Welcome to 2023! So far no new wars or plagues or other apocalyptic stuff has happened, so maybe it’ll be a good one!
Anyway, it feels like just about everyone who writes newsletters has to do a prediction edition every year, and who am I to buck the trend? Plus I feel like given the quickening developments with AR, VR, and AI, 2023 will be a big year for tech and the metaverse. So with that in mind, let’s get to some predictions.
Apple’s headset will be an amazing product but won’t add meaningful revenue
I have no doubt that Apple’s going to deliver a product that has a fantastic UX in a number of ways.
First, they’ll nail the first-time user experience. One thing none of the existing headset makers are especially great at is giving you a magical experience as soon as you put on your headset. There’s setup, account configuration, finding an app to try, yada yada yada. It’s maybe ten minutes before you’re really immersed in something, and that’s a long time when you’re really hyped up about a new product.
Apple is really, really cognizant of the importance of first impressions, and I have no doubt that when you put on their headset for the first time, it’ll be a few seconds, not a few minutes, before you say “wow.” My guess is that it’ll start off with some AR - while you set up, they’ll have robots dancing in your living room or something. I also suspect they won’t make you do the Oculus tasks of drawing a boundary and setting the floor height - those things will be automatically defined to avoid beginning the experience with tedious administrative tasks.
With all that said, I think Apple will face a couple of major challenges. First is the price point - most of the predictions I’ve read have it coming in at $1000-1500, which feels about right (if not low; I wouldn’t be shocked if it turns out to be $1999). That’s a lot of money! And unlike their $>1000 iPhones, the headset won’t have telecom companies offering subsidies and the ability to pay over 36 months. That’s particularly tough when it’s an entirely new category of product, which brings me to the next issue.
People aren’t going to know what they need this for. Folks like myself will buy it because we’re nerds and excited about the space in general. For most people, though, that’s not going to do it. One of the most important steps in getting people to buy something is to get them to picture themselves using it. That’s why car dealerships want to get you in for a test drive - they want you to experience what the car is like, but they also want to make it really easy for you to picture yourself driving to the beach in your new convertible.
The only thing most folks can picture themselves doing in an AR/VR headset right now is playing videogames, and at the high price tag, that’s probably not enough to convince a lot of people to buy it, particularly in its first iteration. I don’t know how much they’ll pitch it as an enterprise tool, but that feels like it’s going to be a hard sell initially.
Given those challenges, my expectation is that Apple won’t sell enough of these to make a huge difference when they report earnings. To be clear, I think that’s okay. While this isn’t a new category, it’s also still not one that’s well defined. The iPhone came in as people were already watching phones add more and more functionality, plus you had BlackBerry in there showing the value of the enterprise use case. AR/VR headsets still have a long way to go, and as Apple helps to define their future, I expect the percentage of the population that owns one to rise rapidly through the 2020s.
AI and the metaverse will become increasingly intertwined
One thing I’ve talked about a few times is how one of the big advantages of AR is that because you’ll be wearing AR glasses all the time (once they get to the right form factor, of course), it’ll be able to offer a push model of information delivery, instead of a pull one. When you walk into a meeting and see someone you haven’t met before, it can tell you who they are in that moment, as opposed to you pulling out your laptop and looking them up on LinkedIn.
AI is going to be critical to that experience, because it’s the piece that will be able to process the information that it’s receiving from your glasses and determine what’s important. It knows I don’t need to see information on my best friend when I see him, as opposed to new folks I’m meeting in a business context. That filtering is going to be important to ensure that you’re not overwhelmed with useless information.
It’s also going to be important as a component of the way you communicate your needs to your AR device. If you have to pull out some kind of controller and scroll through menus in order to do anything, that’s going to significantly lower the utility of AR. If you can mutter an instruction under your breath (or better yet if it can anticipate what you need), that’s where it’ll feel like magic.
Let’s say you’re in a mall and need to find the closest bathroom. If you have to pull out a controller, find the Google Maps app (or the mall’s website), scroll around and find the bathroom, then tell it to direct you there, then you might as well just get out your phone. If you can just say, “find the nearest bathroom” and you’ve got turn-by-turn directions in front of your eyes, that’s going to be something you’ll use a whole lot.
AR has the potential to be an incredibly efficient way of delivering information, but that’s not sufficient to make it a society-wide daily-use tool. There has to be a way to determine what information will be delivered and when that makes sure we can seamlessly get what we need (and hopefully things we didn’t even know we needed) - that’s the gap that should be filled in by AI.
That was all a bit high level, so to clarify what I expect in 2023, I think that we’ll increasingly see AI underpin the way we communicate with our AR and VR devices. Specifically, I think we’ll see Meta implement a lot of what’s shown in this video:
Remember that one? What’s crazy is that was before DALL-E and the other generative AI models. Between those and the large language models that have sprung to prominence in the last few months, we have the tools to allow you to really control AR and VR experiences in a meaningful way with natural communication. I wrote earlier about how Apple’s going to have a magical experience, but this is a place where Meta could deliver one too. They’ve clearly been thinking about it, and I think 2023 will be the year where they bring it to life.
NFTs and crypto won’t play a major part in the metaverse
Will they come back eventually? I suspect so, at least in some form. In 2023, though, I think they’ll both largely be ignored. They’ve lost their sheen of coolness, and they just don’t have the utility to play a major part in anything this year.
A lot of folks have waxed poetic about how the metaverse will be a place where people can escape their day to day lives and become someone else. While that might be true in a personal sense, it very definitely won’t be in a financial sense. You can create all the technical financial tools you want, but when there’s economic activity happening in the metaverse, governments will want to be aware of it and to tax it.
The idea that the metaverse will somehow avoid that even though the internet didn’t feels silly to me. The metaverse is an extension of the internet. Just as mobile changed the internet and created a huge number of new use cases, so will the metaverse. But just as the government knows when you engage in a financial transaction on your phone, it will know when you engage in a financial transaction on your AR headset.
Brands will stop trying to engage with the metaverse
We saw a lot of really, really stupid stuff from brands in the metaverse this year. I don’t even really mean to criticize them when I say that - they tried something brand new, and the stuff they tried turned out to be kind of dumb. That’s okay! We should all try new things that are unfamiliar to us, and when we do, some of the things we try will turn out to be stupid. That’s how we learn, and it’s totally fine.
That said, I think that there was a bit of FOMO in there - one or two restaurants decided to create locations in the metaverse, and suddenly others were scrambling to get on the train. Bud Light decided to throw a metaverse Super Bowl party, so everyone else had to (to be clear I don’t know if Bud Light was the first to do it and am too lazy to check, but the point stands regardless).
This year, it’ll be less doing new stuff for novelty’s sake, less FOMO, and more thought into why AR and VR make sense for each company. Those that have highly engaged fans who are the type of folks who will rush out to buy Apple’s headset should probably have a presence there. Those with the type of products that lend themselves to an immersive, three-dimensional experience will embrace the real utility that the metaverse offers them. The ones that are trying to sell food and beer, which are decidedly terrible products for virtual worlds, will probably pull back on metaverse stuff.
So there you have it - my predictions for 2023. I’d love to hear your thoughts! Leave a comment, shoot me an email, or tweet at me! Happy new year!