Karl Montevirgen is a professional freelance writer who specializes in the fields of finance, cryptomarkets, content strategy, and the arts. Karl works with several organizations in the equities, futures, physical metals, and blockchain industries. He holds FINRA Series 3 and Series 34 licenses in addition to a dual MFA in critical studies/writing and music composition from the California Institute of the Arts.
Doug is a Chartered Alternative Investment Analyst who spent more than 20 years as a derivatives market maker and asset manager before “reincarnating” as a financial media professional a decade ago.
Before joining Britannica, Doug spent nearly six years managing content marketing projects for a dozen clients, including The Ticker Tape, TD Ameritrade’s market news and financial education site for retail investors. He has been a CAIA charter holder since 2006, and also held a Series 3 license during his years as a derivatives specialist.
Doug previously served as Regional Director for the Chicago region of PRMIA, the Professional Risk Managers’ International Association, and he also served as editor of Intelligent Risk, PRMIA’s quarterly member newsletter. He holds a BS from the University of Illinois at Urbana-Champaign and an MBA from Illinois Institute of Technology, Stuart School of Business.
The metaverse is a network of immersive digital worlds designed to let users move between virtual environments, interact with other people, exchange goods and services, and own virtual or real-world assets. It draws on technologies such as virtual reality (VR) and augmented reality (AR) to create shared digital experiences. Although the vision of a fully interconnected metaverse has yet to be realized, companies continue to develop immersive technologies for entertainment, commerce, and business applications.
How does the metaverse work?
The metaverse combines immersive digital environments with technologies such as virtual reality and augmented reality to create shared online experiences. Users can interact with one another, attend events, purchase digital goods, and in some cases, buy physical products through virtual storefronts. A defining goal of the metaverse is interoperabilityâthe ability to move between virtual worlds while maintaining a consistent identity and ownership of digital assets. Some metaverse platforms also incorporate Web3 technologies such as NFTs and blockchain-based ownership, although that vision remains a work in progress.
Is the metaverse still relevant?
The metaverse remains relevant, although expectations have changed significantly since it became a major technology trend in the early 2020s. Consumer adoption has been slower than many expected, but businesses continue to use immersive technologies for product design, employee training, and virtual models of real-world facilities. Companies such as Meta Platforms continue to invest heavily in the technology through initiatives like Reality Labs, even as the industryâs attentionâand much of Metaâs own focusâhas shifted to generative AI.
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Real-life opportunities in the virtual space.
Š Suriyapong ThongsawangâMoment/Getty Images
The metaverse is a network of immersive digital âworldsâ that are interconnected so users can move between them, interact with other users, exchange various goods and services, and transact items for virtual or real-world ownership.
Although widespread consumer adoption has been slower than many early proponents expected, the metaverse continues to evolve through virtual reality, gaming, digital commerce and enterprise applications. For investors, companies developing these technologies may still present long-term opportunities.
Key Points
The metaverse combines immersive digital experiences with virtual commerce and social interaction.
Consumer adoption has been slower than many early proponents expected, although businesses continue to explore practical applications.
When assessing the investment potential of the metaverse, remember that a technology may succeed even if many of the companies pursuing it donât.
Then again, the metaverse might be a passing fad that fails to achieve widespread adoption. Either way, as an investor, itâs important to view the metaverse with eyes wide open to the risks as well as the potential opportunities.
The metaverse is immersive and digital
When the word âimmersiveâ is paired with âdigital experience,â it typically refers to virtual reality and augmented reality environments, often experienced through video games and other interactive applications.
Virtual reality (VR) technology allows you to âenterâ an immersive digital space by way of an audio/visual headset.
Augmented reality (AR) technology overlays virtual characters and objects onto real-world spaces through the use of a device, such as your mobile phone or tablet. In an AR environment, real and virtual spaces are combined, allowing you to interact with characters and objects in both âworldsâ at once.
Meta Platformsâ Reality Labs division became the companyâs primary vehicle for building the metaverse. Its flagship social VR platform, Horizon Worlds, remains one of the most prominent attempts to create a shared virtual social space.
Although most virtual and augmented reality environments are proprietaryâaccessible only through channels provided by or licensed through their developersâthe metaverse aims to connect these worlds, making each one interoperable so users can seamlessly enter any world of their choosing.
