Structural challenges and implementation barriers
Despite impressive success stories and forecasts, substantial challenges remain. The lack of interoperability represents a key hurdle. There is no single metaverse. Technology giants like Meta and Microsoft are still vying for dominance in establishing a global standard. Interoperability and a cohesive metaverse world are lacking. As long as such standards are absent, many companies are hesitant to invest.
The metaverse landscape is diverse, with platforms built using different technologies and protocols. This diversity drives innovation but also creates barriers to interoperability. A consistent user experience across all platforms remains a challenge. Global collaboration is essential for a fully interoperable metaverse, and the involvement of major platforms could be crucial in this endeavor.
The IEC, through its dedicated Standardization Evaluation Group, is investigating standardization needs in the area of metaverse and related technologies. The primary goal is to establish a shared understanding and a uniform definition of metaverse and to develop a roadmap for further standardization activities. Working on common norms and standards helps to identify weaknesses and potential for misuse early on.
Technological hurdles persist. On the one hand, the computing power in many metaverse worlds is still insufficient to handle millions of users worldwide and the increasing graphical detail. On the other hand, user experiences still vary significantly depending on the hardware used. Modern VR devices do not offer a seamless user experience. They are either too heavy and tethered but powerful enough, or lightweight and wireless but laggy and weak. The devices fail to meet the diverse and varied needs of the target audience.
Implementation costs remain prohibitive for small and medium-sized enterprises (SMEs). So far, only very large companies are integrating the Omniverse platform into their existing processes. While the currently high costs for software and hardware integration could decrease, thereby opening up further use cases for SMEs, this process takes time. Marco Thull, Head of Marketing at igus, emphasizes the need to reach SMEs with limited budgets and expertise so they don’t miss out on future technologies.
Another structural problem concerns the lack of regulation. A user’s identity in the metaverse is linked to their cryptocurrency wallet. The absence of rules and regulations means that a user has no recourse to a regulatory authority. The responsibility for user protection lies with the platform. The lack of legal guidelines also means that the platform and its owners have a moral obligation to protect their users. Data sovereignty requires clear control rights for users. Sensitive user data must be stored on demonstrably secure platforms.
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Sustainability and energy consumption as critical factors
The sustainability dimension of the Metaverse is ambivalent. On the one hand, the Industrial Metaverse offers opportunities to increase sustainability through the optimization of production processes, the reduction of prototyping waste, virtual testing instead of physical trials, and the minimization of travel costs through virtual collaboration. On the other hand, the underlying infrastructure causes significant environmental impacts.
The energy demands of AI facilities are jeopardizing progress in the global energy transition. A recent study by the Öko-Institut, commissioned by Greenpeace, shows that the electricity consumption of data centers offering AI-supported services will be eleven times higher in 2030 than in 2023. At the same time, greenhouse gas emissions will rise from 29 million tons of CO2 equivalent in 2023 to 166 million tons. By 2030, AI-specific data centers will account for almost half of all data center emissions worldwide.
Blockchain technologies used for NFTs and decentralized metaverse platforms pose a particular environmental problem. Bitcoin’s annual electricity consumption is equivalent to the total annual energy consumption of Ireland. This energy is primarily derived from fossil fuels. However, solutions are on the horizon. The Proof of Stake method, intended to replace the currently established and energy-intensive Proof of Work, shows a significant improvement in terms of computing power and, consequently, energy consumption and CO2 emissions. ETH 2.0 is predicted to achieve an energy efficiency of 99 percent.
According to calculations by the Öko-Institut (Institute for Applied Ecology), water consumption for cooling data centers will quadruple between 2023 and 2030, from 175 billion liters of water worldwide to 664 billion liters. AI data centers, however, consume twice as much water as conventional ones. By 2030, the expansion of data centers and AI capacities could generate up to five million tons of additional electronic waste.
These figures underscore that artificial intelligence and the metaverse can only be valuable tools for climate protection if they themselves are operated in a climate-friendly manner. To limit environmental impacts, Greenpeace calls for mandatory transparency regarding the energy, water, and raw material consumption of AI systems. Efficiency standards should apply to data centers and AI applications and be identifiable through appropriate labels. Data centers should be integrated into renewable energy and heating networks without expanding nuclear power generation to meet AI’s electricity needs.
