Technologies like NFTs, blockchain, virtual and augmented reality will change the way future consumers will interact with businesses and each other. An overview of Metaverse, digital fashion and digital horse racing.
“USS Callister,” the first episode of the fourth season of the dystopian series Black Mirror, somberly managed to attract the attention of the general public in 2017 and stirred the imagination in many: will we soon be able to jump from one virtual world to another? What was a fantasy yesterday, today seems closer than ever to a digital parallel world.
Last October 2021, Mark Zuckerberg announced the renaming of Facebook to Meta. Since then, not only has the Metaverse become arguably the hottest topic in Sillicon Valley, but the general public began to learn about it as well. All of this indicates that the Metaverse is growing tremendously in importance.
Before putting on the VR goggles to escape the real world, it is necessary to understand what the Metaverse is all about and why companies can benefit from being in the Metaverse.
What is the Metaverse?
The desire to immerse oneself in an expanded and virtual parallel world certainly fascinated many of our ancestors. But the first to sum up this concept in one word was Neal Stephenson. He called it “metaverse.”
In 1992, in his science fiction novel “Snow Crash,” he described a virtual reality that closely resembled an enterable video game. Thirty years later, the metaverse has not yet been concretely defined, but it can be broken down to an idea at its core:
The Metaverse is supposed to merge the real world with the digital world. This is to be made possible by high-tech glasses that allow users to immerse themselves in augmented reality (AR) and virtual reality (VR). The glasses are also supposed to transfer facial expressions and gestures of the users to their digital personalities, the so-called avatars.
As more businesses and consumers become interested, it’s essential that companies keep up. But what does this mean for marketers?
Gaming and Metaverse
“Should every company become a gaming company?” wondered Cathy Hackl, one of the most popular Metaverse Expert:ins, during her podcast “Metaverse Marketing.” Definitely not, but the experts agree that gaming provides the building blocks for the Metaverse. Anyone who still believes that the renaming of Facebook to Meta was purely a rebranding strategy as a result of the numerous scandals is sadly disappointed. Back in 2014, Zuckerberg recognized the potential of a possible Metaverse and bought the then 2-year-old startup Oculus VR for 2.3 billion US dollars. Meanwhile, Meta has sunk about $10 billion into its metaverse strategy in 2021. Less surprising was the acquisition of Activision Blizzard from Microsoft in 2022 for $68.7 billion. By far the most expensive acquisition from the video game industry.
The investment makes sense when you look at the evolution of the video game industry. In just a few decades, the industry has become one of the fastest growing industries in the world, and at the same time, it is considered to be the highest revenue-generating of all entertainment industries, with an estimated global revenue of around $142 billion for the year 2022.
According to a 2021 study by Statista, 38% of video gamers in the U.S. are between the ages of 18 and 34. Moreover, two out of five people worldwide play video games on a regular basis. Thus, there is a huge potential for any company to place its brand, and thereby reach new customers:inside from all over the world. The core idea of the digitally accessible worlds “Roblox”, “Decentraland” and “Sandbox”, the predecessors of the Metaverse, was to simulate human proximity. The Metaverse is about more than a meeting of players. The focus is on social, digital interaction, for example by going to concerts together, traveling virtually around the world or presenting one’s own brand to other Metaverse visitors. With the help of NFTs, users can outfit their avatars with branded clothing or their own creations. In addition, all conceivable business models are permitted in virtual space, such as: Advertising posters, exhibitions, virtual offices, shopping, etc.
What is an NFT?
A Non-Fungible Token (NFT) is a unique digital asset that can take any form. Sometimes they are objects such as artwork, but NFTs can also be videos, music, contracts, real estate, or even clothes or skins.
Marketing in the Metaverse
Two years into the pandemic, and you hear “You are on mute!” in what feels like every other meeting. The metaverse does not promise to solve technical problems once and for all, but new opportunities are on the horizon. Any company can open a virtual office and offer its mundane products or services in the metaverse. The advantage is that you can meet millions of users as well as potential customers without much effort within the Metaverse in one virtual place.
Adidas is the first Dax group that dared to take the step into the Metaverse on December 17, 2021. They offer a digital collection in cooperation with NFT pioneers Bored Ape Yacht Club, Gmoney and Punks Comic. NFT owners, apart from virtual clothes, were given exclusive access to Adidas’ Originals virtual experiences that took place in the Sandbox metaverse world. The NFT collection sold out within hours and revenues amounted to an estimated $22 million.