A peek into the metaverse economy
Why might a business be interested in the metaverse? In addition to presenting a next-evolution social technology where people can interact across multiple virtual worlds, itâs also a space where digital and physical goods and services can be bought and sold.
Digital goods and services. Users can purchase a wide variety of digital goods and services for their avatars or their own virtual experiences. This might include anything from clothing and accessories for avatars to virtual vehicles, experiences, and other digital assets.
Merging virtual and real-world commerce. Transactions can span both virtual and physical worldsâfor example, purchasing a Gucci handbag for your avatar and the physical version for yourself.
The concept extends beyond digital collectibles such as non-fungible tokens (NFTs), blockchain-driven smart contracts that have applications in a real-world context, or cryptocurrency that can be converted into fiat cash. It also includes purchasing real goods through virtual storefronts or experiencing real-world services in immersive digital environments.
For example, brands such as Nike, Walmart, and Gucci have experimented with immersive experiences on platforms like Roblox, where users can interact with branded virtual spaces, purchase digital items, and in some cases, connect those experiences to real-world products. Beyond consumer applications, companies are using platforms such as NVIDIA Omniverse to build digital twins of factories, warehouses, and other facilities for design, simulation, and operations.
A few key concepts of the metaverse
Although the metaverse continues to evolve, several concepts have remained central to how itâs envisioned:
Interoperability. Ideally, the metaverse would be created by multiple organizations, businesses, developers, and creators whose platforms can connect and interact seamlessly.
Virtual co-location. The metaverse seeks to create the sensation of interacting with real people in a virtual space.
Virtual identity. The metaverse aims to provide a way for people to have a consistent, expressible identity across all interconnected worlds.
Virtual ownership. The metaverse aims to support transactions of value and ownership in a virtual or real-world capacity.
The metaverse after the hype
The metaverse was widely viewed as the next evolution in social and commercial technology, and companies invested heavily in the concept. Apple (AAPL) poured billions into what became the Vision Pro. JPMorgan Chase (JPM) opened a virtual bank branch in Decentraland. Chinese tech giant Tencent built out an âextended realityâ division, while venture capital firms poured roughly $4 billion into metaverse-focused start-ups in 2022 alone.
Consumer adoption, however, fell well short of many early expectations. Metaâs flagship social VR platform, Horizon Worlds, peaked at roughly 300,000 monthly users in early 2022, while many virtual spaces attracted relatively few visitors. At the same time, activity in Web3-related areas of the metaverseâincluding NFTs and virtual real estateâdeclined sharply, and venture funding fell from about $4 billion in 2022 to a few hundred million in 2023.
The technology landscape also shifted rapidly with the release of OpenAIâsChatGPT in late 2022. Generative AI quickly became the industryâs primary focus for investment and product development. While Horizon Worlds took approximately three months to reach 300,000 users, ChatGPT attracted 100 million users in about two months, setting a record for consumer adoption of a new technology.
Meta soon reflected that broader shift. By March 2023, CEO Mark Zuckerberg told investors the company would prioritize AI innovation, and Meta later committed hundreds of billions of dollars to AI infrastructure. Although Meta continued to invest in Reality Labs, its earnings calls increasingly emphasized artificial intelligence over the metaverse. From late 2020 through the second quarter of 2026, its Reality Labs division accumulated more than $80 billion in operating losses.
The bottom line
The metaverse didnât disappear, but expectations certainly evolved. Consumer adoption has been slower than initially anticipated, but businesses continue to use immersive technologies for product design, employee training, and virtual models of real-world facilities.
Think back to the late 1990s. The Internet was clearly changing the world, but nobody knew which companies would ultimately benefit. Hundreds of companies rushed in to stake their claim, and investors poured billion of dollars into these ânew economyâ stocks. But the initial boom turned to bust, and only a handful of those âdot-com darlingsâ survived the fallout and eventually thrived.
From an investorâs standpoint, the metaverse offers a similar reminder: A promising technology and a successful investment arenât always the same thing.
This article was most recently revised and updated by Karl MontevirgenThis article was most recently revised and updated by Doug Ashburn
