The Metaverse and Luxury Brands: A Match Made in Virtual Heaven
There is every indication that users of the metaverse will adopt the same strategy as gamers, who have a long history of creating their virtual personas using clothing and accessories. Luxury brand executives are taking this development seriously and working on benefiting from the chance to market virtual representations of their designs to users of the metaverse.
Avatars are crucial in the emerging metaverse, a persistent, shared virtual world that users can access through a variety of tools and platforms. And as a result, some users would shell out a lot of money to present their avatars with expensive items.
Mark Zuckerberg, CEO of Meta, predicts that this market will be significant in the metaverse. According to Zuckerberg, avatars will be as prevalent as profile pictures now, but instead of being static images, they will be life, 3D representations of you, your expressions, and your gestures, allowing for interactions that are richer than what is currently available online.
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By 2030, the market for virtual luxury items, according to Morgan Stanley analysts, may be worth $50 billion. The majority of virtual luxury products are published in constrained numbers, and customers who buy them are given an NFT as digital proof of ownership. Users will be able to transport goods like clothing, accessories, and home decor from one platform to another in the metaverse.
The Benefit of Virtual Good for Luxury Brands
Huge Margins
Luxury products require little work and no raw materials to produce. So, the majority of the earnings come from the sale of virtual clothing and accessories. As there are no restrictions imposed by market realities, designers have a lot of creative freedom when producing virtual objects.
Reviving Older Designs
The majority of luxury firms have decades’ worth of archived designs that they can turn into digital assets, proving to be a new revenue stream with no outlay.
Ongoing Resale Income
Many smart certificates or NFTs for virtual goods incorporate royalties or revenue sharing on subsequent transactions when the product is sold. So, the original designer will continue to make money and there won’t be as many issues with imitations.
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Brands That Are Already Making a Mark in the Metaverse
The Gucci Garden
One bag from a pop-up shop selling the brand’s designs on Roblox went for more than $4,000 in real money.
Tommy Hilfiger
The venture capital arm of Tommy Hilfiger disclosed a relationship with the “v-commerce”-focused viral marketing firm EWG Virtual.
Burberry
Sharky B, a collection of special playable NFT creations made by Burberry, is a resident of Blankos Block Party by Mythical Games. The outfits for the characters include armbands, jetpacks, and pool shoes. For roughly $400,000, the Creation collection soon found a buyer.
Balenciaga
In Fortnite, Balenciaga debuted its clothing line. V-Bucks, the in-game cash for Fortnite, are used to buy these “skins,” or clothes for the game’s characters. V-Bucks can be bought with actual cash.
Dolce and Gabbana
Dolce & Gabbana received $5.7 million for its nine-piece “Collezione Genesi” collection when it was auctioned on the online luxury market UNXD.
Luxury Brands and Their Customer Base
Certain Metaverse organizations are seen as having the ability to engage users across various Metaverse. One is the gaming area’s Generations Z and Alpha. Next, there are non-fungible tokens (NFTs). A wealthy group of influential people who gravitate toward the art world and NFTs comes in one of such categories.
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The NFT Metaverse’s first area to grow was art, and there is a connection between the arts and luxury. The types of consumers in each segment are taken into consideration by the premium companies. In test-and-learn mode are brands. Luxury brands exercise caution when managing brand equity and risk, and they work to determine whether the opportunity is one for business or communication.
Conclusion
Luxury companies can work on any new channel, providing they do not damage their brand equity, which is the main asset investors worry about. This flexibility comes from their brand equity and inventiveness.
As they did in the past few years when they invested in luxury companies to gain exposure to the expansion of emerging markets and e-commerce, investors will increasingly participate in luxury companies as a means of indirectly investing in the metaverse.
