The broader downturn in the global market has gradually resulted in declining interest in the metaverse sector, which was once termed the future of the internet. The OpenAI-led launch of ChatGPT also added to the decline of interest in the metaverse, as many of the leading tech firms shifted their focus from the metaverse to artificial intelligence, investing billions of dollars in AI projects.
Meta, which invested heavily in the development of metaverse projects, is now bolstering its investment in the AI segment. The firm, in April 2023, announced that it is developing generative AI tools for its social media platforms like Facebook and Instagram. Furthermore, it is also planning to build a chatbot for WhatsApp and use artificial intelligence in ad creation. Although Meta is still committed to its metaverse ambition, the shift towards AI is evident from these announcements.
In China, the trend is no different, as tech giants continue to pull the metaverse plug. Tencent, in February 2023, closed the metaverse department soon after launching the unit in 2022. The tech giant reported declining profits as the major reason behind the decision. Baidu’s head of the metaverse operations, Ma Jie, also left the position in May 2023. Like many, Baidu also switched its focus from the metaverse to generative AI technology. Amid the waning interest, the Chinese government is leading the charge in the metaverse sector.
By joining the state-led initiative to explore and promote metaverse adoption in China, Nanjing is aligning itself with cities such as Shanghai and Beijing. Shanghai, for instance, announced a multi-pronged metaverse strategy in July 2022. The strategy aims to create US$300 billion in wealth for the city. A month later, Beijing announced its two-year metaverse plan, indicating the tourism and education sector to be the biggest beneficiary. Following the footsteps of Shanghai and Beijing, Henan Province announced that the local government aims to build a metaverse industry worth US$440 million by 2025.
Going forward, in H2 2023, TechInsight360 expects more Chinese Provinces to unveil their metaverse development plan, as the country continues to bet on the future of the metaverse industry. Elsewhere in Asia, the South Korean government is also actively participating in the development of the metaverse sector, despite the waning tech interest in the segment.
Seoul, in January 2023, unveiled a metaverse rendition of itself, made possible through government funding amounting to a total of US$1.6 million. South Korea, in March 2023, also unveiled its commitment to bolster the metaverse sector by announcing a significant investment of US$51 million. Recognizing the metaverse as a prospective growth catalyst, the government established the Metaverse Fund, specifically earmarked for innovative projects within the sector.
As discussed above, amid the waning tech interest in the metaverse sector, these government-led initiatives in the segment will play a pivotal role in deciding the future growth of the market. The government-led policy structure will also be crucial in driving the mass adoption of metaverse-related products and services.
Currently, majority of the consumers cannot purchase thousands of dollars worth of metaverse-related products. This is one of the biggest barriers to mass adoption. The rising inflation is projected to make the situation worse for private players offering such products. Consequently, government policies offering incentives or rebates on such purchases could accelerate the adoption, by making the purchases more affordable for the consumers.
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