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October 7, 2024
In the spring of last year, Robert Triefus, then CEO of Gucci Vault, the brand’s virtual marketplace, argued at an event in New York City that the recent hype slump surrounding the metaverse was just a blip. “I see it more as a correction,” he told the audience. “We’re now in a much more sane point, where you have individuals [and] companies … who are really serious about what they’re doing.” Asked how buying real estate in The Sandbox aligned with Gucci’s broader goals as a brand, he responded with quasi-mystical language: “The metaverse is an opportunity to embrace your digital self.”
The following month, Triefus “unexpectedly” left Gucci, as Vogue Business reported. He had left “to pursue other opportunities,” the brand said at the time. One month later, Vogue Business revealed that Triefus was to become the new CEO of Stone Island. Speculation was immediate as to whether Stone Island would be making a metaverse move. So far, it has not.
Triefus’ public eagerness for all things virtual and his short-lived tenure as the head of Gucci’s metaverse strategy are both part of a wider trend that briefly gripped the private sector from late 2021: the hastily recruited “chief metaverse officer.” Following a wave of excitement about the metaverse as a golden new business opportunity, a legion of brands rushed to set up virtual shopfronts of their own. Three-quarters of CEOs surveyed by Russell Reynolds in 2022 said they were either hiring dedicated talent to head up the area or expanding existing roles to cover it.
It all started, of course, in October 2021, when Facebook rebranded as Meta, signaling its new focus on the metaverse. CEO Mark Zuckerberg painted a picture of a vast and hugely profitable virtual frontier where future generations would work, play, socialize, date, and (most importantly) shop. Reality Labs, the company’s virtual reality (VR) division, put its money where its mouth was, spending $13.7 billion in 2022 alone – a figure higher than the GDP of Mongolia.
Brands leapt at the chance to sell a whole new category of virtual goods and experiences, enticed by the notion that consumers were lining up to attend VR concerts and buy NFT sneakers.
“A lot of brands were experimenting rapidly – there was a sense of land grabbing,” says Matthew Ball, a tech investor and author of “The Metaverse.” “They didn’t want to be the last one in, and there was a thrill of being first … They also saw the ability to do something that is actually very unusual for a brand, which is to be part of a social experience.”
Luxury brands, in particular, were eager to get involved, having missed out during the early days of e-commerce. It also felt like the perfect crossover, with the twin web3 ethos of exclusivity and authenticity dovetailing neatly with their industry’s fascination with both. And for a moment, it seemed to be working.
Gucci, the first luxury brand to buy digital real estate in The Sandbox, sold a virtual version of its Dionysus handbag on Roblox for about $4,100 – $800 more than the price of its physical counterpart. Jeweler Tiffany & Co. launched virtual necklaces modeled after the CryptoPunks NFT series (“NFTiffs”) that initially sold for around $50,000 each, netting the company more than $12 million. And Burberry went on a two-pronged attack, offering digital brand skins on Minecraft and a game-inspired capsule collection IRL, which generated an estimated $5.2 million (£6.8 million) in advertising return on investment.
Even law firms began to establish themselves in the space – no doubt triggered by Hermès suing an NFT creator over the sale of 100 “MetaBirkin” NFTs based on the brand’s famous Birkin bag. Reflecting this wave of enthusiasm, McKinsey published a report in April 2022 that estimated the metaverse would be worth $5 trillion by 2030.
Then, as quickly as it arrived, the excitement evaporated. Like Dorothy peeking behind the curtain to find the Wizard of Oz is nothing more than a little man pulling levers, the world seemed to have looked at the metaverse and … not found very much.
Horizon Worlds – Meta’s flagship VR platform – was a virtual ghost town populated by legless virtual avatars. In late 2022, data aggregator DappRadar found that Decentraland – a virtual “sandbox” where users can buy and sell virtual real estate – had just 38 active users in a 24-hour period. Let’s say that again: just 38. The company’s market cap at the time was around $1.3 billion.
Around this time, Meta – along with most of the other big Silicon Valley players – panic-shifted much of its capital and PR muscle to AI, following the surprise release of ChatGPT in November 2022. Brands that, not long before, had been throwing themselves headlong into the metaverse soon followed suit.
It would be surprising if all of this didn’t feel incredibly familiar. In 2007, Second Life, an online open-world game where users interact as pseudonymous avatars, experienced a period of explosive growth and drew the attention of businesses eager to capitalize. With very little understanding of the platform or awareness of its users, companies like IBM, Cisco, and Microsoft spent huge sums on “islands” in Second Life to establish a presence in this brave new world. But by 2010, brands were pulling back, calling it a “costly mistake.”
Second Life founder Philip Rosedale says that companies mistakenly believed that these virtual worlds would attract a representative sample of their target audiences, whereas current open-world online games like Fortnite and Roblox are played predominantly by children.
“You don’t know if you can sell stuff to the people in any particular virtual world unless you can assume that they’re a cross-section of normal people,” Rosedale says. “You need normal people to sell your stuff to, and that’s just absolutely not what was happening in Second Life, or is happening in Horizon Worlds, or VR Chat, or any of these other platforms.”
Ball adds that the speed with which brands rushed in without a real plan or understanding of the space created problems for its longevity: “There was definitely a lot of ‘We need to do this because everyone else is,’ and ‘We need to do this because our shareholders expect us to.’ There were many that overestimated the relevance of their brand in these 3D spaces.”
