The Metaverse Might Not Be Relevant Anymore, But AR Will Still Transform Industries
The steep decline in Web3 funding comes amid massive investments from the tech giants into augmented reality.
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The final quarter of last year saw funding for Web3 startups drop 74% from the same quarter of 2021. This steep decline in Web3 funding comes amid massive investments from the Big Tech giants in augmented reality (AR), a technology associated with the metaverse and other similar virtual experiences. Apple, for example, is unveiling a premier mixed-reality headset in the spring, and Microsoft will offer its Hololens AR headsets to the U.S. Army this year.
AR, along with virtual reality (VR), NFTs and blockchain gaming, are considered staples of the metaverse. But the metaverse is most often associated with the recent cryptocurrency bull run when it became a buzzword thanks to Facebook's rebranding, leading many Web3 and play-to-earn gaming applications to also rebrand as "the Metaverse." Of course, most of those companies died when the hype died down.
So what do these tech behemoths see in the metaverse that the average consumer or Silicon Valley VC is missing? Well, nothing. Big Tech is bullish on AR and VR as technologies. That shouldn't be mistaken for enthusiasm for the underdeveloped vague concept of a metaverse, which is a long way from being the all-encompassing and interoperable digital space that many blockchain hardliners are hoping for.
Apple CEO Tim Cook perhaps put it best when he said in January, "I'm not really sure the average person can tell you what the Metaverse is." And if you ask ten people who work in tech what the metaverse is, you'll likely receive nine or ten different responses. Cook would go on to say that he believes AR "will go much, much farther" and that he believes "AR is a profound technology that will affect everything… Imagine suddenly being able to teach with AR and demonstrate things that way. Or medically, and so on. As I said, we are really going to look back and think about how we once lived without AR."
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Some have assumed that Big Tech's entrance into Web3 spaces, or their designing of hardware that could be used for potential-Metaverse experiences, is a stamp of approval. This would be, however, a misguided and premature assumption. As always, Big Tech's eyes are on something more significant.
Rather, what Big Tech sees in AR and VR is a future-proof technology with abundant use cases and the ability for adoption within several industries. While some in Web3 circles fantasize about elaborate, interconnected and fully immersive virtual worlds where you can shop with crypto and dance with friends in virtual nightclubs, Big Tech sees a technology promising to disrupt everything from gaming, office communications, live sports and military training.
By investing and developing products in the field of AR, Big Tech is, in effect, helping build an infrastructure layer for future metaverse-esque applications. But with the Apples and Microsofts of the world investing in the hardware infrastructure layer, what does that mean for the smaller players invested in developing applications and projects for the metaverse or wider Web3?
For many Web3 startups, Big Tech's embrace of AR symbolizes trust in what they are building regarding apps that stand to benefit from the technology. It also represents a maturing and more adaptable Web3 environment than the one that existed at the onset of the current down market.
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As Web3 has matured, new startups are more focused on solving real-world problems and enhancing the experiences and interactions of old industries or services. Freeport, a company offering ownership of fine art at a fraction of the total cost via tokenized equity, is designing a platform that makes the digital-art collecting experience more approachable for younger and less financially-flexible individuals.
When Big Tech surveys the Web3 landscape in the coming years, they will see the projects and decentralized apps (dApps) that are worthy of pairing with their hardware and infrastructure components, not the empty buzzwords and hype. They will see impactful blockchain use cases capable of disrupting any industry, better quality gaming, and products and services that create real value for all people.
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Adaptability is part of the maturity factor that attracts Big Tech to a stabilizing Web3 industry. Many startups ran out of funds or became irrelevant when crypto prices freefell. Still, those that survived demonstrated the importance of adaptability and flexibility within a nascent and volatile sector. Veteran blockchain-gaming platform Spielworks, for example, prioritized the quality of its gameplay, utility of its NFTs and community building from its beginning stages before launching its WOMBAT token. In Q4 of last year, the company surpassed 3 million users on its NFT gaming platform.
These companies are still around today, not the ones that merely rode the hype of the Meta rebrand. And they will be the ones to spearhead new ideas for use cases that can accompany some of the major hard tech companies like Apple are producing.
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The combination of Big Tech's strength and legitimacy in building AR infrastructure and Web3's ability to design innovative software products, services and applications will transform our lives.
Of course, not all AR and VR applications will be within the loosely defined Web3 space, but AR will undoubtedly be a dominating presence in the future direction of our digital lives—both personal and professional. While betting one way or another on the metaverse is risky, with a stable Web3 ecosystem working in harmony with Big Tech, anything is possible.