What has become of the once-dominant metaverse?

Author: Zen, PANews

The "metaverse," which was repeatedly hyped two or three years ago, is now revealing a clearer picture of its true industry landscape as the narrative fades. As 2025 draws to a close, the global metaverse industry presents a complex picture of uneven development.

After the boom in 2021 and the cooling down in 2022, the metaverse ecosystem did not decline as a whole in 2025. Instead, it saw a revival and breakthroughs in some sectors.

However, at the same time, some sectors continue to experience sluggish growth, creating a stark contrast. Some sectors have seen record-breaking user scale and engagement, while others are facing declining activity or even user churn. This divergence between hot and cold sectors has become a key observation point for the metaverse industry in 2025.

Immersive gaming platform: Over 100 million users, yet it wants to "tear off the metaverse" label.

The virtual worlds provided by immersive games represent the most mature and active area of ​​the current metaverse. In 2025, immersive UGC game platforms continued to grow, with leading platforms showing outstanding performance.

Roblox, as an industry bellwether, has reached new heights in user scale and revenue: in the third quarter of 2025, Roblox's average daily active users reached 151.5 million, a year-on-year increase of 70%, and its revenue for the quarter increased by 48% year-on-year to $1.36 billion. Its massive user base demonstrates that the UGC metaverse model that integrates games and social interaction still has strong stickiness and appeal.

However, Roblox has not emphasized the concept and narrative of the metaverse, only expressing its vision for it during the metaverse boom of 2021. Currently, Roblox prefers to tell its story using frameworks such as the "global gaming market," "platform and creator ecosystem," and "virtual economy," without placing the "metaverse" label in a prominent position.

In contrast, Epic Games, the developer behind Fortnite, a game ecosystem with hundreds of millions of monthly active users, still views its platform as a key vehicle for building an open metaverse and an interoperable digital ecosystem. In November 2025, Epic Games announced a partnership with the cross-platform game engine Unity. Tim Sweeney, founder and CEO of Epic Games, stated that companies need to collaborate like they did in the early days of the internet to build an open metaverse in an interoperable and equitable way. According to Sweeney, 40% of Fortnite's gameplay time occurs within third-party content, the "metaverse" portion.

Fortnite's music festival is an original game experience centered on music and based on rhythm. This year, it has collaborated with Hatsune Miku, Sabrina Carpenter, Bruno Mars, and BLACKPINK member Lisa, bringing a virtual large-scale music festival experience to millions of players and fans. In addition, Roblox has also collaborated with Icelandic-Chinese musician Laufey and K-pop girl group aespa, among others, to perform in its official music venue, "The Block." These events demonstrate that immersive platforms still have the potential to become a new "digital third space," embracing new forms of entertainment and social interaction.

Besides the two mentioned above, Minecraft was previously widely regarded as a giant in the metaverse game ecosystem. However, this game platform rarely presents itself as a metaverse ecosystem; its core strategy focuses on community and creation. More importantly, Minecraft's previous support for immersive hardware such as VR and MR has come to an end this year. The official Minecraft Bedrock update log states that VR/MR device support will no longer receive updates after March 2025, and warns that after the final update, the game can only be played using non-VR/MR methods.

Overall, the immersive gaming platform sector in 2025 will see the "strong get stronger" scenario, with leading platforms like Roblox continuing to expand their user base thanks to their massive ecosystems and creator communities, while smaller platforms face pressure from declining user activity or being consolidated and eliminated. The reduced or even strategic abandonment of the metaverse concept by leading ecosystems has undoubtedly significantly weakened public awareness of the metaverse.

Metaverse Social Networking: Old Bottles Fading, New Wine Awaits

Compared to immersive games, metaverse-style virtual social interaction didn't offer much to boast about in 2025; instead, it focused more on exploring new directions through reflection. Some of these early adopters withdrew from the scene, while others struggled to transform their businesses.

As a leading platform, Meta gradually adjusted its strategy in 2023-2024, no longer developing VR social applications in isolation, but attempting to integrate its metaverse social products with existing platforms with huge user bases such as Facebook and Instagram.

However, Meta's Horizon Worlds has struggled, with monthly active users still below 200,000, a negligible number compared to Facebook's hundreds of millions of users. Meta began opening Horizon Worlds to mobile and web platforms in late 2024 to lower the barrier to entry and expand its user base, claiming that mobile users quadrupled within a year. But as a platform primarily reliant on VR devices, Horizon's user adoption remains limited, far from explosive growth.

