experiment by adding 3D elements to their existing owned media environments and activating immersive features on target-appropriate paid media properties.

  • Brands will pivot from “cool” NFTs and toward loyalty.

    The days of launching a consumer-facing NFT to earn a press headline that touts the brand as “innovative” are over. Most consumers aren’t interested in NFT stunts. According to Forrester’s March 2022 Consumer Energy Index And Retail Pulse Survey, most online adults in the US (72%), the UK (75%), and France (79%) have never owned an NFT and have no plans to do so.

Brands that recognize the potential of NFTs in building sustained customer engagement will continue experimenting with NFTs in 2023, but they’ll move away from standalone NFT collectibles and focus on NFTs linked to loyalty, brand experience, and deepening customer relationships. Brands like Louis Vuitton and Starbucks are using NFTs to enable access to exclusive customer experiences and perks.

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  • China is unique: 20% of B2C brands will use digital idols to improve virtual experiences.

    While most online adults are skeptical about the metaverse, 63% in China are eager to explore the metaverse, and 47% indicate that they like to interact/transact with brands in “the metaverse.” China will continue to suffer COVID-19 restrictions in 2023, and locked-down Chinese consumers will turn to metaverse precursors. The economic downturn will compel B2C companies to use affordable solutions like digital idols (human-like virtual entertainers).

The advance of 5G, VR/AR, and 3D engine technologies will make digital idol experiences more engaging for digital-savvy and novelty-seeking Gen Z consumers. B2C marketers should look to digital idols like Ayayi and Luo Tianyi to reduce talent costs and avoid celebrity scandals.

-- Forrester Research.

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