Now many of the chief metaverse officers who had been so hastily installed were scrambling to reinvent themselves – or found themselves out of a job entirely. Coca-Cola’s Pratik Thakar swiftly transitioned from heading up the brand’s metaverse content to becoming the company’s global head of generative AI in August 2023.
Around the same time, Michael White – who was put in charge of Disney’s metaverse efforts in 2022 – departed after the brand’s in-house metaverse division was shut down. The company announced it would be launching a new AI “task force” just days later. Following Triefus’ departure from Gucci, the brand promoted a collaboration with Christie’s on its first generative AI project.
If any further proof were needed that the switch from metaverse to AI was complete, Bloomberg transcript data recorded just two mentions of “the metaverse” in earnings calls from S&P 500 companies in the last quarter of 2022. By the first quarter of 2023, “AI” had clocked 1,073.
According to Cathy Hackl – formerly chief metaverse officer at the consultancy firm Journey – the wholesale marketing shift from virtual brand experiences to AI was both a shrewd business decision and yet another example of tech bandwagon-hopping.
Today, Hackl looks back at the metaverse land grab as a phenomenon that quickly spiraled out of control. “There was this rush among PR teams to get anything out there with ‘metaverse’ in it,” she says. “I think we’ll look back on it as a really interesting moment in time, but maybe we were all a little bit ahead of ourselves.”
Even Hackl, who earned the nickname “Godmother of the Metaverse,” has distanced herself from the concept, launching “a spatial computing and AI solutions company” earlier this year with a conspicuous lack of metaverse mentions.
The metaverse-focused initiatives that once seemed to be part of every brand launch have also gone suspiciously quiet. Bulgari, which launched an NFT jewelry collection on the Polygon blockchain in 2022, confirmed to WIRED that it has no further collections planned for the future.
UNXD, a “curated NFT marketplace” with partners including Dolce & Gabbana, Jacob & Co., and Valentino, is still advertising a competition for Metaverse Fashion Week 2023, along with a number of “coming soon” collections that were confirmed for launch in 2022.
The hype around initially successful collections has also all but died down – Tiffany NFTiffs are now selling for around $2,300 on the NFT marketplace OpenSea, a drop of more than 95 percent from peak sale prices, while activity on Gucci’s “Superplastic” NFT series on OpenSea shows a dizzying drop-off in sale interest from around September 2022 and now – practically nothing.
Why this happened is up for debate. From a lack of audience, to clunky, uncomfortable, and prohibitively expensive VR hardware, to a lack of interoperability, the metaverse promise of 2021 simply hasn’t stood up in 2024. And Zuckerberg knows it: He mentioned the word just three times in his hour-long keynote at his company’s developer conference, Meta Connect – despite it being the namesake of his company.
Not everyone has abandoned the idea entirely, though. A quick scan on LinkedIn reveals that, amazingly, chief metaverse officers are still in place at some companies, although such job specs are now typically lumped in with a host of other digital innovations. Nelly Mensah of LVMH is one, although references to her job title have subtly shifted toward “VP of digital innovation” as interest in the metaverse wanes. In keeping with industry trends, the company’s latest digital experience leaned heavily on generative AI, with nary an “M” word in sight.
This fall from grace was presciently foreshadowed by Matthew Ball in a footnote at the end of his book, where he predicted that when it finally arrives, we’ll call the underlying concept something different. And like clockwork, augmented reality has arrived to pick up where the metaverse left off.
With the VR-focused metaverse demonstrably failing to take off with the mainstream, many tech brands have started to focus on AR in the hope it might stick. So far, things look more promising. Meta launched its smart glasses in collaboration with Ray-Ban last year and used Meta Connect to show off the first proper prototype of its “true augmented reality glasses”; Apple has made much of the Vision Pro’s ability to flip the wearer between passthrough AR and VR; Snap just released the latest version of its AI-powered Spectacles exclusively for AR lens developers in September. And we’re all waiting to see the final version of Google’s new AR glasses, which they couldn’t help but tease back in May.
Meanwhile, “phygital” has established itself as the new marketing buzzword, referring to a supposedly burgeoning consumer demand for a blending of physical and online experiences. With an almost depressing inevitability, another LinkedIn search shows that this phrase is now increasingly popping up on job titles where the “M” word once sat.
According to Shara Senderoff, founder of virtual design studio Futureverse, the tech world’s shift to AR is an attempt to return to a form of virtual experience that is more palatable for the average consumer.
“We skipped a step,” she says. “We went from nothing to 6-pound [VR] headsets. That will never be comfortable, literally and figuratively. Now you’re seeing Snapchat and Meta reduce the friction to get people into an experience that is more accessible.”
Zuckerberg may have finally realized that – like those poor souls in Decentraland (and, potentially, Apple’s Vision Pro team) – no one actually wants to live inside a computer, and appears to have pulled something of a marketing sleight-of-hand, repositioning the metaverse from a fully immersive, virtual experience to one that can be accessed through the company’s AR-powered smart glasses. An experience he’s hoping will become a mainstream hit in a way VR hasn’t.
The company’s advances in AR, he said during the Meta Connect keynote, are “getting closer and closer to realizing the dream of Reality Labs … This is where we want to get to.” Then again, he’s invested far too much to be able to say anything else.