After an intense business meeting, for example, you can go to the virtual Kentucky Derby on platforms like ZED RUN. ZED RUN has taken digital horse racing to a new level. By leveraging NFTs, they allow users to buy, sell as well as breed digital racehorses and use them in digital races. ZED RUN claims to have 100,000 users worldwide, plus the community is growing rapidly. Major brands that have traditionally sponsored real-world racing events have also gotten in on the virtual action. Stella Artois, a world-renowned Belgian beer brand, recognized the marketing potential and used NFT technology to develop a series of its own horse races with themed skins that users can purchase.
“Quality is remembered long after the price is forgotten,” says Aldo Gucci. The quality of a garment in the virtual environment is difficult to judge. It’s not the seams or the material that determine the price, but the imagination of the designer:inside and how they implement it virtually. Both the art objects and the garments we own represent the personality of each of us. But in the real world, we are limited in how we can design clothes, whereas in the metaverse, our imagination is the limit. Here, it’s no problem to wear an angular T-shirt or high heels with 40cm.
Gucci hosted their first event on Roblox, in their own virtual Gucci garden, in 2021. Visitors:inside entered the garden through a virtual lobby where their avatars could view, try on and purchase digital Gucci items. In the themed rooms, the avatars transformed into genderless, humanoid figures. The virtual garments purchased can be worn in other Roblox events and are intended as collectibles.
Big brands such as Balenciaga, Valentino and Burberry have become aware that the young generation attaches just as much importance to the appearance of their virtual avatars as to their own appearance in the real world. For this reason, they also plan to enter the virtual marketplace.
Forecast and opportunities of the Metaverse
According to Google Trends, the search term “metaverse” has been booming since October 2021. Meanwhile, the hashtag #metaverse is widely used on Instagram with more than 1.3 million posts.
The hype is not only attracting tech companies, but also companies from the retail or event industry. They have realized that the Metaverse will be the new social meeting place for the young generation. According to a forecast by Grand View Research, the Metaverse market could be worth $678.8 billion by 2030. This market value puts the Metaverse on par with the top 10 most valuable companies of 2021.
The video game industry is also showing a strong growing trend. According to a comprehensive research report by Market Research Future (MRFR), “Video Game Market information by Gaming Device,” the market was estimated to be worth 155.9 billion dollars in 2019 and will increase at a compound annual growth rate of 14.5% until 2026. In addition, experts estimate that by 2026, most people worldwide will spend at least one hour in augmented reality.
Criticism of the metaverse
Whether the bet on the Metaverse will actually work out, however, remains completely open. For one thing, the technical side is not mature enough. The breakthrough of virtual reality has been expected for years, but even the latest VR equipment has shortcomings when it comes to simulating human eye and hand movements. Thus, lifelike interaction is technically difficult to implement today. One should also not forget the associated costs for companies looking to gain a foothold in the metaverse. Operating virtual platforms involves very high computing power and fast Internet, and is therefore costly. The psychological impact on the user:s of a parallel world must also be considered. The point is that the virtual world can create the illusion of a utopian society. Perfect looks, extravagant cars and clothes, and surreal events that can send one into ecstasy. Glasses on, world off, virtual reality on! But in reality, the user:inside is always alone in their own space, even if it feels like being near someone else. The Metaverse will enhance this effect of being together, even though in reality the person is alone. Moreover, if you are already in the deeper levels of the Internet, you also have to think about privacy, because everything is tracked in the Metaverse. In addition to personal data such as name, birthday, gender, height, etc., even the finest eye and hand movements, among other things, are stored. At the moment, there are no concrete data protection regulations in the Metaverse. It is up to the users and companies to decide how many tracks they want to leave behind in the Metaverse.
Metaverse – the right market for all companies?
The metaverse is still in the development phase, which is why early entry can give a company a big, time advantage over the competition. Of course, each company must carefully weigh the advantages and disadvantages of entering the metaverse. Because even in a virtual world full of possibilities, it is ultimately supply and demand that determine the market. The creativity of every entrepreneur is called for, because one thing is clear: those who do not adapt to the market in this fast digitalized world will slowly but surely be eliminated.
Schwär, Hannah (2022). Techkonzerne pumpen Milliarden in die nächste Stufe des Internets: das Metaversum. Aber ist die Welt tatsächlich schon bereit für virtuelle Kleidung und Immobilien? Capital – Wirtschaft ist Gesellschaft, März 2022, 146, 34-39.
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- adidas NFTs jetzt erhältlich: Willkommen im Metaverse | adidas DE
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- Google Trends: Hype um NFTs und Metaverse lässt Anfang 2022 langsam nach (cointelegraph.com)
- Stella Artois Gallops Into The Metaverse With Horse Racing NFTs (forbes.com)
- Facebook spending $10 billion this year on its metaverse division – The Verge
- Video game market value worldwide 2015 | Statista
- S. average age of video gamers 2021 | Statista
Author: Robert Bedy, Business Development Specialist, Bitrock Digital Partners