For some of the largest retail companies and brands, the metaverse is losing its luster. From a report: Walmart has reportedly shut down its Universe of Play metaverse experience on Roblox just six months after its launch, according to consumer advocacy group Tina.org. Walmart, for its part, said it discontinued the experience “as planned.” Walt Disney has axed the next-generation storytelling and consumer-experiences unit that was mapping out the company’s metaverse strategies late last month. This string of news came after social media giant Meta reported that its metaverse division generated a loss of $4.3 billion in the fourth quarter.
These reports have raised questions on the metaverse’s ability to yield returns on the investments companies have made in it. Retailers and brands have mainly been using the metaverse to build brand experiences and marketing, but many have yet to report on its conversion rate. In an economic environment where retailers and brands have been attempting to cut costs, experts said that retailers would likely pare down unprofitable areas of their businesses. “One of the biggest challenges was really figuring out the right [key performance indicators] and also just figuring out if there weren’t even implications for many brands when it came to their physical product,” said Melissa Minkow, director of retail strategy at digital consultancy firm CI&T. “It was just such a big, broad, abstract landscape that it seemed there was kind of a lack of direction.”
In recent years, brands saw the metaverse as a means of elevating their virtual experiences, and reaching Gen Z in particular. Walmart launched Universe of Play in September and had mainly marketed it as an immersive virtual toy destination. For Disney, the division in charge of its metaverse strategy was focused on crafting interactive storytelling methods using technologically advanced channels. Retailers of varying sizes were attempting to look for ways to incorporate the metaverse in their strategies. While brands were optimistic about the metaverse, consumers didn’t seem to match their sentiment. Minkow, who authored a recent CI&T report, found that 81% of respondents haven’t made a purchase in the metaverse and 45% said that they don’t ever see themselves shopping in it. Meta initially set a 500,000 monthly active user target for its metaverse offering, Horizon Worlds, by the end of last year but then changed its goal to 280,000, indicating how the company underestimated people’s engagement level with the platform.
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