The metaverse could bring a significant boost to the EU economy, according to a new report released today from LSE Consulting, based at the London School of Economics and Political Science (LSE).

BMW Group, Ericsson, Bosch Sensortec, STMicroelectronics, and IKEA Retail (Ingka Group) are among the European companies pioneering these technologies, and laying foundations for the region’s metaverse ecosystem.

The report sets out recommendations to ensure European businesses can grasp this opportunity, including establishing an Airbus for the metaverse, training and retaining top talent, and fostering demand, scale, and open innovation across the EU Member States.

The metaverse could bring a significant boost to the EU economy, according to a new report released today (25 April) from LSE Consulting, based at the London School of Economics and Political Science (LSE).

Metaverse technologies - which enable immersive and virtual environments to converge with the physical world - include virtual and mixed reality (VR and MR), artificial intelligence (AI), as well as dedicated platforms, apps and experiences, allowing end-users to immerse themselves in, e.g., retail experiences, games, real-time supply chain simulations or 3D imaging-guided medical diagnosis.

Establishing a mature ecosystem around these technologies in Europe could curb economic trends and help establish Europe’s credentials as a global innovation leader, according to the report.

Since 1990, the EU’s contribution to the world’s GDP has dipped from 25 per cent to 14 per cent. Moreover, the US had a net inflow of foreign direct investments (FDI) that was almost three times higher than the EU in 2022.

According to interviews and observations from early adopter European firms and technology organisations - including BMW Group, IKEA Retail (Ingka Group), Bosch Sensortec and Ericsson - Europe has a lot of the existing ingredients necessary to unlock these opportunities, including access to a technologically adept global market that specialises in advanced manufacturing, strong value chains, and close cooperation between industry and research technology organisations.

However, it also faces several major impediments including limited venture capital funding, fragmentation of research networks, low industry awareness and misconception about the scope and growth potential of metaverse technologies.

In response, the report details three broad recommendations for the incoming European institutions and Member States to prioritise:

Establishing a European innovation network – an Airbus for the metaverse. Thanks to its research and development leadership and existing clusters in many related areas – including photonics, micro-LEDs, materials, semiconductors, and mobile infrastructure – Europe can become the global industrial hub to build the next iteration of the web.

The study argues for the creation of a pan-European industrial cluster for immersive technologies – an “Airbus” for the metaverse – backed by long-term funding to tackle the innovation challenge and to foster integration and manufacturing of immersive technologies in Europe. An immersive tech cluster would ensure speed and agility in deploying these technologies and help establish common specifications.

Ensuring access to skilled talent in Europe. Skills supply planning should prioritise training first-class researchers and engineers, as foundational research and commercialisation are critical for metaverse development.

Besides creating separate silos with “metaverse degrees”, immersive technologies and their applications (like digital prototyping and twinning) should become integral parts of the curriculum for civil engineers, architects, and other technical degrees. Competitive industrial and services regions should aim to establish vocational, SME and on-the-job training for Web 4.0 and immersive tools.

Fostering demand, scale, and open innovation. Scale, necessary for EU innovations to be competitive and commercially viable, could be achieved with governments’ support for public procurements in IT, standardisation, and removal of barriers that affect member-state market access.

Opportunities here could include unlocking the European Media and Audiovisual Action Plan, support for alliances like the VR/AR Industrial Coalition and EU’s active involvement in international standard-development organisations and developer forums like the Metaverse Standards Forum.

Metaverse technologies are already being utilised across various sectors

As well as highlighting policy recommendations, the report brings together case studies from leading European industry and technology firms which are building components for the metaverse technologies and exploring some of the most innovative uses of virtual and augmented reality.

BMW Group is utilising metaverse technologies for its upcoming electric vehicle plant in Debrecen, Hungary (opening in 2025), optimising manufacturing systems like layouts, robotics, and logistics with real-time digital twin simulations.

IKEA Retail (Ingka Group) introduced IKEA Kreativ, a digital design experience enabling customers to visualise living spaces thanks to spatial computing, machine learning, and 3D mixed reality technologies. IKEA has reported a 98 per cent increase in the likelihood of customers purchasing furniture after using the app. 

Bosch Sensortec GmbH developed the world’s smallest MEMS accelerometers (used to measure movement without a fixed reference) and a smart connected sensors platform to enhance immersive experiences by accurately capturing and translating users' movements into virtual environments.

Ericsson spearheaded an industry collaboration between AT&T, NVIDIA, Qualcomm, Wevr and Dreamscape Immersive aimed to enhance immersive experiences leveraging 5G and edge technology. The project focused on validating the building blocks of VR mobility including computing power, unrestricted movement, and multi-user experiences to improve future applications.

STMicroelectronics develops a broad technology and product portfolio, from microcontrollers and microprocessors, MEMS and image sensors, to optics and photonics, which will power the metaverse. For head and hand tracking and movement in an immersive environment, the accuracy and speed of sensors is critical to ensure realistic user interfaces.

Commenting, Dr Elitsa Garnizova, Director of the Trade Policy Hub at LSE Consulting said: “This research analyses Europe’s strengths in metaverse deployment and identifies potential impediments to further progress, drawing on the contributions of European firms and research technology organisations. It showcases how fostering European talent and skills in immersive technologies is vital, as well as strengthening EU's role in promoting human-centric design.”

Andrew Lloyd, Vice President and Head of Government & Policy Advocacy at Ericsson said: "Ericsson’s decision to join this project is a step in enhancing European competitiveness in the tech industry and it shows our commitment to Europe’s digital future. Extended reality (XR) and metaverse is about redefining interaction with digital spaces, and networking with 5G and edge computing is a powerful combination to enable that.”

Michael Barngrover, Managing Director at XR4Europe said:“This research is timely as the strategic opportunities presented by virtual worlds are prioritized in Europe more than ever before. There are multiple viable paths ahead for the continent. The recommendations presented by LSE's researchers contribute to discussions around the paths we must consider and build upon the critical work undertaken by programmes like Horizon Europe and Digital Europe to further develop Europe's global leadership in virtual worlds.”


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