Is AI a metaverse accelerant?

Tech and entertainment management consultancy Activate Consulting released a report this week, predicting that the current metaverse audience will double in size over the next three years, to around 600 million people, mainly driven by commercial, consumer-facing application of artificial intelligence.

The report comes at a time of gloomy media narratives about the prospects of the metaverse, driven by problems in the crypto sector, and a continued sluggishness in virtual reality headset sales. But Activate takes a catholic, and thereby positive view of the metaverse, making the case that the metaverse market is “already here” and is currently buoyed by successful 2D, non-crypto games like Roblox, Fortnite, Minecraft, and their smaller competitors, which attract a combined audience of 300 million players.

Activate’s report – called Beyond the Hype Cycle: The Metaverse Matters More Than Ever – points out that more than three-quarters of gamers say they have participated in “non-gaming” activities within games in the last 12 months. These include chatting, of course, but also watching movies and live events, creating avatars, and purchasing physical goods.

(Again, the report makes an easy-going view of what constitutes gaming activities, and what does not, but the point it’s making is that play-associated activities define both games, and the metaverse.)

“The metaverse is about socializing, collaboration, and creative self-expression,” said Activate CEO Michael J. Wolf, a former senior executive at MTV. “It’s about building things and sharing them, perhaps even selling them, for dollars and euros. The most popular games in the world share these characteristics, but more than that, they are about to be boosted by the arrival of AI.”

New success

Wolf makes the case that artificial intelligence will be the key driver behind doubling the size of the current metaverse player-base, advancing current hits and creating opportunities for new success stories.

“AI-driven, photorealistic avatar creation is just one example of advances that will attract new audiences,” he says. “It’s so important, because people want to see themselves, or who they want to be, in a way that’s convincing and not cartoonish. We’ve lived with the uncanny valley phenomenon for a long time. People get queasy when their avatar tries and fails to look photorealistic. But everything we’re seeing coming to the market is beyond that.

“Secondly, the ability to shape a world easily, without any knowledge of coding or art creation, is attractive. We’re already seeing it in today’s games, but even they take a certain level of skill even at a simple level. But AI will make it easy for everyone to experiment and create. AI is going to be a metaverse accelerant.

“Also, NPCs are going to become more intelligent, convincing and interesting. Players are going to want to talk to NPCs and engage with them almost like they’re speaking to friends. The combination of all these elements is going to have an extraordinary effect. I think you just have to look at some of the AI products we’re already seeing, and the demos of how AI is going to be used in games.”

World creation

Activate’s report states that virtual world creation “allows the metaverse to scale significantly faster, generating a virtually infinite universe”. It compares AI user-generated content creation to the arrival of video services like YouTube and TikTok.

AI-driven quests will broaden the number of activities available to players, including those that are tailored for the individual. AI assistants will make navigation and in-game onboarding easier, for players who might currently lack confidence to dive into seemingly complex worlds. Virtual economies and marketplaces will flourish as more consumers try their hand at creation and trade.

The report goes on to state that the combination of AI and metaverses will allow players to generate art and music within their favorite games. These games will also be used as platforms for non-gaming activities such as work and education. Players will create custom personalities and biographies, while launching virtual commercial services, much as we’ve seen in the streaming and social media markets.

Controversial issue

Of course, not everyone sees the coming of AI in quite so positive terms. Generative AI is a controversial issue, not least for those professionals who make their living creating games and game assets. The promise of democratization of media has often turned out to be a disappointment in the past, if not a downright dystopia. Anyone who uses social media today, or the internet for that matter, and who recalls the giddy promises of yesteryear, will understand the pitfalls of over-optimism.

Still, Activate has a point. AI is certainly going to change our lives, and our commercial entertainments, allowing for easier self-expression and creativity. Whether this creativity is any good, is yet to be seen, but surely some of it will be valuable.

Wolf says that current pessimism about the metaverse market is simply a function of the hype cycle, which rises and falls dramatically, before steadying out. “This happens every time we see a giant format shift. There’s always a huge amount of hype and skepticism. Just look at the articles about Amazon, back in the day, or about early social media networks. I think we’re past the hype now, and we’re getting into smart people who are ignoring the distractions [like the collapse of crypto companies] and they are building deeply immersive environments where people are going to want to spend their time and their money.”

Finally, he warns that the metaverse will need to distance itself from crypto currencies and some of the most grubby paraphernalia of Web3, in order to appeal to a wide audience. “The metaverse and Web3 are not the same things. People are not interested in these currencies and if they do want to buy NFTs – and most do not – they will prefer to do so using real world money.”

The full report is here.