Will your first luxury item be purchased in Metaverse?
Morgan Stanley recently released a research report that pointed out that by 2030, the NFT market for luxury brands may reach 56 billion U.S. dollars. Thanks to the existence of Metaverse, demand may also increase sharply.
Many luxury brands such as Coach, Prada, and Gucci are rapidly deploying Metaverse, and Metaverse has also become the wealth code that luxury brands want to seize .
Photo/Prada official Weibo
Morgan Stanley predicts that in the next few years, the Metaverse project will account for most of the investment, and it can fundamentally change the medium in which we interact with others. Analysts headed by Edward Stanley said that overall, by 2030, the market size of NFT may grow to about 240 billion U.S. dollars, by then the digital assets of luxury brands will account for 8% of this market.
Luxury goods want to seize the opportunity of the Metaverse, and their urgent needs are behind the impact of the global epidemic, the global luxury goods industry has been hit hard. According to statistics, the epidemic will cause 50 leading luxury goods companies in the world to lose more than US$20 billion in brand value. Some brands choose to close some offline stores to survive.
Previously, luxury brands have also made digital attempts. For example, LV and LOL collaborated to create exclusive hero skins. MOSCHINO used to sell the brand’s virtual items in the video game “The Sims 4”, but they were not as good as this Metaverse tuyere. The potential for attracting gold is considerable.
However, will the luxury goods industry really catch up on the express train of Metaverse as predicted in the Morgan Stanley report? What are the ways to play luxury goods in the Metaverse?
Which luxury brands are entering the Metaverse?
Although most people do not have enough knowledge about Metaverse, this does not prevent luxury brands from pouring into Metaverse.
Morgan Stanley analysts explained that Web 1.0 connects people with information, Web 2.0 represents an iteration of social media, and Web 3.0 is often referred to as a Metaverse, which is “a personal avatar that people can interact with. Reserved”. Since these human avatars can accept styling and dressing, this provides a “huge opportunity” for luxury brands.
Although there is no precise definition of Metaverse, its emergence may further integrate the real and virtual worlds, bring people a new interactive experience, and also bring new vitality and development direction to luxury brands.
Take Roblox as an example. As an online game platform and creation system, one in five players update their avatars almost every day. Morgan Stanley said: “In the virtual experience, images are everything, and luxury brands are exploring multiple collaborations with games and Metaverse platforms.�?/font>
Currently, Roblox platform has cooperated with luxury brands Coach and Prada to sell some virtual or real items. Some practitioners believe that this is what we will see in the future. On the e-commerce retail side, another new e-commerce form may emerge because of Metaverse, which will improve the efficiency and revenue of the entire new retail industry.
In real life scenarios, the concept of Metaverse is still in the stage of using virtual reality (VR) and augmented reality (AR). For example, Dior, Gucci and Balenciaga have all made similar attempts.
At the beginning of this year, Gucci launched virtual sneakers, each priced at $12.99. After buying the shoes, consumers can use them in the Gucci APP and the VR social platform VR CHAT, or try them on the game platform Roblox to prove themselves in a variety of ways. Own these shoes.
Gucci virtual sneakers, picture / Aifaner WeChat public account
Balenciaga (Balenciaga) has produced a video game in its Fall 2021 series, where players can choose their own image to enter the game world with a story of 2031.
The 2022 spring collection of clothing is named “clone”. Through plane tracking, CG scanning, AI and 3D modeling, the model Eliza Douglas was “face-changed”, and she showed off all the new outfits of the season alone.
In addition, in September this year, Balenciaga collaborated with the electronic virtual game “Fortnite” to create new clothes and game props for the four most popular characters in the game. Balenciaga has also opened a virtual retail store in the game. These clothes are also sold as Balenciaga’s new merchandise entities. Users can wear the same style as their virtual images in the game, further fusing the virtual and real worlds.
Therefore, the Paris World is also known as the “early pioneers” of the Metaverse.
Applications such as VR and AR seem to have become the gateway for many luxury brands to cut into the Metaverse. Dior CEO Pietro Beccari also stated in July this year that AR and virtual try-on are priorities. This has proven to be a valuable asset, but it only makes sense to us when it is connected to a real product, not just Only virtual products. Dior previously worked with Snapchat’s parent company Snap to create AR sneaker try-on products.
So, how extensive are the application scenarios of luxury goods in Metaverse?
According to Yi Mo Commercial, there are currently four main ways for luxury brands to explore the “Metaverse” in the commercial field: increasing sales channels through virtual technologies such as VR, launching independent virtual image IP, shaping virtual idols, and launching digital clothing through gaming platforms.
