Wagner James Au / New World Notes

Above: InTrance and LAGurlz, creators of Starving Artists, a game approaching half a billion visits

If you accept the common Valley wisdom, the Metaverse is “dead”. As recently as 2022, tech conferences and startup pitch decks were awash with the term, first coined in Snow Crash; now, you scarcely see it anywhere, as if wholly supplanted by generative Al.. The backlash is so profound, it almost has the feel of an intellectual purge. 

So what I’m about to say may seem totally deranged, but I assure you it’s completely defensible:  

Metaverse platforms continue to grow in mass market adoption and revenue, far outpacing even current darling OpenAI in terms of actual user numbers. (More on those numbers down below.) This growth is happening while sustainable, scalable use cases for generative AI still seem far away or niche, and sober analysts are already pointing to the category as likely being an overhyped bubble.

Why is the business world missing this? The answer, I’ve discovered, speaks to deeper cultural and generational biases that can even obscure sound financial analysis.

The Metaverse by the Numbers 

To level set our references, the Metaverse as originally described in Snow Crash is roughly this: A vast immersive virtual world simultaneously accessible by millions of people through highly customizable avatars and powerful user creation tools which are integrated with external technology and the real world economy. Not coincidentally, that also happens to describe the core features of highly popular platforms like Roblox and Fortnite. That’s not a surprise, since both of them (and many others) were directly and avowedly inspired by Snow Crash.

Most of the leading metaverse platforms I tracked in my book Making a Metaverse That Matters in early 2023 have since seen strong growth. According to analytics firm RTrack, Roblox in December 2023 reached 354 million monthly active users; it counted 400 million MAU this July, and currently has 380 million MAU, 

In other words, not only does Roblox already have more users than the entire United States has people, it’s in striking distance of reaching half a billion MAU fairly soon. And that’s just one of many successful metaverse platforms.

Overall, total monthly user growth tracked among the leading metaverse platforms — including Roblox, Fortnite (100 million MAU), Rec Room (23 million MAU), Avakin Life (14 million MAU), and VRChat (10 million MAU) — has increased by about 140 million people since 2023, for a total global audience of an estimated 690 million active users.

To be sure, this is incremental growth to existing platforms; but surely generative AI represents a transformational, categorical leap?

Maybe, but that’s still far from proven. And setting aside the rhetorical jazz hands of AI evangelists, the actual numbers are not quite convincing.

Metaverse v. Gen AI: Some Hard Contrasts

The top generative AI platform by far, OpenAI’s ChatGPT, only has some 100 million monthly active users – far less than Roblox. This is obviously not an apples-to-apples comparison, but in basic terms of “activity that many people regularly do on the Internet”, metaverse platforms still dominate over gen AI.

A revenue comparison is also not an impressive win for the AI narrative. OpenAI is on track to earn $3.4 billion this year… which is almost exactly the figure Roblox is forecast to earn in 2024. And what revenue AI earns comes at tremendous losses: as Sequoia Capital recently reported, AI companies will have to earn about $600 billion per year just to cover the costs of their computing infrastructure. Which might be justified if a compelling scalable killer app had already emerged, but as Goldman Sachs firmly noted, it has not.

So why has attention shifted so thoroughly away from the Metaverse towards such a profoundly unproven technology? Valley flightiness for the latest buzzword is part of the explanation, as is Meta’s uniquely floundering metaverse strategy, desperately centered as it is around its own line of VR headsets. (Despite Neal Stephenson himself frequently insisting VR is not a prerequisite for the Metaverse. ) 

But I’m convinced something deeper is at work.

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