The metaverse, the tech craze of two years ago, is facing a harsher reality.

The Wall Street Journal reported this week that Walt Disney Co. closed its metaverse strategy section. Microsoft Corp. closed its 2017 social virtual-reality platform. Zuckerberg called Facebook Meta Platforms Inc. META 1.97% gain; green up-pointing triangle to demonstrate his seriousness about the metaverse, concentrated more on artificial intelligence during an earnings call last month.

Disney and Microsoft canceled digital initiatives last month.

Meanwhile, avatar-friendly online worlds’ virtual real estate prices have plummeted. According to WeMeta, which analyzes metaverse land transactions, Decentraland’s median sale price has dropped over 90% from a year earlier.

Meta’s name change in October 2021 excited metaverse experiences, goods, and platforms. Slow user acceptance, pricey hardware requirements, glitchy tech, and deteriorating economic conditions have dampened optimism that the metaverse will generate major money soon.

Matthew Ball, a venture capitalist and author of a metaverse book, remarked, “What many people are beginning to recognize is that this shift is farther away.”

IT corporations are cutting workers and abandoning unimportant projects. Mr. Zuckerberg, who championed the metaverse as the next iteration of the mobile internet 18 months ago, called 2023 “the year of efficiency.” His company laid off 11,000 employees in the fall and announced this month that it would cut another 10,000 positions and various projects, including some in its metaverse division, the Journal previously reported.

“A lot of organizations and corporations naturally feel that if they need to decrease employee count or spending overall, this sort of area would seem to be a pretty simple target,” said Third Bridge Group tech-sector analyst Scott Kessler. He emphasized that AI investments yield quick returns.

He claimed AI-related items may now exploit and use. Unknown metaverse critical mass.

Even during the metaverse frenzy, some IT executives were unimpressed by online realms. “I want to try to work on technologies that bring people’s heads up—get them to experience the real world,” Amazon.com Inc.’s senior vice president of devices and services David Limp said at The Wall Street Journal’s Future of Everything Festival last year.

Since renaming, Meta has spent billions expanding the metaverse. According to internal papers seen by the Journal, Horizon Worlds, its main software, failed to recruit and keep users in the year after the rename. The business also reported a drop in Quest 2 sales, which are required to access Horizon Worlds and other VR apps.

After AI, Mr. Zuckerberg will continue to work on the metaverse. “The two key technology waves driving our road map are AI today and, over the longer future, the metaverse,” he stated last month.

That call mentioned AI 28 times. Metaverse appeared seven times. Meta declined to comment.

Disney has recently restructured and changed leadership. In November, CEO Robert Iger returned to trim costs. Last month, the business announced 7,000 job cuts and $5.5 billion cost cuts.

In early 2022, Mr. Iger became CEO, replacing Bob Chapek. “Create a whole new paradigm for how viewers perceive and participate with our stories,” Mr. Chapek urged staff.

Disney declined comment.

Microsoft gambled on online digital domains but struggled to deploy them. Last year, the Journal noted that AltSpaceVR’s augmented-reality headgear had issues. The WSJ said that the HoloLens team was reformed and budgeted.

Microsoft “remains dedicated to the metaverse” through hardware and software.

Smaller enterprises like Decentraland and the Sandbox, where users may buy virtual land and develop their own worlds, have had the most success. Land sales remain low. WeMeta, which records transactions, reports that Decentraland’s typical price per square meter has decreased from $45 a year ago to $5.

The platform’s Decentraland Foundation representative stated land purchases don’t indicate user growth. The Sandbox spokeswoman stated all of their new acreage sold out in the previous six months.

Online worlds still attract attention despite metaverse involvement decline. DCL Metrics, a site that counts internet users, reports that Decentraland, which witnessed a 25% drop in active users from November to January, is witnessing an upsurge this week from Metaverse Fashion Week, an event including designers like Dolce & Gabbana and Tommy Hilfiger.

“Metaverse enthusiasm has faded. But we should not confuse this for a lack of progress,” said Mr. Ball, the metaverse-bullish venture financier. “Change is slow.”

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