One of the cores of the Metaverse is that “things are precious”. In the real world, it is difficult for us to tailor-made items for everyone, but in the world of the Metaverse, everyone can be personalized, using different dresses, Avatar and so on.
Virtual images and virtual idols are becoming an important part of the current Millennials and Generation Z’s social interactions. They regard their virtual images as their extensions, purchase products and clothing of the corresponding brands to create themselves, which can be displayed in the virtual and real world. Unique self.
Morgan Stanley pointed out in a research report that other platforms such as Fortnite and Roblox Digital Market have shown us signs of shopping in the Metaverse. Revenue sharing transactions are on the rise, which may add 10 to 20 billion US dollars in value to the total potential market for luxury NFTs.
As people spend more time interacting with friends on social media and gaming platforms than in real life, it can be expected that the demand for digital fashion and luxury goods will increase substantially in the next few years.
How big is the Metaverse market for luxury goods?
The Metaverse has not yet taken shape, and luxury goods are the first to test the NFT (non-homogeneous token).
NFT has the characteristics of indivisibility, irreplaceability, and uniqueness. It is considered to be one of the key infrastructures of the Metaverse world. In 2021, NFT will explode, from digital art, collectibles, virtual property to cultural entertainment, identity verification, and insurance. , Infrastructure… Everything can be NFT.
By 2030, Morgan Stanley estimates that virtual goods will generate $50 billion in additional revenue for the luxury fashion industry. NFT and social games are expected to expand the potential market of luxury goods groups by more than 10% within 8 years, and promote the industry’s pre-interest and tax profit growth by about 25%.
At the same time, the entire luxury goods industry will benefit from the arrival of Metaverse, and soft luxury goods (clothing, leather goods, shoes, etc.) have more advantages than hard luxury goods (jewelry and watches).
According to NoFungible data, the NFT market transaction volume in the first quarter of 2021 alone will exceed 8 times that of the full year of 2020, which is approximately US$2 billion. As of April 2021, six NFT encrypted art platforms including SuperRare and MakersPlace have sold 190,665 artworks, with a total market value of US$550,039,020.92.
Many companies have heard the news, and luxury brands will naturally not let go of this trend, and have entered the NFT.
Gucci participated in Christie’s NFT digital art auction project; Italian brand Dolce & Gabbana recently sold nine NFTs for $5.7 million; Burberry officially released its first NFT virtual doll; German luxury suitcase brand RIMOWA cross-border launch of NFT digital artwork…
In addition, LV and Burberry also started NFT games.
At this year’s Los Angeles Electronic Entertainment Expo, Burberry teamed up with a game company to launch a limited edition NFT work in the blockchain game Blankos Block Party. Players can purchase, upgrade and sell the NFT work in the game.
According to official Burberry news, it will continue to strengthen cooperation with Mythiacal Games and launch more NFT accessories, such as jetpacks, clothes and slippers. These items are also applicable to Metaverse. It can be seen that Burberry is already deploying Metaverse related products in advance.
As a more complete world, Metaverse also has a broader market than NFT.
As a virtual world parallel to the real world constructed by digital technology, the Metaverse can use technology to project all content related to luxury goods in the real world into the Metaverse.
For example, luxury goods can be combined with the Metaverse social platform to sell users the same decorative products as the real world, and even go deep into the ecology of food, clothing, housing, transportation and more that fits real life, so that users can be immersed in it and consumed by the new generation. People increase exposure and experience channels, and release greater value space.
At present, luxury brands mainly sell soft luxuries such as ready-made clothes and sneakers to users, which means that luxury goods still have a broad space for expansion in the Metaverse. It is even possible that after purchasing luxury goods in Metaverse, users have a deep understanding of the brand and will then order the same products in the real world, which will bring further benefits to luxury brands.
At the beginning of August of this year, LV released its self-developed free mobile game “Louis The Game”. The goal of the game is to gain an in-depth understanding of the LV brand in the form of postcards. LV put 30 NFTs in the game, and these 30 NFTs are valued at between 20,000 and 20 million U.S. dollars by netizens. In terms of acquisition methods, LV said that during the player’s play, the NFT works will be presented to the winning players in a fixed-period lottery.
Louis The Game page, picture/Louis The Game App Store download page
As the nature of the non-copyability and scarcity of NFT works coincides with the luxury brand culture and product concept, the luxury layout NFT also gives a new form of display of traditional brand value, breaks through the original circle restrictions, and increases brand exposure. The most important thing is to be able to attract the attention of the younger generation of consumer groups, and this part of the group is the key potential consumer groups competing for luxury brands.