The business model of metaverse agencies
Alongside technological development, a new service segment is emerging: metaverse agencies that support companies in entering virtual worlds. These agencies offer a comprehensive service portfolio that differs significantly from consumer marketing.
In the B2B context, the offering initially comprises strategy development and consulting. To succeed in the metaverse, companies need a solid strategy tailored to their individual requirements and goals. Experienced teams analyze the current market position and identify potential growth opportunities within the metaverse. Subsequently, a comprehensive action plan is developed that concretizes goals and visions and makes them achievable.
A second area concerns technical implementation. Metaverse agencies develop virtual showrooms, digital twins, training environments, and collaborative workspaces. Presenting brands and products in the virtual world is a crucial aspect of metaverse marketing. Creative teams help create an engaging and unique presence in virtual environments that reflects brand identity and attracts potential customers.
A key component of metaverse marketing is the creation of interactive and immersive experiences. Agencies develop unique in-game events and activations tailored to the needs of the target audience. These events can include exclusive product launches, virtual concerts, or interactive games that offer users an unforgettable experience.
Performance marketing and analytics are another key focus. Success in metaverse marketing means continuously measuring campaign performance and making optimizations based on that data. Performance marketing experts help monitor the effectiveness of marketing activities across the metaverse and make data-driven decisions. Advanced analytics tools and methods provide detailed insights into campaign performance, identify key performance indicators (KPIs), and uncover areas for improvement.
The technological foundation is primarily comprised of two game engines: Unity and Unreal Engine. Unity is more frequently used for metaverse platforms because it is more cross-platform and lightweight. The development cycle and cost overrun are simply lower with Unity. Unreal is better suited for maximum performance and generally looks better, but it also requires powerful hardware to run smoothly. Metaverses are similar to MMORPGs, so it makes more sense to make the game accessible to less powerful hardware, which Unity does better. Unity also supports web support, a feature that was removed from Unreal Engine. Currently, only pixel streaming works, which is very expensive to host in a large-scale multiplayer context.
The long-term perspective: Productivity plateau
The question of where the Industrial Metaverse stands in the Gartner Hype Cycle is crucial for strategic investment decisions. While the Consumer Metaverse remains mired in the trough of disillusionment, the Industrial Metaverse has already entered the path of enlightenment. Practical applications have been identified, and the technology is beginning to deliver real value. Reputable applications are gaining traction, companies and developers are learning from failures, and standards, best practices, and the first stable business models are emerging.
Gartner predicts that the metaverse will enter a consolidation phase over the next five to ten years. During this time, practical applications will become established and the market will stabilize. The forecasts indicate that the path to the full plateau of productivity is still long. According to Gartner, the metaverse has a 10-plus year outlook to develop and become mainstream. These forecasts are reasonable given the available data and demonstrate that the path to the metaverse is still very long and complex. Despite all the hype, the trillions in projections, and the claims that we already have metaverses, the true metaverse will take many years to arrive because it requires numerous technological disruptions as well as its social acceptance.
As Jake Zim points out: If we truly believe in these technologies, we must commit to staying in the field for the next 10 years. Although we’ve come a long way, we’re still in the early stages and it will take many years before we finally see our dreams become reality.
For the short to medium term, from 2025 to 2027, the metaverse will likely establish itself in niche areas. The industrial metaverse and gaming will remain the main drivers, while consumer applications will grow more slowly. The integration of AI technologies will open up new opportunities and improve the quality of experiences. Mark Zuckerberg calls 2025 the year of truth for the metaverse. Meta plans to invest a further €62 billion, which shows that despite losses, the company is sticking to its vision, albeit with stronger AI integration and reduced expectations in the consumer sector.
In the long term, from 2028 to 2035, the metaverse could become a major digital infrastructure, similar to today’s internet. The successful integration of AI, improved hardware, and new use cases could lead to wider adoption. Blockchain-based digital economies could enable new business models. McKinsey estimates that the metaverse has the potential to create a market of up to $5 trillion by 2030, provided that regulatory harmonization occurs and a uniform tax system for digital transactions is implemented.
Strategic implications for companies
The economic analysis leads to clear strategic recommendations for various business categories. For fully digital companies like social media platforms and gaming firms, it is essential to be part of the metaverse. This also includes online retailers, who need to develop immersive shopping experiences.
