One Major Reason the Consumer Metaverse Is a Long-Term Vision: The Technology Isn’t Ready for It

Subscribe To Download This Insight

3Q 2022 | IN-6655

Challenges adapting to peak streaming demands, along with negative receptions of proto-metaverse platform graphics, highlight the need for a longer runway to the metaverse. Networks, devices, and services are not yet ready or optimized for the eventual deluge of touchpoints enabled by devices like smart glasses. Rather than obsess about these hurdles, however (technology and networks continue to advance), companies need to focus on the nearer-term and controllable elements like business models and user digital identities in order to extract value today and prepare for the longer-term future.

Registered users can unlock up to five pieces of premium content each month.

Log in or register to unlock this Insight.


HBO Max's Streaming Issues for House of the Dragon and Meta's VR Graphics Point to a Long Road Ahead


Meta began expanding its Horizon Worlds virtual platform to Europe and most recently (August 16) announced it had extended the platform to France and Spain. Horizon Worlds was also launched in the United Kingdom, Ireland, and Iceland, in addition to the U.S. and Canadian markets. Market expansion, however, wasn’t the focus of many news articles and comments, it was the poor reception of Horizon World’s graphics. This is not the first time Meta’s virtual spaces and avatars have faced criticisms, but the significant divide in graphical quality between these “proto-metaverse” platforms and the broader gaming industry is indicative of the ground the industry needs to cover. A limiting factor is the hardware (smartphones and Virtual Reality (VR) Head-Mounted Displays (HMDs) versus Personal Computers (PCs) and consoles), but other aspects like networks and compute will need significant development as well.

In comparison to the consumer metaverse the video streaming market is significantly more mature and, at this level of maturity, one might expect many of the past issues to be largely worked out, but some issues remain. Give credit where credit is due—streaming quality is significantly better than when YouTube first burst onto the scene and long gone are the days when viewers anticipated/accepted poor streaming performance or service issues. As more live streaming feeds hit broadcast-level latencies and consumers stack subscription services, the total spending and feel of the bundle starts to look like a direct replacement for traditional pay TV. One area that still falls short, however, is service scaling.

Case in point is HBO Max’s recent launch of its highly anticipated House of the Dragon series, which faced service issues; a similar problem arose with Netflix and its Stranger Things series as well. While this issue speaks to a unicast delivery system versus multicast or broadcast, the development of the metaverse will not only place tremendously higher demands on connectivity and compute, but will potentially see significantly more cases of peak demand (e.g., smart glasses users in public at special events). Today’s networks are far from supporting this level of demand and when you factor in how today’s consumer “metaverse graphics” are viewed, you start to see just how long the runway needs to be before the consumer metaverse fully takes flight.

Big Transformational Changes and Opportunities Coming, but Expect a Slow Burn


A challenging crypto market, coupled with economic concerns, curtailed some of the hype surrounding the metaverse and certainly Web3. Large companies and brands like Nike, McDonald’s, Addidas, Walmart, Under Armor, and others, however, have already invested or experimented in the nascent metaverse, giving credence to some of the hype, but also future business models like virtual to physical with customers ordering food (or any good) in the virtual space and having it delivered in the real world. In some ways, these companies are hedging against the future, while receiving additional exposure for these trials and investments.

Outside of Web3, many of these new opportunities are built upon pre-existing trends or opportunities that stem from development in other markets like VR. Meta’s Horizon is certainly limited by its target hardware (Quest 2) and will improve over time, but until cloud/hybrid compute platforms arrive, the most deeply immersive experiences, from a graphical perspective, will continue to lag behind other markets like gaming (and, certainly, professional studios). It’s important to remember that YouTube launched in a completely different market in 2005 and it took the better part of a decade before the markets (pay TV, Over-the-Top (OTT)) started the transition to streaming and direct-to-consumer—even Connected TV (CTV) is a relatively recently phenomenon, despite smart TVs and streaming boxes being on the market for a considerably longer time.

The metaverse is developing on multiple fronts (content, service, hardware, connectivity, automation) across both the consumer and enterprise markets, which helps justify the long path to a fully realized metaverse. Not only is the longer timeline a necessity, but it enables both the users and markets to ease into these changes. An iPhone and Android moment is coming, but it is still at least several years out. This longer time frame should be viewed as a positive to support the necessary buildout of networks and infrastructure, allowing for the changes to user behavior to occur at a more gradual pace.

In a more demanding metaverse environment, service requirements will grow in kind, with technical issues needing a quick resolution. Artificial Intelligence (AI) will play a critical role in automating this process and maintaining consistent and reliable services. It also gives time for hardware development to bring immersive devices to a wider audience by undergoing additional upgrade cycles. The flipside to the longer-term horizon, however, is the potential for a healthy dose of skepticism, complacency, and framing issues.

Rather than obsess over the longer-term vision, more attention needs to be devoted to the foundational building blocks of the metaverse, from business models to digital identifies, without ignoring the maturity level of enabling technologies.

Start with the User, Then Enabling the Experiences


For the next several years, consumers will still be grappling with managing their catalog of subscriptions services and navigating the digital landscape as it changes with new regulations and concerns over privacy. Consumer-facing companies need to view these complications as opportunities to forge stronger customer relationships and for Internet Service Providers (ISPs), pay TV providers, and Mobile Network Operators (MNOs) to realize the potential to take content/service aggregation services to a new level.

Past ABI Insights have espoused this opportunity to serve as a subscription and marketing hub. In this role, the operator would bolster its connection to its customer, while creating business opportunities through third-party partnerships and, potentially, revenue sharing arrangements. It is paramount that the operator in this role keeps its customers’ best interests at the forefront and balance efforts to market services and content. Customer searches for types of services, for example, should use recommendation engines to filter services that best fit their preferences. These aggregation platforms could help customers build their digital identities, which could plug into other platforms.

A customer’s set of preferred companies and services could be used to filter which marketing efforts reach the user in public locations. This would allow local establishments to either efficiently target users that are already receptive to their marketing efforts, which is beneficial to the recipients (who wouldn’t have to opt-in/out and filter through the noise) and companies that could limit their streaming or compute fees. Companies could also employ a multicast distribution system that, again, would only connect to users who would be receptive to a marketing promotion or ad. In all cases, these implementations would help create efficiencies that would greatly help with peak demands.

Working on these fundamental elements today and in the near term will help companies address the changing landscape (behavior and regulatory) and help create efficiencies as the metaverse begins to scale up at a faster rate. This isn’t to suggest that future networks are expected to be inadequate, but efforts will be required to reduce costs, consider sustainability, and adapt to changing regulatory environments and consumer preferences.


Companies Mentioned