Once hailed as the next frontier of human interaction, the metaverse seemed to lose steam after its initial burst of excitement. 

Vague promises, unclear financial benefits and costly hardware hampered its mass adoption. But in Germany, a second wave of interest is brewing.

State governments and research institutions see the potential of metaverse technologies to revolutionize entertainment, social interaction, public administration and industrial processes.

The metaverse is an emerging virtual space built on blockchain, virtual reality (VR), augmented reality (AR), the Internet of Things (IoT), artificial intelligence (AI), big data, spatial computing and digital twins. It promised to create a new era of connectivity and innovation in many areas, bridging the gap between the physical and digital realms.

Will this second chance be different? By focusing on practical applications within public services and industry, Germany aims to understand the true potential of the metaverse.

Can the metaverse change government services?

Public administrations and governments could benefit from the metaverse and the integration of their services with the metaverse, according to Günter Wenzel, team leader of the Building Culture Innovation research unit at Germany’s Fraunhofer Institute for Industrial Engineering IAO.

The group is currently exploring the potential of metaverse in many areas, particularly in public administration.

“We understand the metaverse as the next evolutionary stage of the internet and the superimposition of real and virtual space, where citizens in the various metaverse ecosystems (commerce, leisure, work, mobility, etc.) would gain open but secure access to data exchange and communication with the authorities through the connection to public administration services,” Wenzel said.

Citizens will be able to access these services from anywhere via smartphone, desktop, VR or AR glasses, using cryptographic technology that secures transactions, actions, access rights and role profiles.

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According to Wenzel, in this scenario, government agencies will no longer communicate with citizens at a physical counter but rather through the metaverse and will be able to provide the vast majority of services regardless of location.

For managing real estate and infrastructure in municipalities or cities, the administration can create a digital twin of a building that can be used to carry out AI-assisted processes for monitoring and maintenance, as well as demolition, conversion and new construction.

Testing VR and XR for public administration

For Wenzel, it’s still difficult to say whether any of this will make government services more efficient, as it depends on the use case.

However, a collaborative initiative of the Ministry of the Interior and Sport in Lower Saxony, the University of Münster and PricewaterhouseCoopers has already showcased the advantages of using immersive technologies in public administration.

Over a series of multiday events in 2022, wherein managers and stakeholders formed their quarterly strategies, 11% of participants were more satisfied with workshop outcomes, 16% found that communication had improved, and 58% felt a stronger sense of camaraderie among colleagues.

In addition to VR collaboration rooms, the state government of Lower Saxony is also working on another project to test immersive technologies. 

The new project, “Extended Reality,” aims to explore the potential of extended reality (XR) technologies for public administration services. Lower Saxony is also planning further scientific studies to provide information on the added value of collaboration in VR versus mixed reality (MR) in the context of project work and communication with citizens.

These projects are inspired by the strategy on Web4 and virtual worlds adopted by the European Commission on July 11, 2023, to “steer the next technological transition and ensure an open, secure, trustworthy, fair and inclusive digital environment for EU citizens, businesses and public administrations.”

A spokesperson for Lower Saxony’s Ministry of the Interior and Sport told Cointelegraph that the results of the upcoming projects on extended reality will be fundamental in determining future performance requirements for headsets. 

“In the years 2024 and 2025, the focus in Lower Saxony will continue to be on pilot projects for the use of these technologies, as the market is developing very rapidly and, in particular, framework conditions such as full compliance with the GDPR must first be clarified.”

Risks and challenges of metaverse

Despite the positive statistics, there is still some uncertainty about using immersive technologies in public administration in Lower Saxony. As the spokesperson noted, it’s crucial to acknowledge not only the potential but also the limitations and dangers these technologies present. “Their integration into planning processes requires a careful and thoughtful approach.”

Internal risks demand particular attention. Implementing the necessary hardware and software requires robust cybersecurity and data protection.

The state government also aims to evaluate the technology’s impact on employee health and data handling practices.

Headset availability and suitability pose a further challenge. While the market offers various solutions, not all align with administrative needs, primarily due to the aforementioned security and data concerns.

Finally, educating employees and citizens and equipping them with the necessary skills for long-term, sustainable use of immersive technologies is the foundation for successfully harnessing the potential of the metaverse. But it’s also not an easy task.

“The public administration will have to learn which application areas the immersive technologies can best use. Based on this, the government can also support technological development so that an open, secure, trustworthy, fair and inclusive digital environment is guaranteed for citizens, businesses and the public administration.”

Regional initiatives drive innovation

Lower Saxony and other German state governments are trying to explore metaverse technologies.

In 2023, the Fraunhofer-IAO and the Fraunhofer Institute for Manufacturing Engineering and Automation teamed up with the Virtual Dimension Center (VDC) in Baden-Württemberg to launch a large-scale metaverse project called CyberLänd.

Funded by the Baden-Württemberg Ministry of Economic Affairs, Labor and Tourism, the initiative focuses on exploring the political, industrial and social potential of the metaverse for the southern German state.

Above all, the project team wants to contribute to a deeper understanding of this complex topic: What role will the metaverse play in Baden-Württemberg? What course of action should the government and businesses take? How can public participation be facilitated?

According to CyberLänd, the metaverse is an important opportunity for Germany to safeguard its position as a technological powerhouse. In the future, extended reality, software solutions for industry business processes and public services, the virtualization and combination of 3D content and decentralized, interoperable data platforms will have a major role to play.

However, building a robust ecosystem requires better collaboration between German industries and their digital technologies.

Another positive example of a regional initiative that produces pilot projects focusing on metaverse and AI is the Innovation Park Artificial Intelligence in Heilbronn. The planned Metaverse Lab will offer a variety of educational opportunities and practical use cases for people and companies to learn about and experience the metaverse.

Large companies invest in industrial metaverse

The German industrial sector is also realizing the benefits of the metaverse for development and production. Siemens Energy is already using the metaverse to model power plants, predict maintenance needs, and potentially save operators $1.7 billion annually by minimizing downtime. In 2023, Siemens also invested more than $1.1 billion in Germany, half of this amount in a new campus in Erlangen. The campus will serve as a global development and manufacturing center, as well as a hub for technology activities related to the industrial metaverse.

In 2024, Siemens also partnered with Sony to create another solution for the industrial metaverse that will combine Siemens’ Xcelerator portfolio of industrial software with Sony’s new system for creating spatial content. The new solution will enable designers and engineers to create and explore design concepts in a boundless, immersive workspace.

Similarly, BMW is working on a digital factory powered by Nvidia’s Omniverse platform, where physical construction will begin only after extensive design and validation of digital models.

Metaverse is dead — long live the metaverse?

The metaverse offers a wide range of valuable applications. Germany is experiencing a second wave of interest fueled by a shift toward exploring its practical applications in public administration and industry.

Public administration sees the potential for improved citizen engagement, service delivery and collaboration between employees, as demonstrated by early initiatives like VR collaboration rooms in Lower Saxony and the CyberLänd project in Baden-Württemberg. Similarly, industry giants like Siemens and BMW leverage the metaverse for enhanced design, testing and production processes.

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Of course, challenges such as data security, legal uncertainties and hardware limitations remain and require careful consideration. Planning, employee training and collaboration between government, industry and researchers are critical to navigating these hurdles successfully, said Wenzel from Fraunhofer-IAO, adding:

“Strictly speaking, the metaverse is still a promise for the future, as not all the necessary sub-technologies have reached the required maturity. However, sub-technologies and business models can already be used in smaller bundles and should always be developed and implemented from the perspective of the application case.“