The Metaverse: Buzzword or Long-Term Trend for Luxury Goods?
Interest in the 'metaverse' rises and falls by the month, but could the medium offer a valuable opportunity to luxury goods brands?
We hear from Lars Rensing, CEO of Web 3 and blockchain solutions provider Protokol, who offers his perspective on the metaverse and its potential.
The metaverse – a type of digital universe – has been springing up in a range of places. Perhaps most well-known through Meta’s offering, the metaverse has so far been successful in engaging digital native users, particularly gamers and Gen Z, as well as for luxury brands who want to tie their physical offerings with virtual ones, as in the case of Coke’s metaverse drink. Because of this, it may seem like the metaverse is simply a new marketing buzzword, set to eventually disappear.
However, the technology has actually been around for some time in a number of industries, just under different branding. Take the gaming industry for example. The wildly successful Pokémon Go game, which launched in 2016, introduced elements of mixed and augmented reality to let players catch Pokémon in their own surroundings, as well as turning local landmarks into important in-game locations. Similarly, 2017 saw the launch of Decentraland – a digital world in which users can purchase ‘virtual real estate’, portions of land within the world that come in the form of NFTs.
The technology has actually been around for some time in a number of industries, just under different branding.
One of the biggest industries embracing the metaverse is the luxury goods industry. We are already seeing luxury brands turning to the metaverse – for instance, Balenciaga launched a collection of outfits in Fortnite for players to purchase and have their avatars wear in-game. In the long-term, the metaverse has the potential to allow luxury goods brands to expand their audience and diversify their offerings, as well as create new opportunities for advertising and sponsorships. However, in order to get the most out of the digital universe, brands need to approach it with the right mindset, seeing it as part of a long-term strategy rather than the latest trend to jump on.
Unlocking the metaverse with NFTs
Luxury brands can use the metaverse to engage with potential new customers in the mediums they already exist in, especially when it comes to younger audiences. For example, luxury brands can create exclusive NFTs – blockchain-based digital collectibles which cannot be forged, replicated or destroyed – in the metaverse for collectors and customers. In a survey earlier this year, 23% of Millennial respondents collected NFTs, so for brands that want to speak to younger audiences, engaging with digital collectibles within the metaverse is a key long-term strategy.
This is particularly important for luxury goods, as the blockchain technology underpinning the metaverse can provide an innovative new way for tracking authenticity. In the luxury space, it is important for collectors to be able to prove that they own physical luxury items, and even more important to prove those items are legitimate. The same is true for digital items. Blockchain-based NFTs allow customers to prove their ownership of digital assets thanks to blockchain’s transparent and secure recording of ownership data.
Luxury brands can use the metaverse to engage with potential new customers in the mediums they already exist in, especially when it comes to younger audiences.
Brands can harness this advantage by giving consumers new ways to interact with the luxury industry, simultaneously creating more brand loyalty with customers and opening up new revenue streams. We saw this when Louis Vuitton launched an adventure game in the metaverse where players could win exclusive NFTs. The game had over two million downloads, opening up new levels of engagement with customers and new revenue streams for the brand.
Luxury brands could also personalise the NFTs they offer in order to further engage with customers. This could look like having the buyer’s name included on the piece – for instance, an NFT replication of a designer jacket with the customer’s name on the back, which their avatar could then wear across popular games in the metaverse. This could create stronger communities of customers for luxury brands, and could even let them reach new audiences within different games.
Events going digital
Luxury brands could also include the metaverse in their long-term events strategy. Not only would this let them add new events to their rosters, but virtual events in the metaverse can help to engage global audiences to create a more connected and loyal consumer base. This could look like consumers attending virtual catwalks and fashion shows in the metaverse – like we saw with Decentraland’s Metaverse Fashion Week – as well as shopping for and purchasing digital outfits in the form of NFTs to wear to these events. Events in the metaverse are also future-proofed against any potential disasters that affect in-person events, such as weather conditions or future pandemics.
Virtual events can also add additional value for customers. Brands can create NFTs for customers to buy as tickets for the event. Not only can they then access the event, but they also have a permanent reminder of it. This would be an exclusive collectible, which would give it additional value, and as such encourage greater interaction and loyalty with brands. Brands could also create experience NFTs to go alongside these events – for instance, fashion customers could purchase a NFT to access a virtual meet and greet with a designer. All this leads to innovative and more effective ways to engage an audience and provides a better customer experience, especially for younger generations who now make up the most significant part of a luxury brand’s market.
Like any brands, luxury goods companies must continue to evolve and innovate in order to stay relevant and pull in new audiences. The metaverse is one key tool in their ability to do that. Rather than treating the tech as a mere trend, luxury brands can see the metaverse as a second home for their products. By treating the metaverse like the innovation it is, luxury brands can move past buzzword accusations and set themselves up for the digital future.