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How business leaders should think about the metaverse in 2023

After two years of hype, should the metaverse still be on the corporate agenda? Author and advocate Matthew Ball explains why the answer is yes.

Portrait of Matthew Ball in a white collared shirt, leaning against a stone wall

Years before the term metaverse was popularized by Mark Zuckerberg’s rebranding of Facebook to Meta in late 2021, Matthew Ball published a series of essays on what the metaverse is all about—and what would be needed to turn the vision into reality. The result was a nine-part “metaverse primer,” released in early 2021 (later evolved into a book, The Metaverse and How It Will Revolutionize Everything, in 2022), which rapidly became required reading for everyone seeking to understand the opportunities and challenges of this complex concept. After a recent talk at a PwC Emerging Tech Exchange event, the former tech executive, Economist contributor, and angel investor sat down with strategy+business to discuss what business leaders need to know about the state of the metaverse in 2023, and where it could go from here.

S+B: What’s the biggest misconception business leaders have about the metaverse?
Oh, there are many. But let’s start with the big one: that the metaverse is or was overhyped.

A lot of the issue here isn’t the degree of the hype, but rather its suddenness and how this produced greater confusion and set the wrong expectations. In the first 29 years of the term’s existence, it appeared in barely a dozen SEC filings. In 2021, there were nearly 300 such uses. In 2022? Three thousand. That is quite the J-curve.

This boom both prompted many executives to start using the term before they really understood it—or how it could affect their company, employees, and customers—and reflected the excitement the concept generated. Often, they wrongly conflated the metaverse with video games, or NFTs, or VR, and so on. Some argued the metaverse was suddenly here—even though executives such as Epic Games’ Tim Sweeney and Nvidia’s Jensen Huang described its development as a multi-decade process that was only just starting to formalize. And despite Zuckerberg predicting the metaverse was five to ten years away, Facebook’s name change seemed to suggest imminent disruption, which those building the metaverse knew would take longer.

In 2023, metaverse hype is holding up better than you might think—there were more than 750 mentions in Q1—but the focus is now on AI. Meanwhile, it’s hard to point to metaverse products and metaverse revenues. Crypto has crashed, VR hasn’t found product-market fit, and US gaming revenues experienced their first year-over-year decline since the dot-com crash. All of this has taken air out of the metaverse “bubble”—but doesn’t alter its potential. In fact, lowered expectations give us more breathing room to unpack its challenges and clarify misconceptions.

For example, some business leaders still think the metaverse is just VR/AR. These devices may become the best, most popular, or preferred way to access the metaverse. But in the same way the mobile internet is not a smartphone, they are not the metaverse—they are just access methods.

Others conflate the metaverse with web3 or crypto, but those terms refer to the philosophy and potential database structures of a decentralized internet. And although web3 and crypto may end up being relevant to the metaverse, this is hotly debated among metaverse leaders today and far from certain.

Some imagine the metaverse is just a giant video game. This is understandable, as a social gaming platform like Roblox has much in common with the metaverse—both are expansive networks of real-time 3D virtual worlds; accessible across myriad devices globally; and with integrated economies, identity systems, and more. Yet describing the metaverse as a game is like describing the internet as a social network. The latter is just a tiny part of the former, and predominantly leisure-focused.

Some think that believing in the metaverse means believing we will replace all the devices and interfaces we use today—that is, we stop using a mobile phone or making a flat video call, and instead wear AR goggles and work inside a 3D boardroom. Not so. The metaverse, and its devices, will complement today’s models. We’re obviously deep into the mobile era, yet I still write on a PC and prefer the form factor for many tasks.

S+B: How can businesses reduce the risk of being too early with the metaverse, or too late, or betting on the wrong horse?
For most businesses, I think declaring a metaverse strategy is unnecessary and probably unhelpful. Instead, companies should simplify their language to convey what they really mean—let’s build a digital twin, let’s do a video game activation, let’s try NFT ticketing, and so on.

When a company is building a metaverse experience, I try to remind its leaders of a few points. First, we are still early. Not only are there large technical problems, but we’re still at the hypothesis stage. This means that there are few KPIs, best practices, or exemplar business cases; and the right technologies, vendors, and timelines are rarely clear. So players need to be judicious and flexible when it comes to their investments.

Second, I think many companies need to more deeply interrogate the purpose of a given metaverse investment. For example, it’s common for blue chip companies to build their own branded world on Roblox or Fortnite, but never ask themselves—or at least, never honestly answer—whether any customers really want to spend their leisure hours inside a corporate world. Some customers would, but if you can’t truthfully answer that question, the world you’ll create won’t find a long-term audience. There are many branded experiences on Roblox that have millions or tens of millions of visits—great topline numbers—but their user approval ratings are at 30 to 50%, engagement time is less than three minutes, and after a first visit during launch month, no one tries it out.

S+B: You’ve said before that asking when the metaverse will be here is the wrong question. What should we be asking?
Technology isn’t really a when? but more of a “When is what here for whom, how, and to what end?” A focus on when? is a distraction—especially when it comes to those asking, after two years of hype, “Why isn’t the metaverse here yet?”

Consider the question “When did mobile arrive?” Even though it’s a backward-looking question and relates to a technology whose era has unquestionably arrived, there’s no simple answer. In fact, even dating its start is hard. The first mobile phone call was made in 1973, the first wireless digital network in 1991, first smartphone in 1992, with enterprise-focused BlackBerries taking off in the late 1990s, WAP [wireless application protocol] following in 1999 (enabling mobile access to a primitive version of the World Wide Web), and the first D2C [direct to consumer] media services emerging in Japan in the early 2000s. The iPhone didn’t launch until 2007, with Android and the Apple App Store following in 2008. It still took until 2014 for half of Americans to own a smartphone and until 2020 for half of the world to own one.

