On the battlefield of the metaverse, Mickey Mouse and Clippy are the latest fallen warriors.

Between mass industry job cuts and a trance-like shift toward generative AI, it's a strange time for the tech world. And as often happens during widespread changes and reorganizations, some efforts get lost in translation — one of those efforts being, it seems, the huge rush toward the metaverse after Facebook-turned-Meta CEO Mark Zuckerberg rebranded the entirety of Facebook around the concept.

According to reporting from The Wall Street Journal, both Disney and Microsoft, two big-name companies that had skin in the game, have made big moves to wind down their metaverse operations, with Disney slashing its entire division and Microsoft shutting down a VR organization that it had acquired in 2017.

"A lot of companies and businesses understandably feel like if they need to reduce headcount or spending overall, this kind of category would seem to be a pretty easy target," Scott Kessler, a tech-sector analyst at research firm Third Bridge Group, told the WSJ.

"All these things that are going on, related to AI, seem to be able to be used and leveraged now," he continued. But when it comes to the metaverse, "no one," Kessler told the WSJ, "knows when you're going to reach critical mass."

In other words, AI looks like money now, while metaverse looks like "maybe money at some point, just not for a while." And investors, apparently, don't prefer the odds of the latter.

It's a telling industry shift, considering that back in just October, Zuck and his falsified metaverse legs were still 100 percent in his AR vision, with a number of high-profile corporate partnerships featured prominently at Meta's Connect 2022 to show for it. And Microsoft, notably, was one of those new and featured partners; Zuckerberg used the conference to posit the metaverse as the future of work, and Microsoft, which has long had its grips on workflows everywhere, was a feather in Zuck's legless cap.

Disney, for its part, had been working on metaverse projects as far back as 2021, when Zucko used the previous year's Connect to first detail his AR vision for reality, with former CEO Bob Chapek doubling down on his trust in the metaverse in an October 2022 company call.

Microsoft's change-of-metaverse-heart is particularly interesting, given the timeline. It's one thing for Disney to see the writing on the pixelated wall. But Microsoft CEO Satya Nadella was onstage with Zucko praising the Facebook founder's digital world just three short months before it invested a reported $10 billion into OpenAI (and meanwhile layed off 11,000 Microsoft employees.)

Cast a wide net, and see what you catch, we guess — and then throw the smaller fish back.

To Nadella's credit, though, even Zuck himself has pared back his metaverse efforts — at least in lip service — to focus on AI. In a recent call, according to the WSJ's tally, the meat-smoking CEO used the word "AI" 28 times, while the word "metaverse" was said a comparatively measly seven times. A similar shift was seen in Zucko's most recent apology-slash-explainer note to his most recently slashed workforce, which mentioned AI four times, meanwhile just mentioning the metaverse twice, and only in the same breath as AI.

Elsewhere, the WSJ also notes that sales of Meta's Quest 2 headsets were down last quarter — a number that feels in line with the number of people that can be found in Horizon Worlds, which apparently just isn't that many.

Of course, Meta's got more money in the metaverse pot than anyone, so it'll be interesting to see where the nascent industry. As for Microsoft and Disney? We know where Microsoft stands, and we wouldn't be surprised to see the pair team up to use AI to generate the "even greater next storytelling frontier." Or something along those lines.

READ MORE: The Metaverse Is Quickly Turning Into the Meh-taverse [The Wall Street Journal]

More on the metaverse: The Metaverse Industry Is Already Going Belly-up, for Reasons We Can't Imagine


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