At Connect 2025, Meta's CTO admitted that the company needs to prove that metaverse social networking can generate sufficient user retention and a profitable business model; otherwise, it will be difficult to sustain the massive investments. To this end, Meta is increasing its investment in AI-generated content and NPCs to enrich Horizon's content, while also emphasizing integration with real-world social networks to reduce user acquisition costs.

Other emerging virtual space platforms, positioned for virtual social interaction and entertainment, are experiencing contrasting fortunes. VRChat, a long-established VR social platform, has maintained steady growth driven by its core community, with user activity reaching a new high in 2025—the peak concurrent online users across the VRChat platform exceeded 130,000 during the New Year's Day holiday in 2025, reflecting its vitality as an open community platform. Furthermore, the surge in user-generated content in markets such as Japan has fueled over 30% growth in VRChat users between 2024 and 2025.

In contrast, Rec Room, a social VR platform once valued at $3.5 billion, encountered growth bottlenecks and announced layoffs of more than half of its workforce in August 2025. Rec Room initially attracted capital investment due to its cross-platform UGC gameplay and creator economy, but as its business expanded to mobile and console games, a large influx of low-quality content failed to keep pace, resulting in lower-than-expected user retention and revenue. A Rec Room co-founder admitted that mobile and console users struggle to create content that attracts others, and efforts to bridge this gap, such as introducing AI creation tools, have not been effective.

In 2025, there are also some noteworthy explorations of new virtual social spaces. For example, AI technology is beginning to be used to enhance the virtual social experience, such as introducing AI-driven virtual characters to accompany users in VR chat rooms, or using GPT models to generate personalized virtual spaces for users. These innovations are still in the experimental stage, but they demonstrate the evolutionary direction of metaverse social interaction: more intelligent environments, more emotionally interactive virtual characters, and closer integration with real-world content.

Overall, the metaverse of social networking in 2025 was in a period of low ebb and adjustment. The novelty of purely virtual social interaction had worn off for the general public, and demand had returned to rationality: users wouldn't linger in virtual spaces lacking high-quality content and genuine social value. This is evident in the fates of Horizon and Rec Room. Those who remained were clearer about their next steps: starting with improving content quality and community culture, they sought a clever way to integrate with real-world social interactions.

Hardware and Spatial Computing: The Rise of AR Glasses, VR Under Pressure to Transform

2024 was regarded by the industry as one of the "Year Zero" for spatial computing, with the release or launch of several heavyweight XR (extended reality) hardware products, which reignited the interest in this field.

The most eye-catching product in the first half of the year was Apple's Vision Pro—a high-end mixed reality headset that was released in limited quantities in the US in early 2024 and gradually rolled out to more regions in 2025. Due to its high price of $3,499 and limited production capacity, Vision Pro sales were limited. Apple CEO Tim Cook admitted that the Vision Pro is currently "not a product for the mass market," but only caters to early adopters. Even so, Apple will continue to invest in ecosystem development in 2025: releasing a visionOS system update and rumors of potential improved hardware, including an upgraded M-series chip and an improved headband.

Beyond the high-end market, Meta's Quest series continues to dominate the mass-market VR market. The Meta Quest 3, released at the end of 2023, saw strong sales for two consecutive holiday seasons in 2024 and 2025 thanks to its improved performance and comfort. According to IDC data, Meta held approximately 60.6% of the global AR/VR headset and smart glasses market share in the first half of 2025, far ahead of the second tier.

Sony's PlayStation VR2, launched in early 2023, underwent significant price reductions and market positioning adjustments in 2025. Due to lower-than-expected sales of only a few million units in its initial year, Sony lowered the official price of the PS VR2 by approximately $150-200 USD starting in March 2025, bringing it down to $399.99, hoping to increase sales volume with a more affordable price. This price reduction strategy led to a sales boost during the holiday season, and cumulative PS VR2 sales are expected to approach 3 million units by the end of 2025. However, compared to the Quest's wireless portability, the PS VR2 remains constrained by the console platform, and its content ecosystem is primarily limited to core console gamers.

Another highlight of XR hardware in 2025 is the rise of consumer-grade smart glasses. The Ray-Ban Meta smart glasses (second generation), a collaboration between Meta and Ray-Ban, were released that year, introducing an integrated display for the first time to achieve basic AR functionality. Shipments of these "lightweight AR glasses" without a full immersive display surged this year. An IDC report indicates that global shipments of AR/VR headsets + smart glasses are expected to reach 14.3 million units in 2025, representing a year-on-year increase of 39.2%.