During this multi-decade pathway, mobile did more than just penetrate a growing share of the global population. It became more integral to more functions, capable of doing more in each, and eventually, a catalyst for change in many industries.

With this in mind, in 2023, it is obvious that the buzz around the term metaverse has receded—or even gone negative. However, we should not mistake this for a lack of progress, let alone regression. The number of virtual worlds made each year, the number of people inside them, as well as the money and time they spend, and the cultural influence of those spaces all continue to grow. More importantly, the deployment of real-time 3D simulation and game engine technology continues to grow, as have their capabilities and business applications. These tools are increasingly used in healthcare, industrial design, civic management, automotive, aerospace, and more.

In 2023, it is obvious that the buzz around the term metaverse has receded—or even gone negative. However, we should not mistake this for a lack of progress, let alone regression.”

S+B: Who will lead the way? Gamers? Gen Z? Or maybe businesses?
It can be helpful to think of computing platforms as having three underlying steps or stages: (1) when a new technology achieves its minimum viable product [MVP], (2) when a generation has grown up using that technology, and (3) when those native to a new technology become entrepreneurs.

Looking at Facebook is a good way to understand the importance of step three. The internet hit its consumer MVP stage with the World Wide Web in the early 1990s. Facebook was technically possible during that entire decade. But it took Mark Zuckerberg, who grew up with the 1990s internet, to create Facebook in 2004, when he was 19 years old, and then see it adopted by his peers, also of the 1990s internet. Evan Spiegel, the creator of Snapchat, was similar, but with the mobile internet.

For the first two or so years following the release of the iPad in 2011, it was common to see press reports and viral YouTube videos of infants and young children who would pick up an analog magazine or book and try to swipe its non-existent touchscreen. Today, those 1-year-olds are 12 to 13 years old. A 4-year-old then is now well on her way to adulthood.

Although this generation now understands why adults found their futile efforts to pinch-to-zoom a piece of paper so comic, most of these consumers still look at the world as interactive and immersive, seeking out not YouTube or Snapchat as millennials did, but Roblox or Minecraft. Their preference for interactivity is so great that they embrace platforms that, like VR today, look rudimentary and technically insufficient. This secular trend explains Roblox’s growth. What excites me is that we’re now approaching step three for the iPad generation.

S+B: Interoperability is part of the ultimate vision of the metaverse and what you’ve cited as the biggest challenge. How do we get there?
We need interoperability if we want the metaverse to exist, but interoperability is not a technical challenge; it’s a human one. We need many rival platforms and ecosystems to agree not just on common technical standards but also on financial systems—and to connect with one another, too.

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We faced the same challenge with the internet. Few believed that could ever happen, for the same reasons, and from the 1970s until the 1990s, we had what was called the “protocol wars.” Indeed, there was a time where the US Department of Commerce was pushing an alternative to the internet protocol suite that the Department of Defense had pioneered! Yet the utility and network effects of a common stack won out.

I suspect the arc of the metaverse will be similar. There’s an economic gravity driving us toward interoperability. It might take 20 years, but we’ll eventually settle on more and more shared standards, solutions, and related conventions in the same way that in the physical world as global trade has grown, we’ve seen de facto standards such as the US dollar, the metric system, the English language, and the intermodal shipping container emerge.

Indeed, today we can already see the early formations of metaverse interoperability. Zoom, Meta’s Horizon Worlds, and Microsoft’s Teams have announced interconnections—not just of their video feeds, but also avatars. Autodesk, Unreal, and Adobe are also integrating their rendering solutions and 3D file formats.

S+B: What are some big questions about the metaverse that remain to be answered? How will they get answered?
The biggest technical gap between where we are today and what the metaverse requires is likely computing power. However, this gap will close over time through a mixture of more computing supply and greater computing efficiency (if not quantum computing).

The most intractable challenge is network deployment/latency, because that’s a socioeconomic, political, geographic, and environmental concern—not to mention a challenge of physics. However, economics, 5G/6G, and satellite internet will eventually close much of this gap, too.

XR [extended reality] has the most problems to solve (batteries, optics, LEDs, and more), but we are en route on each of them. Regulations around the world are addressing some other holdups—namely, those of software distribution and payments.

S+B: What are some things that business leaders, policymakers, or even average citizens can do to shape the metaverse’s future?
I wrote my book because I believe the metaverse is of extraordinary importance. Yes, it will be worth trillions, but it will also reach nearly every person on earth, affecting culture, society, politics, and existence at large.

I want the metaverse to be more than technically realized. I want it to be collectively and broadly prosperous. And I believe the best way to achieve that outcome is to have as many voices heard in and contributing to its development.

The term metaverse comes from a book with a single author [Neal Stephenson’s Snow Crash], but I hope the metaverse has billions of authors. And so, to me, the best way to seize the opportunity is to first learn about it: what, exactly, the metaverse is. What technologies it requires. How it will operate. How it will develop. What’s at risk and what can be gained. This is why I wrote my book in the first place—an endeavor that long predates the wave of excitement about the metaverse that kicked off in 2021.

Author profile:

  • Roberto Hernandez is the global metaverse leader and chief innovation officer for PwC US. Based in Dallas, he is a principal with PwC US.
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