This report aims to help the NSW Government prepare to meet the risks and opportunities created by 'the metaverse': a collection of immersive, computer-generated virtual worlds in which to 'work, play, relax, transact and socialise' . Should the metaverse and its enabling technologies mature quickly and become widely adopted, the NSW Government aims to be ready to
- build, procure and deploy metaverse applications to improve services and outcomes for NSW residents while minimising the risks of unintended harms
- provide data and digital infrastructure to support NSW businesses in developing metaverse applications and services
- address legal and regulatory gaps to ensure safe and equitable outcomes from NSW residents' interactions with the metaverse
- otherwise adapt to residents' increasing interactions with metaverse applications created by third parties.
This report identifies some of the first steps in preparing for these responses. It outlines
- what the metaverse is and what technologies underpin it
- the properties of metaverse applications that differentiate them from other digital technologies
- potential use cases for metaverse technologies that are relevant to the NSW Government
- risks from misapplication of these technologies by the NSW Government and others along with potential approaches for minimising those risks
- recommendations for capability-building activities that the NSW Government can undertake.
Overview of the metaverse
The science fiction author Neal Stephenson introduced the original conception of the metaverse in his 1992 novel Snow Crash: a single, persistent virtual world rendered by computers and accessed with a virtual reality (VR) headset by millions of people simultaneously. In the original conception, the metaverse was a kind of immersive internet, acting as the globally dominant location for commerce, recreation and socialising . A person in a VR headset could shop on a virtual high street, meet friends at a bar or visit a museum without leaving their living room. The virtual worlds in films such as The Matrix (1999) and books such as Ready Player One (2011) draw heavily from Stephenson's original vision.
A closely related concept, also originating from science-fiction, is the augmented reality (AR) metaverse. In the AR metaverse, the structure and geography of the metaverse is still informed by the real world. Wearing AR glasses augments the real world with layers of additional computer-generated content such as objects and scenery that are a near-permanent presence for users. Vernor Vinge's 2006 novel Rainbows End is a famous depiction of such an AR metaverse.
The metaverse today
The science fiction visions of the metaverse do not exist today, nor, we believe, are they likely to be built in the near future.
Today, 'the metaverse' has come to be used as an encompassing term for all the various multi-user virtual environments that currently exist. These are created by different companies and individuals with different technologies on different platforms. They are generally accessible by the internet but not connected to each other. 
The encompassing use of the term metaverse means that two different virtual worlds might both claim to be part of the metaverse but have very different properties. Not all virtual worlds that claim metaverse membership even use virtual reality for instance, instead being accessible from phones and desktop computers.
Defining the metaverse
The variety of applications claiming metaverse status and the many definitions proposed in the literature presents a problem for anyone wishing to discuss the metaverse in detail. This report uses a definition based on 3 key properties shared by many metaverse applications:
A metaverse application is a software application incorporating a persistent virtual world, a sense of presence, and social interaction.
We believe these properties are the most relevant to understanding the sources of the novel opportunities and risks for the NSW Government that the metaverse creates.
Key metaverse properties
- A persistent virtual world: Metaverse applications are typically built around a computer-generated 'world' with locations users can travel to and objects they can interact with. Changes made to the world are perceived by all users and are not reset when a user logs off. The world may pause when no user is logged in, or it may continue to run and evolve.
- Presence: Metaverse applications aim to give users the sensation that they are 'really there', typically through the use of virtual or augmented reality headsets. 
- Social interaction: Metaverse applications allow multiple users to join virtual worlds together and interact, for example by having virtual meetings, playing games or co-designing objects or buildings.
How different combinations of these properties may be found in different applications is depicted in diagram below.
The metaverse's novel opportunities and risks
Metaverse technologies are powerful, even at their current stage of development. Today a metaverse developer can create a virtual world that is completely under their control, from the sights and sounds, to the laws governing people's behaviour and even to the laws of physics. This world can then be joined by users from all around the globe, each of whom increasingly feel 'present' in the world and with each other through virtual and augmented reality.
The capability to create a shared virtual world such as this presents new opportunities to improve work and life across many domains. However, it also creates risk of harm. Some of these risks are already well established in areas like social media and online gaming, but others will only emerge if and when metaverse adoption becomes more widespread.