For companies that manufacture tangible products, such as automotive and textile companies, the metaverse offers a unique opportunity to diversify and profitably expand their portfolio. Avatars wearing branded clothing in exchange for digital money transfers are already a reality. Presenting products in virtual showrooms, enabling virtual test drives or fittings, and integrating AR functions into marketing campaigns are becoming standard tools.
For companies that rely heavily on human interaction, expanding their business models into the metaverse will take the longest. Nevertheless, these companies should also monitor developments and experiment with pilot projects. The question is not whether, but when the technology will become relevant to their respective business models.
Manufacturing companies should assess the suitability of their redesign projects for implementation in a virtual environment. Projects can be made more efficient step by step, and virtual twins can become the standard. Investing in digital twins pays for itself over the entire lifecycle of equipment through improved planning, reduced downtime, optimized maintenance, and increased production capacity.
A wait-and-see strategy is no strategy at all. German companies should examine potential applications and closely monitor further technological developments, as Bitkom CEO Dr. Bernhard Rohleder emphasizes. There is a clear need for a visionary strategy that looks at least 10 years into the future, but starts now, says Rob Davis, Head of Innovation at Ogilvy.
The industrial metaverse requires collaboration. This virtual world is not being built by a single company or a few partners. Openness and interoperability are fundamental prerequisites for building the industrial metaverse, as Timo Gessmann, CTO of Schunk, explains. Companies should therefore participate in the development of standards early on and establish partnerships along the value chain.
The silent revolution beyond the hype
The hype surrounding the consumer metaverse was overblown, that much is undeniable. The vision of a Second Life for the masses, where people spend most of their time in virtual worlds, seems more naive than ever today. Meta paid a heavy price for maintaining this illusion, incurring losses of over $71 billion. But while media headlines proclaim the failure of the metaverse, a fundamental transformation is taking place in the factories, design offices, and planning departments.
The industrial metaverse is no longer a futuristic vision, but a present reality with measurable economic impact. BMW launches virtual production two years before physical construction, PepsiCo increases throughput by 20 percent through digital twins, and Siemens offers a platform with its Digital Twin Composer that identifies up to 90 percent of potential problems before physical changes are made. These concrete successes are based on a fundamental insight: the metaverse is not an entertainment platform for consumers, but a production tool for industry.
The economic dimensions are considerable. An increase in German GDP of 66 to 71 billion euros by 2035, productivity gains of 12 percent for metaversely skilled workers, a reduction in investment spending of 10 to 15 percent, and a doubling of production capacity compared to conventional plants – these figures do not describe a hypothetical future, but rather developments that have already occurred or are imminent.
The integration of artificial intelligence further accelerates this transformation. AI is not just an add-on, but the backbone of the industrial metaverse. It enables the generation of synthetic training data, the optimization of complex simulations, predictive maintenance, and the intelligent control of autonomous systems. The convergence of AI, digital twins, IoT, cloud computing, and immersive technologies creates a completely new quality of industrial production.
The challenges remain substantial. A lack of interoperability, high implementation costs, inadequate standards, data protection and security concerns, as well as significant energy consumption, necessitate coordinated efforts from industry, policymakers, and research institutions. The need for global cooperation in standards development is evident, as is the urgency of ensuring that small and medium-sized enterprises (SMEs) are not left behind.
Global competition is intensifying the pressure to act. China is already mobilizing its industrial policy and diplomatic influence to challenge Germany’s leadership position in the industrial metaverse. US companies have a long track record of successfully integrating internet products into industry. Germany and Europe must combine their strengths in precision engineering and industrial excellence with digital innovation to remain competitive.
The economic reality of the Industrial Metaverse refutes the pessimistic diagnosis of the failed Metaverse project. The consumer hype may be over, but the industrial revolution has only just begun. While Meta is scaling back its Reality Labs and cutting its budget, BMW, Siemens, PepsiCo, Mercedes-Benz, and numerous other industrial companies are investing heavily in digital twins and virtual production environments. They are doing so not out of ideological conviction or technological enthusiasm, but based on sound business calculations. The return on investment calculations are positive, the competitive advantages evident, and the risks of non-adoption too high.
The Industrial Metaverse is progressing through the Gartner Hype Cycle faster than expected. It has largely overcome the trough of disillusionment and is on the path to enlightenment. The plateau of productivity is in sight. The hype is over. The real value creation is beginning now.
