There's been a lot of snark about what exactly the metaverse is.

The metaverse, a byproduct of covid isolation, mass produced virtual reality headsets in the burgeoning Web3 space.

If we think back a couple of years, we have huge companies investing in metaverse divisions and hiring chief metaverse officers and whole strategies around this.

Banks started opening branches in the metaverse.

Celebrities made headlines buying property in the metaverse.

ETFs around the metaverse trade started popping up.

We were all still sort of under pandemic lockdown.

So there was over exuberance in metaverse because people were looking to socialize and it wasn't that easy to do in real life.

At the peak of the metaverse hype cycle, Citibank estimated the space could hit $13 trillion in valuation by 2030.

Microsoft threw its hat in the metaverse ring.

Even Web3 and crypto projects capitalized on the trend with decentralized metaverses like Decentraland and Sandbox.

People would take this sort of idea of a digital asset, apply that to the 3D virtual worlds and huzzah, you've got the metaverse.

But when it comes to the metaverse, no one stakes their claim on the space more than Facebook.

Facebook is announcing its name change officially, now changing its corporate name to Meta.

The next platform and medium will be even more immersive, an embodied Internet where you're in the experience, not just looking at it.

In October of 2021, Facebook CEO Mark Zuckerberg placed his trillion dollar social media company at the forefront of the metaverse conversation, investing heavily in its reality lab segment, kicking off the entire Wall Street hype cycle.

There was genuinely a need and a desire at the time for Facebook, the company, to rebrand into something else.

Metaverse was Facebook's answer to an increasingly online population, with Zuckerberg estimating a billion users by the end of the decade.

So that leads us to ask, where is everybody?

If you build it, they will come.

I think we're all still waiting to see if people will come.

To understand the metaverse and Meta's role in space, first we have to figure out what exactly it is.

The metaverse cannot be defined.

Kind of like a virtual digital world universe, if you will, in which people can essentially have like their Internet counterpart, essentially like an avatar of yourself, live inside this virtual world.

An open-ended, interconnected world with user-driven content and the potential for the users to cross into other platforms.

Trying to define what a metaverse or the metaverse is, was kind of one of the biggest issues that actually surrounded the metaverse overall as concept, because it was never really universally agreed upon.

While it's difficult to nail down an exact definition of a metaverse, the term predates meta and virtual reality headsets.

Online platforms like Second Life came about in the 2000s and are considered early examples of metaverses, virtual spaces where players could assume digital identities and interact with other players from around the globe.

Originating primarily from the video game space, more recent examples of metaverses include multiplayer games like Fortnite and Roblox.

Even Blizzard's World of Warcraft could be defined as a metaverse.

You have Fortnite and Roblox, which are like 2D versions of a metaverse where they are these kind of immersive open world platforms.

So if metaverses already existed, why did the term gain popularity in 2021?

Well, a lot of it has to do with the advancement of virtual reality.

If you're talking to a CTO of a big Fortune 500 company and trying to say what technology trends you need to be up to date with, at that time, VR, the metaverse, kind of checked all of those boxes.

There was a bit of a sense in 2020 and into 2021 that this was a technology that was ready, that it was finally going to hit the big time.

Because, I mean, we've had a lot of false stones in virtual reality in the past.

There have been many times when people said, oh, this technology is only a year or two away from being the next big thing.

And that is where Reality Labs played a huge role for meta.

Created in 2014 after its acquisition of VR startup Oculus, Meta started ramping up investment in Reality Labs over the past five years.

In December of 2021, two months after changing its name, Meta officially launched its online multiplayer virtual reality game, Horizon Worlds.

You know, by the end of the decade, we hope to basically get to around a billion people in the metaverse doing hundreds of dollars of commerce each.

A goal that is looking less and less achievable.

I think of the big moment as when the pictures came out of Mark Zuckerberg's avatar in Horizon Worlds a couple of years ago.

And it's this incredibly low quality avatar.

And people are like, this is what we're supposed to be getting excited about.

This is what you're saying is the future.

Well, who would want to go into this space?

The problem with meta versus people assumed that they would be developed instantaneously.

And even Facebook meta trying to do it in an environment where they're a publicly traded company and have to show success on a platform that's been too fast for a company as well funded as meta was.

Now, three years after changing its name, Meta's metaverse has largely fallen out of the tech conversation.

Google searches for the term metaverse are near flat just three years after hitting a peak in October of 2021.

Undoubtedly, the last couple of years, we've seen the metaverse hugely drop away in popularity.

Now Reality Labs faces an eye-watering $58 billion in operating losses since 2020.

An insider reports from 2022 revealed Horizon Worlds was averaging around 200,000 monthly active users in its first year, less than half of Meta's original goal of 500,000.

If it didn't do this, and it decided just to be a social company, which it absolutely could have done, you know, it would have saved it billions of dollars in terms of what it spent on Reality Labs.

So what happened?

Why didn't people flock to the metaverse?

Well, there's been a lot of finger pointing, but most arguments come back to the same conclusion.

No one's really figured out a solid use case for the broad adoption of a metaverse.

The audience wasn't necessarily there at the time.

And so hence, I think you see that sort of pullback away from it.

Medic pitched the metaverse as a place to both work and play.

