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Metaverse hype fizzles out as Korean tech giants pull plug

Published: 21 Dec. 2024, 07:00 Updated: 27 Dec. 2024, 17:34

LEE JAE-LIM
[email protected]

A visitor tries their hand at a virtual reality device at the Metaverse Expo 2024 held at Coex, southern Seoul, on June 26. [NEWS1]

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The metaverse hype that surged during the Covid-19 pandemic has largely fizzled out, as Korean tech companies shut down the virtual meetup services they launched during the heyday with an ambition to impact social media and gatherings culture.

Metaverse platforms aimed at the business-to-consumer market failed because they were promoted as substitutes for reality, as users craved social interaction during Covid-19 pandemic lockdowns.

The latest departure involves SK Telecom’s metaverse platform ifland, which is set to discontinue its services on March 31 next year.

Along with Naver's Zepeto, ifland was touted as one of the mainstream metaverse platforms that made consistent efforts to lock in users to their services, until very recently attempting to lure them in with K-pop-related content.

It was launched during the Covid-19 pandemic in July 2021 when the excitement around metaverse was at its height. With social distancing measures in place, users flocked to virtual worlds, driven by anticipation of the metaverse becoming a ubiquitous part of their daily lives.

A notification of the termination of SK Telecom’s metaverse platform ifland after March 31, 2025. [SCREEN CAPTURE]

Events ranging from job interviews and graduations to business meetings and K-pop concerts seemed to move to the metaverse as real-world gatherings became inaccessible.

Despite the early optimism, demand for virtual worlds plummeted after the pandemic, as users came to appreciate the value of physical interaction that could not be replaced virtually.

ifland’s monthly active users (MAUs) for the fourth quarter of 2023 was 3.7 million, a dip of 0.6 million users compared to the third quarter. It is the last updated figure that SK Telecom disclosed, as the mobile carrier no longer reveals the information as of this year.

However, the company continued to push efforts to resuscitate its metaverse business by integrating AI and targeting overseas users.

In April, the company signed publishing agreements with Malaysia’s telecom operator CelcomDigi and the Philippines’ IT company Cherry to expand the platform into the Southeast Asian market, tailoring the services for local users. It also planned to roll out AI features to ifland within the year, such as AI non-player characters that can communicate with users in multiple languages, customized to the cultural context of different regions.

One of the primary reasons for ifland’s failure is its inability to effectively engage with younger users who make up the platform’s core audience.

“SK Telecom is not accustomed to managing such online services,” said an IT industry insider who requested anonymity. “They struggled to understand how to appeal to this demographic or to explore the types of services that would resonate with younger users.”

Among three major telecom operators, LG U+ remains the sole company to continue its metaverse business. It operates the children-focused metaverse platform KidsTopia and a university-focused platform Uverse.

Another major telecom company, KT, discontinued its metaverse platforms Meta Lounge and Genieverse in April and August, respectively.

Several gaming companies have also ceased their metaverse services due to declining profitability. Netmarble F&C dissolved its subsidiary Metaverse World in January and declared voluntary resignation for some 70 employees. It has completely exited the metaverse business since then.

Operations of Com2uS’ metaverse subsidiary Com2verse suspended operations in March this year, less than seven months after it released its own platform.

It may be too early to declare the demise of the metaverse as companies such as Meta, Apple and Samsung Electronics are rolling out extended reality (XR) platforms and devices.

Following Apple’s Vision Pro, Samsung will release an XR headset in collaboration with Google and Qualcomm.

Shin Ha-young, a 24-year-old tech enthusiast with a keen interest in gadgets and games, was among the first to try out the Vision Pro after its domestic launch. She believes that while the metaverse is likely to remain a niche market, the adoption rate of XR headsets could play a significant role in its potential resurgence.

“My interest in the metaverse and XR grows with the increasing number of VR games,” Shin said. “It’s also a bit of a romantic notion — VR allows you to experience a whole new world, a complete escape from reality, which I find fascinating.”

A visitor experiences a metaverse-based training platform at the 2024 Cyber Summit Korea held in Coex, southern Seoul, on Sept. 11. [YONHAP]

Shin’s fascination with the virtual world contrasts sharply with the approach of domestic businesses, which focuses on replicating reality. This fundamental mismatch is a key reason why many have struggled to gain traction and have entered a decline, according to Professor Wi Jong-hyun of Chung Ang University’s business department.

“The business platforms treated the metaverse as a competitor to the real world by replicating its structures and society,” Wi said, stating that the bubble has burst and will take another five to 10 years for the metaverse's revival.

“Metaverse must provide value that reality cannot, and it has immense potential in business-to-business applications, such as in healthcare or defense education. For example, in medicine, there’s no need to physically perform dissections — interns or medical students can conduct experiments virtually. From a societal perspective, services combining AI and the metaverse could support isolated individuals, like seniors living alone or reclusive youths, by offering valuable assistance and connection."

BY LEE JAE-LIM [[email protected]]