The details of these opportunities and risks depend heavily on the specific use-case to which metaverse technologies are applied. Metaverse applications with government involvement lays out these opportunities and risks for specific application areas relevant to the NSW Government. However, common themes from that section are summarised below.
The metaverse and its enabling technologies can be applied across diverse domains including education, health and aged care, art and tourism, asset management, emergency services and community support. The private sector is already engaging with these; Case Western Reserve University is using AR to teach students about anatomy , for example, and Harley Davidson is using AR to improve customers' retail experience in their showrooms. 
Many of the examples outlined in Metaverse applications with government involvement cross over multiple application areas. The metaverse's propensity for immersive remote social connectivity is applicable to both people in nursing homes and correctional facilities. Immersive VR training simulations could be useful for the emergency service, medical surgeries, and even for general workplace behaviour monitoring. New possibilities for VR and AR art could be beneficial for tourism, or even as a new medium for artists to showcase their work.
The following application classes capture opportunities this report has identified as relevant to the NSW Government.
Metaverse application classes
- Bringing people together: By recreating many of the visual cues present in real social interaction that are missing in phone or video conferencing, metaverse applications have the potential to improve the social benefits of remote interactions compared with less-immersive alternatives like video conferencing.
Example: Virtual family visits to aged care facilities during Covid-19 lockdown
- Assisting people with contextual information about their activities: Mixing virtual elements into real-world environments presents opportunities to combine real- and virtual social interaction, or to provide information to users that they can process without diverting their attention.
Example: 'hologram' of remote expert collaborating with field maintenance worker
- Providing people with a model of the real world: Many circumstances such as emergency response require training or planning with high-fidelity models of the real world. The ability to have shared, immersive experiences in such models may increase their effectiveness compared to presenting them on flat screens, and also present an alternative to real-world simulacrums in some circumstances.
Example: VR emergency and disaster response planning tool
- Giving people experiences: Metaverse applications allow for shared interactions with virtual spaces and objects, and could be used to create virtual art galleries or performances, or to augment existing spaces with digital sights and sounds.
g. virtual art gallery
- Transporting people out of their environment: There are some circumstances where escaping an unpleasant but unavoidable environment may be desirable: the immersion metaverse technologies provide may be one mechanism to achieve this
g. virtual outdoor worlds for people stuck in confined spaces
Every particular metaverse use case will have its own unique risks. However, the properties of metaverse applications and the technologies on which they are built suggest some risks that may be common across many use cases.
Metaverse application risks
- Exposing people to anti-social or abusive behaviour: Intimidation, bullying and abuse have not been eliminated from social media and online gaming, and may prove similarly prevalent in an immersive metaverse world. The impact from these negative interactions may also be magnified by the immersive properties of the metaverse. A virtual 'physical' assault, for example, may feel real to the victim, or at least engender similar physical and emotional responses to an assault in the real world. 
- Excluding people: The hardware and software required to access metaverse applications is still expensive, and the quality of network infrastructure required to access it is not universally available. Many people also cannot wear headsets for an extended period without feeling dizzy, such as for example, recent mothers experiencing postpartum vertigo. This lack of universal accessibility to the metaverse creates a risk that important services or opportunities are denied to some parts of the population.
- Violating people's privacy: Metaverse applications are a rich source of personal information for developers. In addition to developers being able to track where a metaverse user goes and who and what they interact with, headsets used to access metaverse applications can gather detailed biometric information that may include body language, facial expressions and gaze direction.  Such highly detailed information about the behaviour, attention and physical or emotional responses of users creates novel and significant privacy risks.
- Manipulating people: Metaverse applications may give developers powerful levers with which to influence the behaviour of their users. Social media platforms already do this with attention-maximising algorithms that learn from users' clicks and reading behaviour , but metaverse applications have both richer sources of data about users and more direct control over their experience. The risk is that such increased information and control will lead to some of the same problems caused by algorithmic control of social media such as increased polarisation, promotion of extremist material, addiction and fragmentation of a shared worldview. , 
- Denying people a livable environment: Creating a virtual world will be cheaper and faster than improving the real world in many cases. This creates a risk that metaverse applications are used to paper over poor-quality environments in facilities such as prisons or aged-care homes.
