Metaverse Hits Sudden Brake Amid 'Endemic' Threshold

After Social Distancing Lifted
Rapid Decline in User Numbers and Time
Growth Slows but Potential for Increase
Companies Accelerate Business Expansion

[Asia Economy Reporter Seungjin Lee] With the COVID-19 endemic (periodic outbreak of infectious diseases), the usage rate of metaverse (extended virtual world) applications (apps), which showed high growth until the first quarter following online video services (OTT), has recently sharply declined.

Sharp Decline in Users of Zepeto and Roblox

According to mobile data analysis platform Mobile Index on the 23rd, since the lifting of social distancing measures last month, the usage time and number of users of major metaverse apps have rapidly decreased. For Android users, Naver Zepeto recorded a total usage time of 34,400 hours on March 19. However, it decreased to 31,000 hours on April 2 and further dropped to 26,600 hours on April 30, nearly a 10,000-hour decrease within a month. On the 14th of this month, it showed a continuing downward trend with 25,200 hours.

The world's number one metaverse service, Roblox, also saw its total usage time decrease by nearly 300,000 hours over two months. Roblox's total usage time was 673,800 hours on March 19 but dropped to 396,000 hours on the 14th of this month.

Weekly Active Users (WAU) also sharply declined. Zepeto recorded 133,708 users from April 9 to 15, the lowest number since the first week of July last year (130,126 users). Roblox also saw a 17.8% decrease compared to the previous week, with 773,678 users during the same period, marking the lowest point in 10 months since the last week of June last year.

This decline is attributed to the resumption of normal school attendance for teenagers, the main users of metaverse apps, which reduced smartphone usage time, and the lifting of social distancing measures that led to more active outdoor activities.

Strong Growth Until the First Quarter

Although the growth of metaverse services has slowed due to the endemic, the potential for growth remains high. According to a report by market research firm Data AI, avatar social apps represented by Zepeto increased total downloads from 11 million in the first quarter of 2020 to 38 million in the first quarter of this year. As of the first quarter of this year, Zepeto was the most downloaded avatar social app, followed by Bird, Oasis, and Makerblocks.

The report indicates that these apps are primarily driven by Generation Z (born in the mid-1990s to early 2000s). According to a survey conducted in March targeting U.S. iPhone users, Zepeto users from Generation Z used the app 80% more than the average monthly active users (MAU). Particularly, the analysis showed that domestic users of avatar-based social apps preferred graphic and design-related apps 5.5 times more than general users. They also showed 4.7 times higher preference for photo and video-related apps and 4.5 times higher preference for entertainment apps such as karaoke.

"Still Metaverse"

Although metaverse services are slowing down, major domestic IT companies are accelerating their expansion in related businesses. LG Uplus recently entered the metaverse market, launching ‘Virtual Office’ and ‘Kids Zoo’ services specialized for specific customer targets such as office workers and young children. LG Uplus plans to fiercely compete with companies like Naver and SK Telecom, which have secured the metaverse market by targeting niche markets.

SK Telecom is focusing on the global expansion of its metaverse platform Ifland. To launch Ifland in Europe, SK Telecom is collaborating with German telecom operator Deutsche Telekom to develop metaverse content and conduct marketing targeting customers. The two companies also plan to establish a joint venture (JV) that will serve as a forward base for metaverse business in the European region.

NHN Edu, a subsidiary of NHN, is developing the educational platform ‘I am School,’ which has 6.7 million members, into an educational metaverse. To this end, it recently secured an investment of 32 billion KRW from Notic Investment and BNW Investment.