Meta's Ray-Ban model, with its resemblance to ordinary sunglasses and practical features such as photography and AI, is highly favored by young urban users. Overall, the XR hardware market in 2025 exhibited a "hot at both ends, cold in the middle" pattern: the ultra-high-end Vision Pro sparked innovation but had limited sales; the mid-to-low-end Quest and smart glasses achieved high sales volume, capturing the majority of the market; while traditional PC VR, expensive HoloLens 2, Magic Leap 2, and other enterprise AR devices had relatively modest influence, mainly used in small-scale applications within the industry.

At Meta Connect 2025, Meta emphasized the introduction of generative AI into XR, enabling users to generate virtual scenes and objects through voice. Apple is also exploring the integration of Vision Pro with AI assistants and more natural human-computer interaction. This indicates that AI+XR will become a new investment hotspot in 2026. Secondly, industry collaboration and standards are accelerating: for example, the OpenXR standard will gain wider support in 2025, different brands of headsets will gradually become compatible in terms of content and accessories, and Microsoft, Valve, and others are also preparing to launch new devices to the market.

It is worth mentioning that the application of XR hardware outside the industry is constantly expanding: in 2025, XR solutions in the medical and education fields will see significant growth, with more and more hospitals using VR for psychological therapy and schools using AR to assist teaching. These successful cases in professional fields will, in turn, prove the value of XR technology and lay the foundation for the long-term popularization of the device.

Digital Humans and Virtual Avatars: Technological Advancement and Commercialization Exploration

The field of digital identity and avatars in the metaverse continues to develop in 2025, with numerous companies worldwide offering services for creating and managing virtual avatars. Among them, ZEPETO from South Korea's NAVER Z and the European startup Ready Player Me (RPM) are typical examples.

As of 2025, ZEPETO had accumulated over 400 million registered users, with approximately 20 million monthly active users. While this scale is smaller than gaming platforms like Roblox and Fortnite, it is quite considerable within the metaverse vertical community. ZEPETO's user base is primarily Generation Z, especially women, who use the app to create personalized 3D avatars, dress up in virtual fashion, and socialize and take photos in various scenes within the app.

In 2025, ZEPETO continued to attract a large number of fashion and entertainment brands, including collaborations with luxury brands such as GUCCI and Dior to launch limited-edition digital apparel, and partnerships with several K-Pop idol groups to host virtual fan meetings. These activities boosted platform activity, allowing ZEPETO to weather the user decline following the pandemic. Official data from NAVER Z shows that, including ZEPETO and sticker tools, its overall product line had 49.4 million monthly active users, and this growth trend continued in 2025.

Ready Player Me (RPM), a cross-platform avatar creation tool, garnered significant attention after being acquired by Netflix in late 2025. Since its founding in 2020, RPM had raised approximately $72 million in funding, with investors including a16z. RPM allows users to create 3D avatars that are compatible across multiple virtual worlds and was previously integrated into numerous games and applications. Prior to the acquisition, RPM had over 6,500 developers using its SDK, supporting RPM avatars in various products.

Following the acquisition of RPM, Netflix plans to utilize its team and technology for its expanding gaming business, allowing Netflix users to have a unified virtual avatar across various games. Furthermore, RPM announced it will shut down its standalone avatar service to the public in early 2026 to focus on internal integration.

Meanwhile, Snapchat, a veteran player in the social media field with over 300 million daily active users, is also trying to further enrich the metaverse of Bitmoji, such as testing the application of generative AI to virtual avatars and launching a Bitmoji fashion store. Bitmoji is an application and service where users create cartoon avatars of themselves and use them as stickers; most Snap users use it to customize their avatars.

Meta is also investing in building its own Avatar system: in 2025, Meta will introduce more realistic "Codec Avatars" in Quest and social applications, allowing them to be used across Facebook, Instagram, and Quest. It will also launch a series of AI virtual avatars endorsed by celebrities to interact with users in Messenger, striving to create a digital identity system that runs through its social and VR platforms.

Industrial Metaverse: Most Practical and Accelerates Value Realization

Compared to consumer-facing products like games and VR glasses mentioned earlier, the industrial and enterprise-level metaverse, primarily targeting businesses, is projected to be the most realistic and fastest-growing area in the metaverse field by 2025. Following initial hype, industries such as manufacturing, engineering and construction, and medical training have become the first adopters of industrial metaverse technology. In terms of market size, research reports indicate that the industrial metaverse market will reach approximately $48.2 billion in 2025, and is expected to grow rapidly at a CAGR of 20.5% from 2025 to 2032, reaching $600 billion by 2032.

A prime example in this industry is NVIDIA's Omniverse platform, which is expected to be widely used by large enterprises for digital twins and simulations by 2025. Reports indicate that manufacturing giants such as Toyota, TSMC, and Foxconn are leveraging Omniverse to build digital twins of their factories to optimize production line layouts and AI training. The extensive collaboration within the Omniverse ecosystem also reflects the investment from industrial giants—industrial software companies like Ansys, Siemens, and Cadence are deeply integrating with NVIDIA to establish data and visualization standards.

