Meta’s reported spending cuts in its Metaverse division—reportedly as high as 30%—combined with the high-profile hire of Apple’s former head of design, Alan Dye, and its recent push into AI glasses, suggest that the company is rapidly reallocating resources away from VR (Quest headsets) and virtual worlds (Horizon Worlds) toward AI-powered wearables.
This pivot should not come as a major surprise. Virtual reality has struggled for years to achieve mainstream adoption due to cost, bulkiness, and motion-sickness issues. Horizon Worlds, which requires a VR headset, has accordingly failed to gain meaningful traction. We have long said that we expect Apple to follow a similar path, gradually shifting focus from the Vision Pro headset toward “mainstream” AI glasses.
Do Meta’s challenges signal the end of virtual worlds? Not at all. We see these difficulties as largely company-specific, tied to Meta’s heavy VR bet. In contrast, game-based virtual worlds that do not require headsets—such as Roblox or Sea’s Free Fire—have regained strong momentum since their post-Covid slump, attracting millions of new users.
In addition, the partnership announced early 2024 between Disney and Epic Games (owner of Fortnite) to create an “expansive and open games and entertainment universe” could reinvigorate the broader concept of the Metaverse. The two companies have been explicit about their ambition to build “a new persistent universe that will offer a multitude of opportunities for consumers to play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more”. It’s then likely that Disney and Epic will come up at some point with a virtual world that interoperates with Fortnite and where users have the ability to move seamlessly across different “lands”, just like a physical theme park.
Looking ahead, two visions of the Metaverse are then likely to coexist:
- The immersive digital world, where people spend a growing share of their online time to socialize, work, and have fun. This version already exists as we said above (e.g. Roblox) and should become increasingly rich as new features (e-commerce, social functions, etc.) are added.
- The AI-glasses-driven world, blending the physical environment with AI and holographic overlays.
This latter category has the potential to become the next major computing platform. Yet despite the impressive early reception of Meta’s new Ray-Ban glasses, the technology remains in its infancy. Messaging, navigation, quick photo/video capture, and AI assistant features offer a compelling glimpse of a hands-free future where the smartphone becomes less central—but the number of apps and use cases remains limited at this stage.
One thing is clear: whether through virtual worlds or smart glasses, AI will be the critical enabler—powering interactions and content within virtual worlds, and understanding and interpreting the real world in the case of glasses.
