…a fictional glimpse into the real future
As I’m sure you’ve read, the Metaverse is all the rage right now- even though mainstream adoption could be a decade out. With Facebook officially changing its name to Meta, as well as tech heavyweights like Microsoft and Nvidia investing heavily- there is much discussion and speculation around the future vision of what the Metaverse and its variants.
Most of the discussions focus around either the consumer, social Metaverse forthcoming from Meta sometime in the future, or the corporate version of the Metaverse coming from Microsoft in the nearer term. But the lens that I thought would be interesting to explore is not distinctly business or consumer, but how ‘businesses’ prepare for the ‘consumer’ Metaverse. More specifically, what businesses should be thinking about as they prepare to open up an entirely new market by peddling their wares on the social, gaming, consumer Metaverse.
To do this- let’s look at a fictional company, Hoodie-X, that makes physical clothes that are sold in retail stores and can be purchased digitally via Ecommerce stores. They became a viral phenomenon when their hoodies were spotted as worn by tech titans in Silicon Valley. Since then- they have become extremely popular among millennials, as well as tech employees that work remotely and in companies with a more casual dress code. Hoodie-X just hit $1B in annual sales, and is looking to open up new markets to continue their growth trajectory.
The challenge they face is that after being in business for 10 years, they’ve saturated their top distribution options across the planet. They sell direct-to-consumer online, and have maximized their marketing efforts across all channels- including paid ads, SEO, email, social, mobile and direct mail. They’ve partnered with major department stores in the U.S., EMEA and APAC and have experienced significant success. While they could invest more in these areas, they’ve started to see diminishing returns from their efforts.
While it seems like a moonshot, Hoodie-X’s CMO is extremely excited about the prospect of the Metaverse. In the company’s annual planning meetings- the CMO presents the concept of taking their entire physical hoodie line and offering virtual replicas of every hoodie on Meta’s Horizon Worlds, which is currently the most popular Metaverse available. While the idea may seem like a novelty, the CMO expands on their plan for the Metaverse and why this could truly create an opportunity as significant or even bigger than their physical or Ecommerce business.
Here are the highlights from Hoodie-X’s case to embrace the Metaverse:
- Sizeable New Market Opportunity by 2030
- The Global Metaverse Market reached USD 21.91 billion in 2020, projected to grow at a whopping CAGR of 41.7% from 2021 to 20301
- In extrapolating these projections, the numbers equate to a $504 billion global total addressable market (TAM) opportunity by 2030
- Specifically for the luxury goods niche within the Metaverse, Morgan Stanley projects that it will present brands with a $50 billion revenue opportunity within the decade2
- The profit associated with selling virtual clothing will be attractive given the near zero overhead
- Mirror Avatar and Your Wardrobe
- Establish a model that whenever a consumer purchases a physical hoodie, grant the customer a token to seamlessly redeem a digital version that can be used in their application / game of choice
- Seamlessly mirroring the physical and virtual goods will drive higher customer loyalty for those that spend significant time online
- Create Limited Edition Avatar Fashion with NFT’s
- Leverage NFT’s. To explain this concept- think of an official, custom pair of (virtual) Nike Air Jordan 1’s that have never been seen by the world. If you were to secure an NFT for this pair of Jordans, you would own the exclusive rights to this digital asset. This is what your brand can produce by issuing NFT’s (non-fungible tokens), which is a unique digital identifier recorded on the blockchain to certify its undisputed authenticity and ownership.
- The more time consumers spend online, the more concerned they may be with their digital identity and potentially enjoy showing off their one-of-a-kind, limited edition NFT’s
- Consumers will conceivably be able to traverse different Metaverse platforms with their unique, limited edition NFT fashion assets (with blockchain proof)
- Test New, Risk-Free Fashion Concepts
- Create a risk-free model to test new products in the Metaverse before manufacturing and releasing new physical goods
- Generate customer surveys to collect opinions on new designs and styles
- Build a virtuous product development cycle of Metaverse virtual tests, customer feedback and releasing new styles based on fan favorites
- Immersive Advertising
- Once Virtual Reality (VR) becomes a mainstream element of the Metaverse, brands can create more immersive, embedded advertising opportunities within games, concerts, events and virtual worlds
- When Augmented Reality (AR) enters the world of the Metaverse, brands can harness their creativity by leveraging more immersive advertising opportunities that straddle the virtual and physical worlds
- ‘Big Brother-Style’ Data Collection
- Once VR and AR become mainstream, although a bit creepy- the tech behemoths behind the technology may be able to collect data on your movements, eye contractions and mind reactions
- A 2018 Stanford Virtual Human Interaction Lab paper estimated that 20 minutes in a VR simulation allows almost 2 million body language recordings3
- Tech companies can leverage this data to gain better insights on how to drive increased adoption, engagement and purchase behavior
As you consider the case that HoodieX’s CMO has made for the Metaverse, I’ll leave you with this quote from the Forbes article, “More Than A Trend: Entering The Metaverse Will Become A Necessity For Brands”
“The virtual economy will become as important as the physical economy. Many brands intuitively or on purpose are moving towards the metaverse which is creating a global economy on track to exceed the current one many times over. There will be no other option but to join it. Otherwise, you will not survive as a company.”
- Vlad Panchenko (CEO and Founder at DMarket, a marketplace and technology for building virtual worlds) 4
1 – Metaverse Market Worth USD 21.91 Billion In 2020 and is Predicted to Grow at 41.7% CAGR by 2030 – Report by Market Research Future (MRFR) – https://www.globenewswire.com/news-release/2021/12/14/2351695/0/en/Metaverse-Market-Worth-USD-21-91-Billion-In-2020-and-is-Predicted-to-Grow-at-41-7-CAGR-by-2030-Report-by-Market-Research-Future-MRFR.html
2 – Lucrative for luxury: Metaverse could untap $50bn for brands by 2030 – https://www.cityam.com/lucrative-for-luxury-metaverse-could-untap-50bn-for-brands-by-2030/
3 – Conquering the metaverse: 3 ways that businesses can find real customers in virtual worlds – https://fortune.com/2021/12/03/metaverse-business-nfts-real-estate-virtual-reality-roblox/
4 – More Than A Trend: Entering The Metaverse Will Become A Necessity For Brands https://www.forbes.com/sites/cathyhackl/2021/06/24/more-than-a-trend-entering-the-metaverse-will-become-a-necessity-for-brands/?sh=40ce569555ab