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Disney, Microsoft Say Meh to the Metaverse

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The metaverse, the virtual world that was the hot thing in tech less than two years ago, is facing a harsher reality.

Walt Disney Co.

has shut down the division that was developing its metaverse strategies, The Wall Street Journal reported this week.

Microsoft Corp.

recently shut down a social virtual-reality platform it acquired in 2017. And

Mark Zuckerberg,

who renamed Facebook as

Meta Platforms Inc.

META 2.33%

to signal his seriousness about the metaverse, focused more on artificial intelligence on an earnings call last month. 

Meanwhile, the price for virtual real estate in some online worlds, where users can hang out as avatars, has cratered. The median sale price for land in Decentraland has declined almost 90% from a year ago, according to WeMeta, a site that tracks land sales in the metaverse.

Meta’s name change in October 2021 spurred excitement about metaverse experiences, products and platforms. But slow user adoption, driven in part by expensive hardware requirements and glitchy tech, and deteriorating economic conditions have put a damper on expectations the metaverse will drive meaningful revenue soon. 

Photo: Nikki Ritcher for The Wall Street Journal

“What many people are coming to realize is that this transformation is farther away,” said Matthew Ball, a venture capitalist and author of a book about the metaverse.

Tech companies have been slashing jobs and abandoning projects deemed nonessential. Mr. Zuckerberg, who championed the metaverse as the next iteration of the mobile internet a mere 18 months ago, dubbed 2023 “the year of efficiency.” His company laid off 11,000 employees in the fall and said this month that it would cut a further 10,000 positions and various projects, including some that are based in its metaverse division, the Journal previously reported.

“A lot of companies and businesses understandably feel like if they need to reduce head count or spending overall, this kind of category would seem to be a pretty easy target,” said

Scott Kessler,

a tech-sector analyst at research firm Third Bridge Group. Investments in artificial intelligence promise returns in the nearer term, he added. 

“All these things that are going on, related to AI, seem to be able to be used and leveraged now,” he said. With the metaverse, “no one knows when you’re going to reach critical mass.”

Even at the height of the metaverse craze, some tech executives were less enamored with online realms. “I want to try and work on technologies that bring people’s heads up—get them to enjoy the real world,”

David Limp,

senior vice president of devices and services at

Amazon.com Inc.,

said at The Wall Street Journal’s Future of Everything Festival last year.

Meta has spent billions of dollars trying to build out the metaverse since changing its name. But its flagship app, Horizon Worlds, struggled to gain and retain users within the first year after the renaming, according to internal documents viewed by the Journal. Sales of its Quest 2 virtual-reality headsets, which are used to access Horizon Worlds and other virtual-reality apps, were also down in the most recent quarter, the company said. 

Mr. Zuckerberg isn’t walking away from the metaverse, signaling that it remains a long-term focus for the company after AI. “The two major technological waves driving our road map are AI today and, over the longer term, the metaverse,” he said last month. 

On that call, “AI” was mentioned 28 times. The word “metaverse” was mentioned on seven occasions. Meta didn’t respond to a request for comment.

The pivot at Disney comes amid its recent leadership change and restructuring. Chief Executive

Robert Iger

returned to the company in November and has started slashing costs. The company last month said it plans to cut 7,000 jobs and reduce costs by $5.5 billion. 

Mr. Iger succeeded

Bob Chapek

as CEO, who in early 2022 appointed the leader of the division that explored metaverse strategies. At the time, Mr. Chapek told employees that the goal was to “create an entirely new paradigm for how audiences experience and engage with our stories.”

People wear Microsoft HoloLens 2 headsets as they use the Bentley Systems Synchro XR augmented-reality app.



Photo:

Angel Garcia/Bloomberg News

Disney didn’t respond to a request for comment.

Microsoft also bet big on the idea of online digital realms, though struggled with implementing that vision. In addition to shutting down AltSpaceVR, the company’s work on augmented-reality headsets was plagued by problems, the Journal reported last year. The company has since restructured the HoloLens team and trimmed its budget, the Journal has reported. 

Microsoft said it “remains committed to the metaverse” with both hardware and software tools.

Smaller companies such as Decentraland and the Sandbox where users have been able to buy virtual land and build their own worlds have seen some of the most success so far. But even so, land sales are down. The median price per square meter in Decentraland has dropped from about $45 a year ago to $5, according to data from WeMeta, the firm that tracks the sales.

A spokesperson for the Decentraland Foundation, which oversees the platform, said land sales aren’t indicative of user growth. A spokesperson for the Sandbox said all of the new land they have put up for sale over the past six months has sold out.

Despite a broad reduction in metaverse engagement, the online realms can still draw eyeballs. Decentraland, which saw a 25% decline in active users from November to January, is seeing an uptick this week from Metaverse Fashion Week, an event where brands such as Dolce & Gabbana and Tommy Hilfiger are participating, according to DCL Metrics, a site that tracks users in the digital realm. 

“It is obvious that hype around the metaverse has receded. But we should not mistake this for a lack of progress,” said Mr. Ball, the venture capitalist who is bullish on the metaverse. “Change isn’t that fast.”

For more WSJ Technology analysis, advice, and headlines, sign up for our weekly newsletter.