- Increasing social anxieties and disconnection: An over-reliance on VR as an interaction tool may impact peoples' ability to communicate in the real world. By engaging heavily in an immersive virtual 'life' that can be curated and superimposed onto a user's online personality, users risk creating an identity disconnection that may elevate social anxieties in the real world. , 
The future of the metaverse
Longer-term visions of the metaverse imagine a single virtual world or a set of highly connected virtual worlds that users can move between at will.  They imagine large fractions of the population using augmented reality devices on a daily or near-constant basis, with semi-permanent overlays providing contextual information about many aspects of their daily lives. ,  Some metaverse materials even predict brain-computer interfaces that will bypass sensory organs like ears and eyes and interact directly with the brain to achieve otherwise impossible degrees of immersion. 
This longer-term vision for the metaverse (closer to the one illustrated in science fiction) is highly speculative, and we believe is too far away and too uncertain for the NSW Government to begin preparing for in earnest. This report therefore focuses on current-term and near-term metaverse technologies.
In the near term, we believe that metaverse applications will remain unconnected or only loosely connected through means such as the ability to move an avatar or certain items between worlds. Current restrictions on the number of users that can be simultaneously present in metaverse virtual environments (currently in the 10-1000 range) will be relaxed gradually, probably involving compromises that constrain the visual fidelity of avatars further away, or limit the number of avatars that can be present in a given area.
Audience of this report
This report is intended for the NSW Government policy makers, ministers and staff.
Navigating this report
Following this introduction, Properties of metaverse applications examines the metaverse and metaverse applications in more detail. It describes some key properties of metaverse applications that differentiate them from various existing technologies and approaches.
The metaverse today gives an overview of the metaverse as implemented today, with a particular focus on the investment in metaverse technologies around the world and uptake amongst governments, private industry and the public. It also provides a brief description of some applications of metaverse technologies already in use by the NSW Government.
Metaverse applications with government involvement examines potential future metaverse applications that may involve the NSW Government in different ways. This may be as a creator, user or regulator of metaverse applications or enabling technologies. The section focuses specifically on the potential harms and benefits associated with applying metaverse technologies in different contexts.
Finally, last sections present the report's recommendations. Recommendations for building understanding and expertise presents approaches for the government to build knowledge and experience metaverse technologies. Recommendations for augmenting systems and infrastructure recommends augmenting existing NSW Government infrastructure and systems to better integrate with the metaverse, focusing on digital identity and the NSW Spatial Digital Twin. The report concludes with recommended elements of metaverse governance in Recommendations for developing governance.
 Moy, C. & Gadgil, A. Opportunities in the metaverse: How businesses can explore the metaverse and navigate the hype vs. reality. (2022).
 Benford, S. Metaverse: five things to know – and what it could mean for you.. The Conversation (2021).
 Mestre, D., Fuchs, P., Berthoz, A. & Vercher, J. Immersion et présence. Le traité de la réalité virtuelle. Paris: Ecole des Mines de Paris 309–38 (2006).
 Case Western Reserve University. HoloAnatomy® Software Suite | Case Western Reserve University. HoloAnatomy® Software Suite
 Pimentel, K. Theia Interactive’s Harley Davidson AR Experience Showcases the Potential of Real-time. Unreal Engine (2018).
 Klaris, E. & Bedat, A. M&E Journal: The Biometric Data Concerns Around Virtual and Augmented Reality Applications. Media & Entertainment Services Alliance (2018).
 Bhargava, V. R. & Velasquez, M. Ethics of the Attention Economy: The Problem of Social Media Addiction. Business Ethics Quarterly 31, 321–359 (2020).
 Boxell, L. The internet, social media, and political polarisation. VoxEU.org (2017).
 Haidt, J. Why the Past 10 Years of American Life Have Been Uniquely Stupid. The Atlantic (2022).
 Aboujaoude, E. Virtually You: The Dangerous Powers of the E-Personality. (W W Norton & Company, 2012).
 Kim, M. The Good and the Bad of Escaping to Virtual Reality. The Atlantic (2015).
 HYPER-REALITY. (2016).