Dubai bullish on metaverse as hype fades

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The metaverse has been seen as the silver bullet that would revive businesses in Dubai and the wider Gulf region in the post-pandemic era. 

The UAE is still bullish about its potential, but Mohammad AlBlooshi, CEO of the Dubai International Financial Centre (DIFC) Innovation Hub, told an event on Monday that enthusiasm for the nascent technology has “toned down a little bit” since the beginning of this year.

“Similar to any other new technology, there is always a [time] where hype slows down to give way to more sustainable adoption and growth, which is what has happened with the metaverse,” he told AGBI.

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“But we still believe in the metaverse and its use cases and how it can help and enable businesses, and our lives as well. We are still pushing on metaverse and its applications.”

The DIFC launched its “Metaverse Platform” in January to attract entrepreneurs worldwide.

An accelerator that supports startups received around 160 applications from countries including the UAE, the UK and India. The financial free zone hopes to raise that figure to 500 “in the coming years”.

Last year Dubai announced its Metaverse Strategy, with an aim to place the emirate among the top 10 metaverse economies in the world.

Its goal is to attract more than 1,000 companies, generate up to $4 billion in extra GDP by 2030 and support as many as 40,000 virtual jobs.

The numbers being forecast are huge. A report by PwC’s Strategy& said the metaverse will contribute $15 billion annually to Gulf economies by 2030.

However, funding around the world for metaverse startups is starting to dwindle. According to Crunchbase data, investments in startups has dropped 77 percent from the final quarter of 2021 to the first quarter of this year.

AlBlooshi does not believe that the focus on AI is behind this.

“We continue to see strong interest coming from the market in both these technologies,” he said, adding that he viewed them as “complementary technologies”.

“There is a large AI aspect at the back-end for up-and-coming metaverse startups, which helps fuel growth and scale,” he said.

DIFC Innovation Hub

Magnitt, a venture capital data platform based in Dubai, said both technologies were important but the value AI has added to the region in terms of real-world applications was about three or four times the impact the metaverse has had.

“For investments in the metaverse to grow, real-world applications and corresponding customer adoption are needed to deliver investor interest,” a Magnitt spokesperson told AGBI.

“It’s also important to note that AI and the metaverse can work hand in hand but, in a capital-constrained environment, investors would be more inclined to play in the AI pond till the metaverse proves itself and delivers some global heroes.”

Lucy Chow, general partner at the WBAF Angel Investment Fund, said AI and the metaverse can easily co-exist. She believed both will have an impact in the highly competitive fintech sector, as companies look to scale up their market share by offering a more personalised user experience.

Despite the more muted environment, some businesses remain keen to harness the virtual world to transform their operations. 

Ibrahim Najjar, vice president of IT at Dubai ports operator DP World, said it is exploring and implementing the usage of metaverse applications for its services, including simulations of warehousing and terminal operations in “digital twins” – 3D virtual versions of physical assets – as well as for container and vessel inspections.

Dubai developer Damac Properties last year said the metaverse will boost its sales.

General manager Ali Sajwani said the metaverse would enable customers to explore digital twins mirroring real world assets and make purchases remotely.

Sandra Helou, co-founder and chief commercial officer of Metapolis, wrote for AGBI that the technology requires more education.

“We’ve seen companies rush to establish a metaverse presence, but often with little understanding of how the new model applies to their business strategy,” she said.

A June 2022 study from the Pew Research Center found that 54 percent of respondents predicted the metaverse would be a fully immersive aspect of daily life for at least half a billion people by 2040, while 46 percent said it would not.

The metaverse may no longer be flavour of the month, but many still believe in its future.