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Stepping into virtual world

The rise of the virtual experience economy


Every other Wednesday, h/commerce provides in-depth analysis of the most impactful trends reshaping retail.

The adoption of virtual reality technologies by brands has been delayed for a long time as it was judged too expensive, not mature enough or difficult to develop. Yet today, in a context where the social distancing is the new normality, digital channels have the power to redefine the brand-consumer relationship and their time to shine might have come. The step into the virtual world awaits.

In our previous articles, we wrote about the micro-trends of the lockdown. This time we will speak about an ongoing and a major trend – or should we say a whole economy. With 27 million users attending the virtual Fortnite concert of Travis Scott (featuring the limited edition of the rappers’ sneaker model for Jordan) and 250 million Fortnite active gamers, the new conversation about multiverse world’s economy shall be sparked.

Parallel Lives

Why virtual experiences economy should be taken more seriously than ever? Because the sanitary crisis has reinforced the demand. With music festivals cancelled, sports events delayed, and restaurants closed there is a vacant place for entertainment in people’s lives. Immersive, virtual worlds like Second Life years ago, Animal Crossing more recently and most and foremost Fortnite are the hottest trending spot and new communication channel for brands. This ongoing trend might further explode this year as Facebook is working thoroughly on the launch of the multiverse world baptized Horizon. Following the success of Fortnite, Facebook seeks to create its own sandbox universe that is playable in virtual reality using Oculus. Facebook Horizon would allow users to design their custom avatars and hop between virtual locales through portals called Telepods, watch movies and consume other media with friends.

The multiverse, virtual worlds are doomed to success in actual uncertain context as they are a place for escapism from the burdens of the new reality. People across the world adapt to a life indoors and consequently, many have picked up video games as a method to deal with stress and uncertainty. The result? The thriving gaming industry might be the only winner of the lockdown.

In March 2020, video games saw a 52% increase in sales. The console sales numbers have increased by 155% globally (according to Video games are beating the records of audience and even the WHO is encouraging to play the part as it is a good way of staying home.

The success of the virtual worlds is based on filling the basic needs that were disrupted during the crisis. The need for entertainment, the need to escape from the stressing context and the need to socialize. Fortnite (250 million active players) as well as the newest Nintendo hit: Animal Crossing, or other virtual worlds like Roblox and Minecraft (more than 200 million monthly average users combined) are successful because they are something more than gaming platforms. They are gaming-social platforms that bring people together.

Travis Scott’s five virtual concerts who attracted millions of players is the proof. The show, called Astronomical, garnered more than 27.7 million views across the five events that ran until 27th April and achieved 12.3 million concurrent viewers. Multiverse realities open the possibility of innovating and re-defining events in the new reality we find ourselves in.

The social factor is also crucial for Animal Crossing: New Horizons. The game has become an instant hit because it allows escaping to an island paradise, a conveniently timed piece of relaxing fantasy. Plenty of players used Animal Crossing for more intimate get-togethers like celebrating Ramadan or Easter last month or just gathering friends or family together in one place.

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Virtual Possessions

Once the need for entertainment, relax and socializing is fulfilled, there comes the question of virtual status. In a multiverse world people get to be whoever they want to be and act in a way they cannot in real life. Creating a virtual identity comes more often with having virtual avatar and possessions. The so-called skins and the way you build your virtual environment are a major status symbol. As shown by Ipsos report on Fortnite:

For the younger generation who grew up surrounded by social media and online personas, there is little difference between the value of physical and virtual possessions. A new skin carries the same cultural capital as the latest branded trainers. (Ipsos)

Virtual worlds are becoming an extension of our everyday realities. With 50% of the EU population now playing video games and with the cultural shifts towards the virtual experience economy, comes great opportunities for retail and brands. (Ipsos)

The luxury fashion e-commerce platform Net-A-Porter is one of the first companies to monetize the Animal Crossing Phenomenon in China. The e-commerce retailer worked with multiple Chinese fashion designers to create avatar skins issued from their newest collections. Users can purchase not only those virtual skins in-game, but also the real clothing via Tmall owned by Alibaba.

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Net-a-Porter in Animal Crossing. Photo: handout

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French apparel brand Gémo followed the example and transferred its newest collection to a virtual store accessible from the game. While physical stores being closed amid the Covid crisis, Animal Crossing is not only a paradise for confined users but also for advertisers.

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Gémo virtual store in Animal Crossing game.

Last October, the Chinese social media giant Weibo has launched ADA – a mobile app that allows users to purchase clothing and other items from luxury brands like Prada and Gucci for their virtual avatars. The users can also visit each-other customized virtual rooms filled with luxury furnishings. The Ada app is basically a luxury brand-sponsored virtual pop-up store and among brands that have already signed up for the game, we find luxury powerhouses like Dior, Gucci, Prada or Armani.

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The Ada app allows users to customize their virtual looks and homes.

Similar to Ada – an app called Drest allows users to dress up their avatars in virtual items from current collections of more than 100 brands. The looks, hair and makeup are paid for in-game currency and the final look is released for rating by the community. If the users are happy with their styling, they can simply click through to purchase the real outfit via e-commerce site Farfetch.

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The Drest app is a pioneer in “Virtual-first” purchase

It is clear that the luxury and fashion industry have ventured into virtual gaming. Their participation could open up the possibility of selling “virtual first” items that could later converse into real purchase once the user is satisfied with his avatar’s appeal.

Virtual economy

The lockdown has created a stronger demand for the virtual economy. All the ends of the spectrum are looking to the trend of virtual realms where we can create our virtual selves and where we can recreate the virtual consumerism and there is a big opportunity for brands to engage with a big audience. Animal Crossing has revealed itself magnetic even to those who don’t even play games usually. The sanitary crisis has opened the gate of imaginative gaming worlds offering their usual entertaining escape from the stress and a way to get together, to share space, to create and to shop. In the virtual realms, the users function in the same way as in the real one – the virtual gaming space is a place for virtual consumption and some high-end fashion brands understood it well.

For brands, the virtual worlds might be the new paradise as they can develop new storytelling, make the most out of cross-media experiences, recreate virtual events, boost brands exposure, find new ways to engage and showcase products etc. The possibilities are infinite, as infinite are the worlds that we can create in multiverse games. The appeal of virtual realities lies above in their function as a creative medium not only for creative users but also for creators of brand experiences.

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Mikaela Barbosa

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