Traditional industrial software vendors like Siemens are also actively promoting the Industrial Metaverse concept in 2025. A joint survey by Siemens and S&P Global indicates that 81% of companies worldwide are already using, testing, or planning to implement Industrial Metaverse solutions. This demonstrates the industry's strong emphasis on technologies such as digital twins, IoT + AI, and immersive training.

In specific examples, in 2025, BMW expanded its virtual factory project, using digital twins to simulate the commissioning of new model production lines, reducing the time to market for new products by 30%; Boeing used HoloLens and digital twin technology to design and assemble complex aerospace parts, claiming to have reduced the design error rate of new aircraft models by nearly 40%. In the medical and training fields, VR/AR applications are also becoming more mature: several hospitals in the United States adopted VR therapy (such as the RelieVRx system) to help patients recover in 2025, and 84% of medical professionals believe that AR/VR will have a positive impact on the industry.

Furthermore, multinational energy companies are using VR for hazardous work condition training, and logistics companies are using AR glasses to assist in warehousing and picking, both achieving good ROI. For example, a French nuclear power company reported that VR training reduced the accident rate of new employees by more than 20%. This year, several government-supported digital twin projects for cities have also been launched, such as Singapore upgrading its national 3D digital model for planning, and Saudi Arabia building a massive metaverse model for the NEOM new city, all of which are practical achievements within the industrial metaverse framework.

Therefore, the industrial metaverse has largely moved beyond hype and become a natural extension of digital transformation. However, its development also faces significant obstacles: incompatibility between different vendors' solutions and the existence of data silos have led some companies to adopt a wait-and-see attitude; data security and confidentiality are concerns for companies when connecting production systems and cloud simulations, and resolving these pain points will take time. Therefore, despite a high application rate, many applications remain at the Proof-of-Concept (PoC) or small-scale stage, far from widespread adoption across the industry.

Encryption and the NFT Metaverse: Burdened by History, Difficult to Make a Comeback

Following the bursting of the bubble in 2022-2023, the speculative frenzy surrounding NFT virtual land and blockchain games subsided. However, the "core players" in this sector did not give up exploring, and the integration of new projects and technologies has attempted to revitalize the industry. Established decentralized virtual worlds such as Decentraland and The Sandbox continue to operate, but user activity is nowhere near its peak.

According to DappRadar data, the total NFT transaction volume of the entire Metaverse project in Q3 2025 was only about $17 million, of which Decentraland's quarterly land transaction volume was only $416,000, with 1,113 transactions. Compared to the peak of millions of dollars per land sale in 2021, this represents a significant decrease. Regarding user activity, DappRadar data as early as 2022 showed that Decentraland had fewer than a thousand daily active users, with a daily concurrent user count ranging from a few hundred to a few thousand, only reaching tens of thousands during major events.

This "ghost town" phenomenon also exists in projects like The Sandbox. However, the project teams are making efforts to maintain the community through DAOs and events: Decentraland established the Metaverse Content Fund in 2025, with the DAO allocating $8.2 million to support events such as Art Week and Career Fair, hoping to attract creators and businesses back. The Sandbox, on the other hand, has established partnerships with Universal Pictures and others, launching virtual scenic areas themed around IPs like "The Walking Dead" in an attempt to attract new users.

Furthermore, the biggest event in the crypto metaverse in 2025 was undoubtedly the launch of Yuga Labs' Otherside. As the company behind BAYC, Yuga's Otherside virtual world, three years in the making, officially opened to web access in November 2025, requiring no NFTs for entry. On its first day, it attracted tens of thousands of players to the new "Koda Nexus" area, creating a rare moment of high popularity in the Web3 metaverse. It is reported that Yuga also integrated an AI world generation tool into Otherside, allowing users to create 3D game scenes through dialogue, enhancing the richness of user-generated content (UGC).

Compared to other metaverse paths, the metaverse ecosystem integrating cryptocurrency and NFTs carries a heavier historical burden. At the previous peak, excessive financialization and speculative narratives dominated product promotion and user expectations, ultimately causing many participants to suffer real and significant financial losses.

As a result, the metaverse ecosystem based on crypto assets and NFTs faces more significant trust barriers in terms of public perception. This sector is struggling to shake off stereotypes of "asset speculation," "disconnect from real needs," and "poor user experience." Even though some teams are still trying to return to content and user experience, it is almost impossible to escape the situation of being ignored and win the trust and widespread participation of the mainstream user group in the short term.