It’s easy to assume that the metaverse bubble has burst. In late March, Walt Disney Co. disbanded the 50-member unit that was developing metaverse strategies for the group. Two months earlier, Microsoft announced that it would shut down Altspace VR. Sony and Byte Dance’s Pico unit both admitted that VR headset sales would be far lower in 2023 than projected. Meta Platforms is stepping up layoffs, and the metaverse hardly features in its CEO’s recent speeches—even though the company rebranded itself around the concept less than two years ago.

Pessimists could argue that the reasons for these companies’ disillusionment is structural, and that we should have seen this deep winter coming. The metaverse was certainly a managerial flight of fancy: According to Forrester’s 2022 surveys, 75% of chief marketing officers were excited about the metaverse, whereas only 35% of consumers showed interest. The metaverse ecosystem also never took off, perhaps due to greed. Complementors’ pickings have been slim. The development of tools and creator rewards programs were underwhelming last year, and metaverse platforms, such as Horizon Worlds, have retained nearly 50% of transacted revenues. And, looking beyond developers, complementary technologies disappointed: VR headsets are clunky and often cause motion sickness, leading to limited uptake.

But, despite these chilly signs, look again—and data suggests that the metaverse is awake and green shoots abound. The number of total monthly active metaverse users crossed 500 million in the first quarter of 2023—up from 373 million in the corresponding quarter of 2022, according to Metaversed. Gaming platforms, such as Fortnite and Roblox, drew 200 million users a month, on average, last year, with the latter meeting its daily-active-user growth target of 23% by the end of 2022.