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Metaverse frenzy cools as tech giants shift focus to AI-generated content

BusinessMetaverse frenzy cools as tech giants shift focus to AI-generated content

The hype surrounding the metaverse, a technology buzzword that promises a future where virtual and physical worlds are seamlessly connected, is beginning to wane as major tech players downsize their workforces in metaverse-related businesses and shift their focus towards the rapidly growing sector of artificial intelligence-generated content (AIGC), according to experts.

The concept of the metaverse involves creating a shared virtual environment or digital space using technologies such as virtual reality and augmented reality. However, companies are becoming more pragmatic about the metaverse, which demands significant investment in technology R&D and talent training, as well as improvements in related laws and regulations, the experts added. Meanwhile, the rapid development of generative AI, represented by ChatGPT, is expected to accelerate the metaverse’s growth.

Chinese VR headset manufacturer Pico, owned by tech firm ByteDance, has reportedly laid off some teams by as much as 30%. Pico stated that it is making organizational adjustments and that normal operations will not be affected. It has also reduced its sales target for 2023, although specific figures have not been disclosed.

Media reported that Tencent Holdings will adjust some teams after launching part of its extended reality team in June last year. This comes as many foreign tech firms, including Meta and Microsoft, announced layoffs or streamlined their metaverse teams amid rising fears of a global recession.

Major tech firms are shifting their focus towards the AIGC sector, which is likely to impact the investments in the metaverse that once captivated the global tech industry, said Shen Yang, a professor from Tsinghua University. The metaverse and AIGC are not at odds with one another, as tech companies’ increased investment in AIGC will provide a strong impetus for the development of virtual humans, Yang added.

Although PwC highlighted the metaverse as the next frontier, predicting it will be worth $1.5 trillion in 2030, experts caution that the supporting technologies, application scenarios, and business models are still in their infancy. Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University’s International Business School, believes that the rapid development of AIGC and ChatGPT-related technologies will lead to a lower threshold of content creation, which will be conducive to building a content ecosystem for the metaverse. However, he stressed the need for expanding the industrial application scenarios of the metaverse and pooling more resources into improving cloud computing and data processing capacities.

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