You won’t believe what Apple is doing in the metaverse – but will anyone even care?

Mark Zuckerberg embraced a digital world known as the metaverse when he said in November 2021 that he was changing his company name from Facebook to Meta.

A month later, Bill Gates, one of the founders of Microsoft, he wrote who within two to three years believed most virtual meetings would transition from two-dimensional video grids “to the metaverse, a 3D space with digital avatars.”

Shortly thereafter, Microsoft announced it would spend $70 billion to buy video game giant Activision Blizzard and said the deal would “provide building blocks for the metaverse.”

But since then, interest in the metaverse has stalled. Tech investors have moved on to new trends like artificial intelligence. And some metaverse projects have been shut down at companies like Disney and Microsoft, despite that burst of enthusiasm.

Enter Apple. At the Worldwide Developers Conference starting on Monday, the tech giant is expected to showcase its virtual reality hardware product – high-tech goggles that bridge the digital and physical worlds.

The company is betting it can tempt consumers with mixed reality products better than Meta, whose high-end Quest Pro headsets haven’t sold well, and that it can ignite mainstream interest in VR in a way that other companies haven’t. . The Apple headset is expected to cost around $3,000 and will look like ski goggles, according to current and former employees familiar with its development.

Apple already has. Eventual successes like the iPod, iPhone and Apple Watch were born in niche markets that have grown into large corporations. But also Apple executives they have been skeptical of the company’s prospects in virtual reality, which they say may not yet be ready for its mainstream moment.

Apple declined to comment.

The idea of ​​an immersive, all-encompassing online universe made the most sense to many investors when people stayed indoors during the height of the pandemic. Metaverse-related startups raised about $664 million in venture capital in the first five months of 2023, a sharp drop from the more than $2.93 billion raised in the same period of 2022, according to data compiled by PitchBook. . This decline cuts recent investment in metaverse startups to about a quarter of its peak in the first half of 2022, PitchBook said.

“The metaverse investing fad: It came and went, and now people are focusing on artificial intelligence,” said Doug Creutz, an analyst at Cowen & Company. “People who were jumping on it because it was a sexy thing to talk about jumped back.”

This year, Microsoft shut down a virtual reality world, called AltspaceVR, which it acquired in 2017. The company also laid off some employees working on its HoloLens mixed reality headset and eliminated or reassigned teams that had been working on projects metaverse, according to a person familiar with the changes.

In a statement, Microsoft said it was still committed to the metaverse and highlighted the news that it was rolling out three-dimensional avatars for Microsoft Teams meetings.

Disney also fired about 50 employees who had been working on metaverse projects, according to a person familiar with the cuts. News about The cuts of Microsoft and Disney was previously reported by The Wall Street Journal.

At Meta, Zuckerberg’s plan to restructure the company around metaverse-centric technologies has been costly. Meta’s hardware unit, Reality Labs, which includes its Oculus headsets, is responsible for a significant portion of Meta’s recent large increase in spending. That division lost about $4 billion in the first three months of this year.

Mr. Zuckerberg has warned that building the metaverse would be a losing proposition with little promise of anticipated returns. However, it took a long time longer than he had anticipated. In recent months, Mr. Zuckerberg and his lieutenants have spent more time talking about Meta’s experience in AI, even as he’s chafed at the idea that the metaverse isn’t more his target than he is.

“A narrative has developed that we’re kind of moving away from focusing on seeing the metaverse,” he said in a call with investors in April. “So I just want to say up front that it’s not accurate. We’ve had a focus on both AI and the metaverse for years now, and we will continue to focus on both.”

A spokeswoman for Meta, Ashley Zandy, said: “We have always been clear that our vision for the metaverse is long-term and nothing has changed. We are committed to our metaverse vision and are seeing good momentum.

Thursday, Mr. Zuckerberg teased a version of Meta Quest 3, the company’s latest VR headset, which will cost $499 and could arrive this year. To date, consumers have spent more than $1.5 billion on apps and games in Meta’s Quest app store.

For Apple, its new headset could be the start of a long-term plan that will eventually lead to a more popular virtual reality product, like a lightweight pair of glasses.

Some analysts have suggested the company may take an experimental approach, assessing how early adopters are using it and then making changes before marketing a future version to a wider audience. It would be similar to what it did with the Apple Watch. It was initially marketed as a generic companion to the iPhone but was later recast as a fitness gadget.

Despite the waning interest, many argue it’s too soon to write off the metaverse idea. Companies that preached the metaverse well before Meta popularized it, like Roblox and Epic Games, are still committed to their long-term visions.

Matthew Ball, a venture capitalist who wrote a book on the metaverse, said mainstream attention to the concept after Facebook changed its name spurred outlandish predictions about how soon people would be spending their time in immersive online worlds.

“It was more about poor management of the timeline,” Mr. Ball said. “The intense focus on the metaverse in a short period of time, with some claiming it was here now or about to be, was bound to disappoint many.”

With their tens of millions of participants, user-generated content, and digital economies, Roblox and Epic Games, which produces the battle royale game Fortnite, could provide a more compelling take on a metaverse.

Roblox, a platform with millions of games often aimed at children, had 66.1 million daily users in the first quarter of 2023, a 22% increase from a year earlier. Craig Donato, the company’s chief business officer, said Roblox was working to branch out into other immersive online experiences, but that a full-fledged metaverse was still some way off.

“We’re very much in the first or second inning,” said Mr. Donato.

In March, Epic Games has released new tools designed to help Fortnite players create and earn from their own games on the company’s platform, spurring the creation of an online economy in Fortnite, a cornerstone of the metaverse vision preached by Tim Sweeney, CEO of the company. Mr. Sweeney said the mainstream interest in the metaverse attracted people who weren’t really into space.

“Unfortunately, a lot of people have tried to join that trend without really delivering the goods,” she said. “But if you look at the trend, it just keeps growing and it keeps looking like exponential growth.”

Brian X. Chen AND Karen Weise contributed report.