The same operation is completely applicable to the Metaverse. This may also indicate that in the Metaverse, luxury brands have unimaginable huge potential.
As technology giants get together and squeeze into the “Metaverse”, while creating a trillion-dollar market, it will also have a disruptive impact on all aspects of the luxury goods industry.
Can luxury brands seize the opportunity of Metaverse?
In fact, there are long precedents for luxury brands to explore digital products.
For example, Hermès released a game application called H-pitchhh in 2018; Gucci once cooperated with the American virtual chat company Genies. Every user who uses Genies can wear various luxury goods when creating his own avatar. And fashion items; Italian luxury brand MOSCHINO once sold the brand’s virtual items in the video game “The Sims 4”; Prada tried a virtual fashion show…
In 2019, LV also cooperated with LOL Games. LV’s women’s queen design director personally created exclusive summer skins for the heroes in LOL, so that e-sports heroes put on luxury items. Many gamers ridiculed that my first luxury item was actually It is LOL skin. Qiyana in LOL became the first hero to have a LV skin. According to netizens calculations, the total cost of Qiyana’s outfit in reality is close to 100,000 yuan, which can be said to be the “most expensive” skin in the history of League of Legends. .
LV and LOL game cooperation skin, picture/LOL official Weibo
It is worth noting that LOL players only need tens of yuan to get the skin, which is far lower than the price of the corresponding product in real life. This time, under the wind of the Metaverse, the luxury brand launched the NFT product at the price mentioned above. It is not cheap, even higher than the actual price, creating considerable revenue for luxury brands.
Prior to this, luxury brands were more attentive to digital attempts, not very concerned about the specific conversion effects, and used it as a new type of marketing that keeps pace with the times to narrow the gap with young people.
But this time, luxury brands have chosen to take the express train of Metaverse, and feel the premium brought by the tuyere. For each brand, the digital layout is no longer as simple as marketing and customer acquisition, but also related to the survival of the future market. The point is.
Coupled with the impact of the new crown epidemic, the global luxury goods market has been hit hard. Bain Consulting and the Italian luxury goods association Fondazione Altagamma jointly released the “Bain Luxury Research” pointed out that due to the impact of the new crown epidemic, global luxury goods sales in 2020 will fall by 23% compared with 2019 to 217 billion euros.
Judging from the financial report data of the world’s largest luxury goods group LVMH, its core data in fiscal 2020 all declined, with sales falling 17% year-on-year to 44.65 billion euros; operating profit fell 28% year-on-year to 8.3 billion euros; net profit A year-on-year decline of 34% to 4.7 billion euros; free cash flow fell 1% year-on-year to 6.12 billion euros; net debt fell 32% year-on-year to 4.24 billion euros.
Under the pressure of the epidemic, the luxury goods industry will catch up on the outlet of Metaverse in 2021 and get out of the circle quickly. According to The Paper , some insiders said that Metaverse is an inevitable step in the integration of mankind and technology. Fashion, creativity and technology have become closer in business cooperation. In this process, traditional luxury fashion companies may have to Redefine the connotation and extension of itself.
Of course, the development of the Metaverse concept and the opportunities it brings to the field of luxury goods cannot be accomplished overnight, and it will take several years in the future.
In this process, there are still many challenges to overcome, and many technologies need to be improved. Marcel Hollerbach, chief innovation officer of Productup, a product data management company, believes that for the overall retail industry, a headlong plunge into the Metaverse concept will increase complexity and bring many problems to existing omni-channel retail. When no company can keep up with product information synchronization and the speed of the supply chain, and lack of technical support from third-party companies, it will bring chaos to the retails industry. The luxury goods industry also needs to pay attention to this problem.
But Metaverse has become an opportunity not to be missed by luxury brands. It can be expected that which company can seize the vent of the Metaverse, or rise against the trend under the trend of normalization of the epidemic.
If luxury goods can gain the upper hand in the Metaverse world, on the one hand, it can alleviate the current recovery dilemma of luxury goods affected by the epidemic, increase visibility, and capture users in the Z era; on the other hand, digitalization can be said to be a profiteering industry, even though Metaverse is Virtual, but the opportunities and benefits for luxury brands to flex their muscles are real.
As the technology continues to mature, Metaverse will become more and more lively, and luxury brands have begun to compete for the position in the new world, who can finally seize the opportunity?
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