As the Metaverse recedes, JJ Lin is just one of the losers

Metaverse has disappeared from the public opinion field for a long time. The latest news is that JJ Lin’s Metaverse real estate investment has plummeted by 91%.

In 2021, the Metaverse was once the darling of almost all industries. This complex that combines all the current hot concepts (AI, VR, cloud technology, blockchain) looks extremely sexy, and therefore attracted many practitioners, investors and even enthusiasts to flock to it.

JJ Lin is one of the representatives. In November last year, he bought a property worth $123,000 on the well-known metaverse platform Decentraland. He also expressed his great interest in the metaverse and planned to build a music studio and performance stage on Decentraland.

However, when the hype faded and the hot money dissipated, the trading volume and transaction price on Decentraland plummeted, and the price of the land purchased by JJ Lin also dropped to around US$10,000, a 91% drop from the price when he purchased it.

History is undergoing a dramatic change. AI, a concept that was originally included as a subset of the Metaverse, is making breakthrough progress. As people's attention is flocking to this technology that seems more practical and can better demonstrate its capabilities, the Metaverse has become a thing of the past.

Those who tried to invest in this concept and gain returns became the leeks hit by the sickle.

Due to the lack of substantial breakthroughs in technology, despite being sought after by major Internet companies at home and abroad, the Metaverse remains at the conceptual stage and has few practical applications.

Even though Facebook, which changed its name to Meta, claims to be fully committed to creating the Metaverse, its public-facing product Horizon Worlds has been criticized by many, and user retention is worrying. The Metaverse product created by Baidu in China even started with a negative number in the initial version naming, which fully reflects the immaturity of both technology and application.

However, the lack of practical application does not mean that the capital market is unwelcome. Economist Robert Shiller once proposed the theory of "animal spirits", arguing that the prices in the financial market are largely affected by people's confidence and emotions, which are not necessarily consistent with market fundamentals.

Therefore, even though the Metaverse has no actual products and even the concept is not particularly clear, the pursuit at home and abroad still promotes the activeness of the capital market. When many people believe that the Metaverse will become the future of all industries, speculators and investors are born at the same time.

On September 6, 2021, a game company called Zhongqingbao posted on its official account that the company is committed to creating a virtual and real fantasy linkage simulation business metaverse game "Brew Master". Subsequently, the company's stock price rose by the daily limit for two consecutive days, so Zhongqingbao was called a "well-known metaverse concept stock" by the market. By November 11, 2021, Zhongqingbao's intraday price once rose to a maximum of 42.63 yuan per share, and its total market value exceeded 10 billion yuan, with an increase of more than 389% in more than two months.

Popular concepts have contributed to the boom in the financial market, and those who use capital means are not soft-hearted. From February 20 to March 25, 2022, the chairman of Zhongqingbao sold 7.86 million shares, cashing out 190 million yuan.

In contrast to the chairman's cashing out, according to market data, in the first quarter of 2021, Zhongqingbao had 40,000 retail investors, which became 94,000 by the end of 2021, and there were still 92,000 retail investors until the first quarter of 2022. A reasonable speculation is that these extra 50,000 people poured in for the concept of the metaverse, but were unable to exit at the right time.

NFT, the companion product of the Metaverse, was also one of the hottest products in the capital market. NFT is considered the cornerstone of the Metaverse. CITIC Securities once issued an announcement stating that "NFT will be the digital asset rights confirmation solution for the Metaverse."

Jay Chou once bought the same Bored Ape avatar as NBA star Curry. In January 2022, he also changed his avatar to Phantom Bear on Instagram. The product was launched by PHANTACi, a trendy brand founded by Jay Chou and his friend Ric Chiang. With Jay Chou's promotion, 10,000 Phantom Bear NFTs were sold out in less than 40 minutes, and the estimated sales value reached 62 million yuan.

At the end of 2022, Jay Chou also launched a digital collection called Demo Space by operating his own IP. Its gameplay is similar to blind boxes. Users can open this space by purchasing keys of different prices, and dig Easter eggs while listening to music as digital people. One day after the launch, Demon Space sold nearly 60,000 units. Calculated at the lowest price of 20 yuan , the sales volume also reached about 1.2 million yuan.

Of course, these two products also correspond to different forms. The latter is a fixed-price NFT product, and it has the meaning of idol consumption. A Jay Chou fan who bought this product told Dumou (ID: Domoredumou) that she bought the demo space not for digital collections, but to support genuine demos. At the same time, the product also restricts trading behavior. But the former is more about trading and speculation, but when users realize that such products do not actually have high value, the transaction price will drop instantly.

According to Fortune, the price of the "Phantom Bear" NFT in the secondary market once soared from 0.26 ETH (about $984 at the time) to 6.39 ETH (about $21,700 at the time), but then the long bear market began. In less than half a year, the lowest purchase price of the series plummeted by 96.6% from its peak.

In addition to NFT, Metaverse virtual real estate was also one of the hot topics in the capital market. JJ Lin, who is also an entertainment industry figure like Jay Chou, personally purchased Metaverse virtual real estate. However, while Jay Chou helped his friend sell a huge amount of NFT assets, JJ Lin got himself into trouble.

