On LVMH’s most recent earnings call, Chairman and CEO Bernard Arnault noted that the metaverse may present opportunities for the company, but that it is “not interested in selling virtual sneakers for 10 euros” and that “we have to be wary of bubbles.” He may be underestimating the potential the metaverse holds for his brands.
While the metaverse is more than just gaming, gaming is currently the most relatable element of the metaverse. It is estimated that there will be more than 3 billion gamers in the world by 2023. The Asia-Pacific, the heart of the world’s luxury market, is not surprisingly home to the highest number of gamers, at 1.5 billion, who generate a whopping $78 billion in revenue. And it’s not just young men—41% of gamers in the US are women.
Emerging metaverse platforms, which includes gaming platforms like Roblox, cannot be ignored by luxury brands. Not only do they offer luxury companies a completely new way to expand their global presence, but they also enable the creation of unique collaborations. Interactive virtual stores that rivet the attention of consumers, particularly younger generations of luxury goods consumers, will be the future of “phygital” experiences.
Knowing what we know today about the power of social media, wouldn’t most luxury brands jump at the chance to be pioneers in this new digital frontier? Here are some innovative ways that brands such as Balenciaga, Prada, Adidas, and others are starting to build new brand communities through unique metaverse initiatives.
Buying Virtual Luxury “Real” Estate
Investors are snapping up parcels of virtual land for sale on NFT marketplaces like OpenSea and in metaverses such as The Sandbox, a virtual gaming platform, and Decentraland, a virtual city owned by its inhabitants.
Some owners are developing virtual shopping malls, where luxury names are sure to feature eventually. A landowner named the Metaverse Group plans to stage a Metaverse Fashion Week on its plot in Decentraland’s Fashion District from March 24 to 27, 2022. When will we see the virtual rendition of The Dubai Mall or South Coast Plaza?
For luxury brands, buying or renting virtual space in these metaverses presents nearly limitless opportunity to create entirely new selling and experiential channels. Brands can build their own virtual flagships on these platforms, host virtual runway shows and events, and partner with other brands and creators to offer exclusive virtual products on the platforms’ various marketplaces.
The Karl Lagerfeld brand recently collaborated with London-based street artist Endless on its fourth iteration of NFT digital figurines of Lagerfeld. Certain purchasers of the NFTs will gain access to a real-life cocktail party at the Lagerfeld headquarters in Paris this summer, bridging the digital and physical worlds through a unique, exclusive experience.
Prada and Adidas Originals recently announced an NFT collaboration that will enable selected contributors to create their own digital artwork by choosing a photograph and enhancing it with a filter designed by Zach Lieberman, a digital artist. Lieberman will take 3,000 of the contributors’ NFTs and make them into a huge single NFT that will be auctioned later this year. UGC contributors will retain ownership of their own NFT submissions.
Dolce & Gabbana set a record in September with its “Collezione Genesi” nine-piece NFT collection auction with UNXD, a digital luxury and culture marketplace. The auction included some actual couture pieces for the highest bidders and made 1,885 ETH, valued at nearly $6 million at the time of the auction.
Roblox, Fortnite and Other Gaming Partnerships
In September, Balenciaga became the first luxury brand to collaborate with Fortnite. The collaboration’s real-life logo tees, hoodies, baseball caps, denim jackets and button-down shirts cost between $395 and $1,200, with the digital versions costing about $2 and $12. In December, Balenciaga announced a new business unit which will explore and develop opportunities for commerce and marketing in the metaverse.
Another notable example is Burberry’s partnership with Mythical Games, which saw the luxury brand launch a limited collection of NFTs in the Blankos Block Party videogame. The collection quickly sold out, reportedly to the tune of about $400,000.