Companies could host a virtual meeting.

You could socialize with friends and play games in Horizon Worlds.

Shopping and e-commerce were also part of that early vision.

They're promised all these amazing experiences like Ready Player One, you know, that it could be a wider difference than what we're actually seeing when we get in the device.

To put it simply, people really didn't care.

Video game players had their own metaverses already, and the metaverse hype cycle ended up being, well, a lot of hype.

And it wasn't just meta who felt the metaverse bubble pop.

Web3 metaverses like Decentraland and Sandbox saw trading activity fall significantly on their site after 2022.

Sandbox's unique active wallets, a way to measure daily active users on the platform, fell below 100 in early 2024.

Meaning less than 100 people were active on the platform day to day. 98 percent of those projects are totally dead today.

The other 2 percent of them have lost, you know, 95 percent of their market cap since the highs of 2021.

And Wall Street's been pulling back, too, with several metaverse ETFs closing up shop over the past two years.

We continue to hope that somebody is going to figure out the killer use case for VR, and even Apple has struggled to do so.

I don't think metaverse anytime soon, using hardware that's readily available now, is going to be happening.

So why keep investing in something that is an obvious cash burn?

Well, when it comes to meta's metaverse, this isn't the metaverse.

This is the metaverse, or at least it's a piece of it.

The metaverse, it's this broad thing, it's not just virtual and augmented reality, although those are going to be some of the new major computing platforms.

When it comes to defining its own metaverse, MetaSense Horizon Worlds isn't the entire metaverse.

It's only part of the larger interconnected metaverse ecosystem.

That includes a software like Horizon Worlds and the Horizon operating system, as well as wearables like Oculus VR headsets and Meta's newest edition.

It's a Ryanair glasses.

We've been investing for this for a long time just because we are asking the question sort of what comes after the smartphone.

It's what many consider to be Meta's endgame, a foothold in the hardware space, a space that has previously eluded them.

So it's playing a long game with the hope that it pays off and the hope being it gives Meta that platform, the computing platform that they crave, a place where they can set the rules.

They don't have to abide by the rules of gatekeepers like Apple or Google.

They get to have their own walls, their own building and have their own developer ecosystem within this new computing paradigm.

Meta's Oculus headsets are the top selling virtual reality headsets in the world, capturing 60 percent of the VR headset marketplace.

Still, that's holding space in a seemingly declining market as U.S. companies responded the year prior.

Meta did not respond to CNBC's request for comment.

Not very many companies have the luxury of having, you know, an enormous amount of cash and having an incredibly powerful advertising business that provides them with a constant stream of money to be doing this, these investments.

I meet people every day who think Mark Zuckerberg invented VR, which is just a crazy notion.

It is through this that Meta can get its own hardware into people's heads, cutting out the middlemen of Apple and Google.

Earlier this year, Mark Zuckerberg sat down with the hosts of Acquired to discuss this exact topic, saying Meta controlling its destiny is strategically valuable.

I think we might be like twice as profitable if we own the platform or something.

So I think from that perspective, that's worth a lot, just from like a pure like dollars perspective, which is not primarily how I come at this stuff.

What Meta did was try to become the company that was building the hard part of the Metaverse, which was figuring out the hardware.

It's expensive, losing a lot of money doing it, but it's a bet that they're willing to take.

And controlling the hardware and software ecosystem also means access to two extremely profitable spaces that Meta is intimately familiar with, user data and advertising.

In-game advertising has grown by about 10% a year over the last several years, and it's about $140 billion industry today.

Meta's ad ambitions are much more grand than just saying, here's a new helmet to put on your character and dress up your avatar with, where Fortnite and Roblox are more kind of on that tier, where Meta is trying to do what they're doing with Facebook advertising, and they're trying to run the ecosystem.

All goes according to plan, you would have a big online economy going through these Metaverses, future Metaverses, both the physical with AR to the virtual world and, you know, full 3D VR.

That's where augmented reality comes into play, an arena big tech is investing heavily in.

Again, here's Mark Zuckerberg speaking with the Acquired podcast on his vision for AR.

Everyone had a phone before, replaced it with a smartphone, and then a lot of more people got smartphones.

If all we get is all the people in the world who already have glasses upgrading to glasses that have AI in them, then like, this is already going to be one of the most successful products in the history of the world.

So, and I think it's going to go a lot further than that.

Traditionally, we've thought about the Metaverse, or a lot of people thought about the Metaverse as specifically a 3D world and virtual reality.

But, you know, Meta has really made it a point to be, oh, AR, augmented reality blended into the physical world is a really important play.

That's an incredibly powerful thing.

If Meta is able to catch that position as a platform player for the next generation of computing, which is, I think, the real ambition here, that puts it in a totally different position to where it's been functioning so far.

So maybe we haven't seen the end of Meta's Metaverse ambitions.

Maybe the Metaverse didn't go anywhere.

It could just be another decade before we see the ultimate plans of reality labs come to fruition.

It's absolutely been, it's been easy to tease Meta and to kind of, you know, point the finger and maybe critique the investments.

And that's been a challenge for the company.

But I really, I think it's inarguable that if not the Meta, the category, I mean, it may not still be really even alive and kicking.