What history tells us about the future of the metaverse

3G history metaverse
Image by Pang-rum | Bigstockphoto

Metaverse platforms are here, but few are signing up and fewer come back. What’s going on? Those who remember the history of 3G may have an idea.

Metaverses have been a hot topic for at least a year now – basically, ever since Facebook decided to change its name to Meta. Several other big players have talked about their metaverse plans since then. Meanwhile, there are also a lot of startups building a metaverse or components of them.

The latest reports show Meta’s metaverse is still quite empty. But this shouldn’t surprise anyone. It is always hard to force new things to happen when you want them to happen. They come when the time and components are right, and not a moment before.

WSJ reports that Meta is falling short of its targets to populate its metaverse, Meta Horizon Worlds. Meta expected to have 500,000 active users this year. The latest report says they currently have less than 200,000. Perhaps even more worrying is the fact that users don’t return to the service after the first month. And, in fact, the user base has actually declined since the spring.

I have written earlier that it is always extremely difficult to predict the timing and breakthrough sequence for new things. This is especially challenging for the metaverse because it’s massively complex. A metaverse isn’t an individual standalone service – it’s more like an ecosystem. It’s a similar situation with platform projects, where all relevant offerings have to be in place before the service can launch, and enough users have to stick around.

Metaverse lessons from 3G history

I was recently in a conference in London where metaverse people talked about their plans. Small anecdotes were presented as major business breakthroughs. And I found myself thinking back to the early days of 3G in 2000.

3G came along around the same time as the dot-com bubble bust, and there was a lot of excitement about the possibilities of mobile broadband. There were a lot of ideas, platform projects, ambitious services and startups in that space. But the technology was not really ready yet for those services. Some of the projects were just based on easy funding before the burst. More importantly, it was not possible to offer user experiences that would get users excited and keep them engaged.

Also, while there were many mobile internet service platform projects and companies emerging at the time, it was often hard to understand what exactly their role was in the ecosystem. Later we realized they didn’t have any role in the ecosystem, which turned out to be a huge problem. That taught us to be critical of plans that are based on many theoretical and hypothetical components.

On the other hand, there were also components that would have been very valuable later, but were too early to the table. I remember, for example, a mobile gaming company that was able to get mobile games rights for many Hollywood titles, including Marvel’s titles. The problem was that networks were too slow and mobile phone technology not advanced enough to make proper games for those titles. Some of the games they published were super simplified, mainly based on some text and simple symbols. And the company was burning money rapidly, waiting for the business to kick in soon. When they went bankrupt a couple of years later, they were still waiting.

Fear of missing out

It is a typical example of what happens when new service ideas come along. There’s a lot of investment money, but many investors don’t really understand the business yet. And that’s because no one really understands it yet. But people start to panic that they’ll miss the opportunity.

Then you also typically have the ‘business people’ who see opportunities for quick money. They have no experience or understanding how to build a successful business for that area, but that doesn’t matter because their actual objective isn’t to build a business – it’s to raise good money from investors and be involved in something cool.

There are also companies that have a solid business plan, but it’s based on some wrong assumptions. For example, in the early 3G days, mobile carriers wanted to build a walled-garden portal for mobile internet services. Some companies wanted to build dedicated mobile internet servers and protocols (remember WAP?). Those plans assumed the mobile internet is separate from other internet services (and that users like to have simplified directories to find services).

We can now say that many companies that have been successful with mobile internet services have done much more systematic step-by-step work, rather than trying to change the market overnight with big money. They carefully monitored the technology and market to find the right timing for the services.

For example, Apple released the iPhone in 2007, six years after 3G became commercially available. (And it wasn’t even a 3G phone! Apple expected iPhone users to use Wi-Fi for data-intensive apps.) Suddenly mobile games became a big thing after other mobile companies had tried for ten years to make it take off. And, of course, Apple’s relatively open ecosystem was far more successful than any given walled-garden service.

History repeating (or at least rhyming)

History cannot really repeat itself when the circumstances and context are always new. But we can still learn many things from history.

For example, we can see that the technology for metaverses is still quite simplified. Honestly being in a metaverse reminds me of playing early 3G games. We can also see that many parties want to build their own walled-garden ecosystems where they can manage the whole ecosystem.

There are a lot of projects – many of them attracting significant funding – that are not only based on a new metaverse concept but also include many other new components, like Web3, blockchain and cryptos. These components are all in an early phase themselves, and there are many open questions regarding how they develop. We also have many fundamental questions about IP’s and data ownerships in metaverses.

Some assembly required

Let me be clear: I do believe metaverses are coming, although maybe by the time they arrive we will call them virtual realities or something else. The point is that it is still hard to know when and how they come.

We know that they can come only when they offer a user experience that people are willing to return to daily. Most probably they will change our lives significantly. But as it is often said, we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.

As many new technologies, platforms and ecosystems have demonstrated over the years, it is hard to force new things to come before they are ready, especially complex things. It takes time to have all the right components, actors, and use cases in place.

Most probably, metaverses will have to be based on open ecosystems so that there’s a business case for all parties, and so users can get more experiences. For many companies, it will be better to move towards metaverses step by step with environments that can offer a good user experience (and good earnings models) today.

Inevitably there will be different metaverse platforms, but the platform companies will do well to remember that the companies offering services or components for metaverse platforms won’t want to put all their eggs in one basket and bet on a single metaverse platform. History tells us that.

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