Write to Meghan Bobrowsky at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8


The metaverse, the virtual world that was the hot thing in tech less than two years ago, is facing a harsher reality.

Walt Disney Co.

has shut down the division that was developing its metaverse strategies, The Wall Street Journal reported this week.

Microsoft Corp.

recently shut down a social virtual-reality platform it acquired in 2017. And

Mark Zuckerberg,

who renamed Facebook as

Meta Platforms Inc.

META 2.33%

to signal his seriousness about the metaverse, focused more on artificial intelligence on an earnings call last month. 

Meanwhile, the price for virtual real estate in some online worlds, where users can hang out as avatars, has cratered. The median sale price for land in Decentraland has declined almost 90% from a year ago, according to WeMeta, a site that tracks land sales in the metaverse.

Meta’s name change in October 2021 spurred excitement about metaverse experiences, products and platforms. But slow user adoption, driven in part by expensive hardware requirements and glitchy tech, and deteriorating economic conditions have put a damper on expectations the metaverse will drive meaningful revenue soon. 

Photo: Nikki Ritcher for The Wall Street Journal

“What many people are coming to realize is that this transformation is farther away,” said Matthew Ball, a venture capitalist and author of a book about the metaverse.

Tech companies have been slashing jobs and abandoning projects deemed nonessential. Mr. Zuckerberg, who championed the metaverse as the next iteration of the mobile internet a mere 18 months ago, dubbed 2023 “the year of efficiency.” His company laid off 11,000 employees in the fall and said this month that it would cut a further 10,000 positions and various projects, including some that are based in its metaverse division, the Journal previously reported.

“A lot of companies and businesses understandably feel like if they need to reduce head count or spending overall, this kind of category would seem to be a pretty easy target,” said

Scott Kessler,

a tech-sector analyst at research firm Third Bridge Group. Investments in artificial intelligence promise returns in the nearer term, he added. 

“All these things that are going on, related to AI, seem to be able to be used and leveraged now,” he said. With the metaverse, “no one knows when you’re going to reach critical mass.”

Even at the height of the metaverse craze, some tech executives were less enamored with online realms. “I want to try and work on technologies that bring people’s heads up—get them to enjoy the real world,”

David Limp,

senior vice president of devices and services at

Amazon.com Inc.,

said at The Wall Street Journal’s Future of Everything Festival last year.

Meta has spent billions of dollars trying to build out the metaverse since changing its name. But its flagship app, Horizon Worlds, struggled to gain and retain users within the first year after the renaming, according to internal documents viewed by the Journal. Sales of its Quest 2 virtual-reality headsets, which are used to access Horizon Worlds and other virtual-reality apps, were also down in the most recent quarter, the company said. 

Mr. Zuckerberg isn’t walking away from the metaverse, signaling that it remains a long-term focus for the company after AI. “The two major technological waves driving our road map are AI today and, over the longer term, the metaverse,” he said last month. 

On that call, “AI” was mentioned 28 times. The word “metaverse” was mentioned on seven occasions. Meta didn’t respond to a request for comment.

The pivot at Disney comes amid its recent leadership change and restructuring. Chief Executive

Robert Iger

returned to the company in November and has started slashing costs. The company last month said it plans to cut 7,000 jobs and reduce costs by $5.5 billion. 

Mr. Iger succeeded

Bob Chapek

as CEO, who in early 2022 appointed the leader of the division that explored metaverse strategies. At the time, Mr. Chapek told employees that the goal was to “create an entirely new paradigm for how audiences experience and engage with our stories.”

People wear Microsoft HoloLens 2 headsets as they use the Bentley Systems Synchro XR augmented-reality app.



Photo:

Angel Garcia/Bloomberg News

Disney didn’t respond to a request for comment.

Microsoft also bet big on the idea of online digital realms, though struggled with implementing that vision. In addition to shutting down AltSpaceVR, the company’s work on augmented-reality headsets was plagued by problems, the Journal reported last year. The company has since restructured the HoloLens team and trimmed its budget, the Journal has reported. 

Microsoft said it “remains committed to the metaverse” with both hardware and software tools.

Smaller companies such as Decentraland and the Sandbox where users have been able to buy virtual land and build their own worlds have seen some of the most success so far. But even so, land sales are down. The median price per square meter in Decentraland has dropped from about $45 a year ago to $5, according to data from WeMeta, the firm that tracks the sales.

A spokesperson for the Decentraland Foundation, which oversees the platform, said land sales aren’t indicative of user growth. A spokesperson for the Sandbox said all of the new land they have put up for sale over the past six months has sold out.

Despite a broad reduction in metaverse engagement, the online realms can still draw eyeballs. Decentraland, which saw a 25% decline in active users from November to January, is seeing an uptick this week from Metaverse Fashion Week, an event where brands such as Dolce & Gabbana and Tommy Hilfiger are participating, according to DCL Metrics, a site that tracks users in the digital realm. 

“It is obvious that hype around the metaverse has receded. But we should not mistake this for a lack of progress,” said Mr. Ball, the venture capitalist who is bullish on the metaverse. “Change isn’t that fast.”

For more WSJ Technology analysis, advice, and headlines, sign up for our weekly newsletter.

Write to Meghan Bobrowsky at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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