According to China Securities Journal, the median transaction price of Decentraland, the metaverse real estate sales platform where JJ Lin bought real estate, has fallen from $45 in 2022 to $5, a drop of nearly 90%. Previously, in November 2022, JJ Lin spent $123,000 to buy three virtual properties in Decentraland, which are currently worth only about $10,000, with a floating loss of 91%.

JJ Lin posted a photo of his wallet on the social platform, saying "I heard that many people want to help me manage my finances recently", apparently in response to this message.

In addition to this type of capital investment targeting a niche group of people, some people have chosen to focus on the more popular paid knowledge track. In the early days when the concept was popular, some Metaverse courses on paid knowledge platforms sold tens of thousands of copies, with sales reaching millions, and were the first to reap the benefits of the Metaverse.

If these people enter the Metaverse investment market for this reason, their losses may be more than just the 30 yuan course fee.

JJ Lin's purchase of virtual real estate was somewhat accidental. But there are indeed many people who invest in the concept and hope to profit from it. The market has indeed given returns beyond imagination, but not everyone buys and sells in the right time period. In the end, many people entered the market with the intention of cutting leeks, but were cut off by short-term price fluctuations.

This result is also related to the disappearance of market confidence. From the year before last to the middle of last year, the failure of many large companies and the overwhelming media coverage increased users' confidence. However, since this year, the Metaverse has shown a relatively declining state.

The stagnation of Metaverse progress by major companies was the direct trigger.

Among them, Facebook, which changed its name to Meta, is the most obvious. In October 2021, Meta officially announced that it would change its name from "Facebook" to "Meta", and bet all its efforts on the Metaverse. Zuckerberg once said at the annual shareholders' meeting that if Meta invests at least $10 billion a year in the next five years, Meta's investment will reach $70 billion by 2026. But this is just a conservative figure. Meta's investment by the early 2030s is likely to be close to $100 billion.

However, the heavy investment obviously failed to bring Meta the expected returns. According to Meta's fourth-quarter financial report for fiscal year 2022, Meta's fourth-quarter revenue was US$32.165 billion, a 4% decrease from US$33.671 billion in the same period last year; net profit was US$4.652 billion, a 55% decrease from US$10.285 billion in the same period last year.

Among them, the company's Metaverse department has not yet achieved profitability. Revenue in the fourth quarter of 2022 was US$727 million, a year-on-year decrease of 17.1%; the loss during the period was US$4.279 billion, which was due to the decline in sales of the virtual reality headset (VR headset) Quest; the loss for the whole year of 2022 was US$13.717 billion, an increase of 34.57% compared with the loss of US$10.193 billion in 2021.

Losses in new projects are not surprising for large companies. The most direct and impactful factor for investors’ confidence is the poor performance of its metaverse product, Horizon Worlds. A survey of Horizon users showed that users said they did not find a virtual world they liked on the platform, nor could they find people to play with. Other users also reported that the virtual images did not look real, and that the characters had no legs.

These reasons further pushed users away from Meta's metaverse. On October 15, 2022, The Wall Street Journal reported that Meta's virtual social platform Horizon Worlds failed to meet its target expectations. The number of users on the platform is still 300,000 short of the original target of 500,000, and the number of users is still declining.

Other companies that originally had Metaverse plans have also stopped. According to media reports, Microsoft laid off its Industrial Metaverse team, which was established only a few months ago, and many domestic Internet Metaverse businesses have been suspended. Only Soul, which has accumulated losses of 2.412 billion yuan in three years and is eager to go public, still insists on claiming on its official website that it is a "social Metaverse for young people."

The loss of power of the big companies further pushed away investors who originally came for short-term gains. According to data from NonFungible.com, Decentraland, the platform where JJ Lin bought the property, currently has about 650 daily active users (DAU) and about 30,000 monthly active users (MAU).

The capital market has been cold, and some industries that were not at the center of public opinion have continued to insist on the metaverse. On April 9 this year, Guangxi and Chongqing jointly created the "first immersive cave metaverse - Hezhou Ziyun Cave metaverse project". In January this year, Zhangjiajie also launched the scenic spot metaverse platform "Zhangjiajie Planet". Most of these metaverse projects focus on immersive experience and digital ecology. Although they may not be consistent with the original concept of the metaverse, they do provide some scenic spots with new experience projects.

As the Metaverse recedes, AI, which was once a subset of the Metaverse, has made rapid progress in recent times. In March this year, Roblox, the first company in the world to launch the Metaverse concept, also announced that it would launch a generative AI game creation tool.

Roblox Studio head Stef Corazza said the tools can "help automate basic coding tasks so users can focus on creative work." This means being able to generate code snippets and in-game object textures based on short prompts.

The popularity of Chatgpt has once again fueled the capital market. And unlike the Metaverse, Chatgpt’s technology is more visible and tangible, which has undoubtedly attracted new attention from the public.

Soon, many domestic projects began to be launched. Since Baidu first released Wenxin Yiyan, many Internet giants have also launched their own Chatgpt-like projects, such as Alibaba's Tongyi Qianwen, 360 Zhinao, Tencent Hunyuan, etc. No one followed Li Yanhong's intention to build a car on the wheel, but instead, one by one, they started to build the wheel again.

Looking back at the metaverse craze that occurred almost at the same time two years ago, this is somewhat ironic.